Rich countries are built on Venture Capital

One thing for sure is that you have to be open to new ideas and it takes long-term planning and execution, to move people (or a country) from one place to the next.
The current problems we’re facing in SA is that no one is open to change amongst the current generation, and there seems to be a lack of vision and long-term planning, and execution too is problematic due to procrastination and a lack of direction.

Tender Disease. Test it with the people around you, try and sell them a new idea and see how far it takes you. Talk about tenders and see the reaction. Contrast the two reactions and you’ll be able to understand the diseases that are eating the intellect in this country. Thinking beyond the realms of tenders/proposals is nonexistent. Innovation is stifled as a result and no new genuine enterprises are being created as a result. America was not created by Big Corporations but was built by Small Businesses. All of Microsoft, Google, Ford, AT&T, GM, Sony (Japan) were once Small Businesses that later became Big. In South Africa doing business as a small business is cost prohibitive and the barriers are huge due to “Tibiyo” (Cronyism) hence innovation and creativity is stifled and aborted during the first trimester.

Hopelessness. Name one company that you are proud of that’s been created after 1994, that’s innovative and has breakthrough world-class technology. The current crop of Leadership in this country is clouded with short-term thinking and lacks the courage to see and implement what really works. Try getting funding for something creative, innovative and technology driven. Contrast that with trying to get funding for a tender to build roads, or broken/shady/slum RDP houses, or even providing cleaning services etc. In view of this, most entrepreneurs in this country end up chasing tenders, as a result. Water takes the easiest route. What is the problem with Tenders? Tenders do not increase the cake – they only take away from the same cake. The objective should be to increase the cake. But how do we do that?

Problem Diagnosed. There’s no venture capital (“VC”) in this country. No VC means no new ideas or no innovation. Innovation by its mere philosophy requires VC. Why? Because innovation is, more often than not, likely to come from Small Businesses. Big Businesses are too comfortable making money from the Status Quo which renders them unlikely to nurture innovation or disrupt the current market. So what is VC – it is Capital required to fund a Venture. Venture is synonymous with Adventure / Gamble / Risk / Speculation / Exploration / Voyage. In the current construct, there is no institution in South Africa that provides this kind of Capital due to its inherent nature – it is a Gamble. Banks are inherently risk averse, so a Venture for them is not worth it. Hence they would never fund it – Banks are built to fund “sure bets”. They even hire clever people to develop clever models that measure risk – if it’s risky, they run, that’s their philosophy. True entrepreneurship (I'm talking about the groundbreaking stuff that builds Google / Apple / Microsoft / Ford etc) is therefore doomed in SA before it even starts.

Huge Successes. No company or financial institution in SA would have ever funded Microsoft, Google, Ford, AT&T, or Sony (Japan) – all these Fortune 500 companies were once Ventures, and thus required VC. Look at the case of Facebook or even Twitter – no one currently understands their business model and how they will monetise their businesses. But these companies have funding and are burning cash and sooner or later they will monetise their models. Or by the way, guess what they are creating jobs, and once they “grow up” to bigger companies they too will employ even more people. Take the case of our “dear company” as well, at one stage our technology was a Venture. But look at the value that’s been created ever since its inception. Take any company for that matter that’s a breakthrough – they were all Ventures at one stage.

And my favourite Venture of all time – Apple – these are the guys who brought us the computer, CGI movies (Pixar) and other business disruptions. How much Value has the computer created in the world? All this came from Venture Capital. In my quick hypothesis –America is built on Venture Capital. How do you think the world was conquered by England? It was VC which used to be provided by the Queen and other rich “noble” people. No VC, No Venture. No Venture, No Profit.

Nothing Ventured, Nothing Gained.