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While most people dream of working for themselves, not everyone is cut out to be an entrepreneur. Further obstacles, such as financial commitments, stand in the way of entrepreneurship. This is true all over the world, but particularly in South Africa – even as we move forward in our 28th year of democracy. In this article, Enzo Mpanza – the COO of F5VC – explores the stumbling blocks to entrepreneurship and, more specifically, diversity in our country’s entrepreneurial space. Mpanza encourages Corporate South Africa to pursue diversity and transformation in our start-up space more fiercely, warning that – without it – ‘we risk building more businesses that are not diverse and will be having the same conversations on transformation – decades from now.’ – Nadya Swart
Lack of diversity in the SA start-ups and what we can do about it
South Africa, similar to other leading tech hubs around the world is dominated primarily by white males, mostly based out of Cape Town. I recently shared a picture of my business partners on a business trip, who happen to be white males with an average age above 40. This has consistently raised eyebrows and questions from friends and family around whether we are not pro-diversity and if I’m the “token black”.
As a 28-year-old, black South African – who had qualified as a CA and spent 6 years in banking, mostly focusing on investment banking – I had made the move in 2020 to entrepreneurship to join a former client, who I had advised on a transaction during my time in banking and had built a close relationship with over the years.
I have been fortunate to have business partners who, whilst they do not look like me and are much older than me, appreciate my skills and expertise, share the same values and have the same passion for ensuring transformation within the telecoms and tech spaces.
The stumbling block with trying to build a diverse team has been attracting people of colour to a world of unstable income, high risk and uncertainty. Entrepreneurship typically has three stages. The early stage, which generally means minimal or no income, high risk but equally attractive equity upside. Most people, regardless of colour or gender, have no appetite for this.
The second stage offers stable income, but generally means less upside as the early entrants who took on the early risk hold most of the equity. At this stage, most start-ups can afford to pay a fair salary but cannot match the big corporate salaries for the best talent and are offering minimal upside.
The third stage is like any other corporate job, good salary but no upside.
Most people cannot pursue entrepreneurship opportunities for three primary reasons: existing financial commitments such as mortgages and car repayments, monthly living expenses and lack of network and relationships. Additionally, black people face additional obstacles such as sending money home for their parents or paying for a sibling’s school fees. Often, black talent, who might not even have these obligations, cannot raise money from family and friends or move in with their parents to save costs. Moving back home to Bryanston is ultimately very different to moving back to Thoyandou.
When I speak to young professionals about joining the team, often they either decline as a result of the above or ask for 18 months to get their affairs in order. 18 months is a long time in a start-up and things are likely to be materially different by then.
At F5 and within the broader group, we have prioritised transformation through primarily ensuring black ownership from day one where possible. Secondly, we are consistently speaking to black talent and casting the net as wide as possible. We are creating a culture that makes it attractive for people of colour and women and speak openly about diversity. We are creating programs to take-on black interns and exposing them to various parts of the group.
Corporate South Africa also has a role to play in driving transformation in start-ups. Enabling young talent to pursue entrepreneurial opportunities, through initiatives such as providing seed funding and through granting employees sabbaticals to pursue entrepreneurial opportunities.
Without these early interventions, we risk building more businesses that are not diverse and will be having the same conversations on transformation – decades from now.
- Enzo Mpanza is the COO of F5VC and a Director of F5 Ventures, a newly incorporated SA venture capital firm.
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