Build sustainable businesses that make money, not just for reselling to bigger companies.
This was the award winning entrepreneur and businessman, Vinny Lingham's advice to upcoming South African entrepreneurs at CITI's first soapbox event for the year.
Lingham, who started his first business, incuBeta, in his living-room, motivated the young Western Cape entrepreneurs to spread their wings and to disrupt the market.
incuBeta moved to the Bandwidth Barn as a very young company, but outgrew the space in only nine months. "You have to get your products out to the market quickly and start building a fundable, sustainable business that can survive outside the Barn – and in doing so, make room for other start-ups to grow in an incubator like the Barn," Lingham says.
On using his thriving web software development company, Yola, as an example, he shared some inside secrets on building a rapid growing business. "We built our entire business model on disrupting the market that had an outdated model at the time. With declining costs and revenues and consumers getting wiser by the day, we outsmarted our competitors by attacking their core business. It is important to present unique and value added offerings to win business effectively when entering a new market."
In South Africa, a particular non-entrepreneurial culture with a focus mainly on safe corporate jobs are starting to make way for an entrepreneurial culture where young people are given the opportunities to create their own luck.
"South Africa doesn't have a long legacy of entrepreneurship due to the lack of funding. However, the wheels are slowly turning and entrepreneurs that are already making money will start giving back to new entrepreneurs by investing in their innovative ideas. Entrepreneurs who are still in their 20s and 30s now will eventually make funds available when they reach a re-investment stage of their lives," he says.
"In the US, funding is just not an issue – the biggest and craziest ideas get funded. However, this leads to entrepreneurs having a more aggressive approach to running businesses compared to local entrepreneurs. In South Africa, we just want to make money and build a sustainable businesses, whereas in the US, entrepreneurs are more focused on chasing new trends and on developing new business crazes – as they have the capital to do so", says Lingham, who manages Yola from his San Francisco office.
With the educational and knowledge gap eroded in South Africa, the focus must now fall on skills development and capital to grow local business.
Some of Lingham's inside secrets on securing investment includes:
* Have a good team, plan, network, demo and pitch. Know what you do and be able to explain it in one or two sentences;
* Be persistent;
* Have passion for your idea and prove potential;
* Prove execution – investors are understanding and forgiving and will most likely give you your next round of funding if you show them successful implementation.