SA’s Knife Capital reports 64% average revenue growth for startups

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Cape Town-based high growth investment company Knife Capital has released figures from its second Grindstone accelerator programme, saying 12 scale-up companies saw an average of 64 per cent increase in revenue and created 70 jobs over the course of 2015.

The Knife Capital entrepreneurial leadership programme Grindstone recently concluded its second intake, with the participating companies experiencing strong business growth.

Upon intake, the average Grindstone SME had been running for 6.5 years, and employed 12 people. Participating companies, aside from the year-on-year revenue growth and the addition of employees, added a total of ZAR65 million (US$3.9 million) in revenue, and doubled their number of key customers.

Knife Capital said there is an expectation the companies will see a 72 per cent Compound Annual Growth Rate (CAGR) over the next three years, compared to 49 per cent at the start of the programme, while there was a 14 per cent increase in efficiency measured by average revenue generated per employee.

The year-long programme aims to take businesses with proven traction through an intensive review of their strategies, providing them with the necessary support to build a foundation for growth through the transfer of skills and introduction to relevant business networks.

Grindstone partners included corporates such as FNB, ENS Africa, Microsoft BizSpark, Moneyweb, M&C Saatchi Abel, Ansarada, PwC and Mazars.

“The real value of the Grindstone programme is that the participants are enabled to rapidly react to windows of opportunity for corporate activity,” said Andrea Bӧhmert, director at Grindstone.

“The inbound interest from local corporates and international investors to partner with these companies are encouraging, and there are some real success stories in the making.”

Bӧhmert said more than half of the Grindstone II participants had received offers for full or partial acquisition during the past 12 months.

“Some of these opportunities are still under evaluation and/or negotiation, but being in the position to decline such offers if not optimal is a clear sign that the companies back their own growth strategies,” she said.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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