*This content is brought to you by Endeavor
When the Local Scale Up (LSU) programme was launched in 2021 by Endeavor and the SA SME Fund, the vision was to support a cohort of early stage high-growth tech-enabled businesses to not only bolster their growth, but in doing so stimulate our local SA economy, drive job growth, and create a positive multiplier effect growing SA’s entrepreneurial ecosystem. 18 months on and the results are strong, confirming the multiplicative impact these businesses have in our economy and the success of the LSU program to accelerate their growth on both the local and global stage. Based on the first 6 months of this year, the LSU cohort of 24 companies is collectively forecast to grow revenue 300% in 2022 up from 61% in 2021, generating an annual revenue of R2.8bn by the end of 2022 compared to R1.8bn in 2021.
Moreover, these 24 high-growth entrepreneurs have collectively created 1,750 jobs over the past 18 months since the programme’s inception. A further 550 jobs are set to be filled in the second six months of 2022, equating to a 57% job growth, with 75% of these new jobs being taken up by black youth. The LSU cohort is expected to see capital raised grow by over 50% in 2022, with R1.6bn forecast to be invested into these companies during 2022, thus furthering the growth momentum and sending a positive signalling.
Given the LSU’s proven success in accelerating revenue and job growth, in July this year, six additional tech-enabled businesses were selected to join the program, bringing the cohort to 30 – the largest size to date. The new joiners include GoMetro, Momint, Nomanini, Social Places, Onyx Educate and TruID, all with annual revenue between R2m to R20m. They join the existing 24 companies that span fintech, insurtech, SaaS, edtech, cyber security, proptech amongst other verticals and include: 4-Sure, Aura, Basalt, CarScan, Ctrl, Cumulate, Daily Maverick, Explore.ai, Finclusion, Flow, Fundrr, iContact, Inoxico, Jabu, Kandua, MamaMoney, Mobiz, StructureIT, Synatic, Talk360, Vectra and Yellow.
Access to networks: Markets & Capital
The LSU entrepreneurs are able to benefit from on-demand, tailored support from the Endeavor’s global network, which spans 40 markets in 32 countries worldwide and includes more than 2000 entrepreneurs as well as 5000+ mentors globally. The LSU is geared towards supporting entrepreneurs to secure more clients in existing and new geographies and the much-needed funding for growth – either local or international – taking months off the typical capital raising period.
According to Alison Collier, Managing Director of Endeavor South Africa, this access to a trusted network of experienced, successful entrepreneurs “who’ve been there and done that” in the way of capital and markets is key to accelerating their growth. Endeavor’s international network being a large differentiator we offer to SA’s high-growth entrepreneurs. We are able to introduce the LSU companies to lead VC investors for funding as well as co-invest in their rounds via our R190m co-investment fund Harvest. Endeavor SA’s Harvest Fund investment has a two-fold benefit for entrepreneurs – first it reduces the fundraise period by a number of months; and secondly, it spurs on development of SA’s start-up ecosystem as Endeavor re-invests 20% of the fund’s carry into future cohorts.
The 20x ‘multiplier effect’ in action
Building on this, Collier emphasises Endeavor’s ‘20x multiplier effect’ that is generated by successful entrepreneurs. “Endeavor’s thesis is, that success breeds success, twenty times in fact. What Endeavor does is to provide a platform and pay-it-forward environment for these high-growth entrepreneurs to flourish through learning from successful entrepreneurs and mentors who’ve gone before them, and then pay it forward by either mentoring others in the network or re-investing directly in up-and-coming entrepreneurs. Endeavor’s co-investment funds – Global Catalyst & Local Harvest Fund – are also designed to do exactly that, thus creating this supercharged multiplier effect” she explains.
High-growth entrepreneurs should be welcomed
Looking at the economic impact of the LSU cohort, Ketso Gordhan, CEO of the SA SME Fund, believes that high-growth entrepreneurs play an important role in driving future revenue growth and job creation in South Africa and are thrilled to be partnering with Endeavor in the LSU program. “We are very proud of the revenue and job growth the LSU cohort has delivered to date and are looking forward to the year end results. From our experience of working with start-ups and high-growth entrepreneurs in South Africa, it’s clear that these businesses are driving revenue growth, escalating job creation and attracting private capital. They are economy agnostic, which in terms of South Africa is exactly what is needed,” he says.
“South Africa is a vibrant economy with exceptional entrepreneurs, and the LSU Cohort results are just a small microcosm of the impact that exists within the entrepreneurial sector. Endeavor believes high-growth entrepreneurs are key to unlocking sustainable growth not just in the South African job market but in all emerging markets, and the results speak for themselves. Entrepreneurs exists everywhere, it’s our role as a country to create a facilitating environment for them to thrive” Collier concludes.
Read also:
