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  • Great experience working with you to gain clarity of what needs changing in my business. Stephen Jordan Access to Africa - 25 August 2011, Marketing Module

Focus on entrepreneurs, incentives needed to boost venture capitalism

Government needs to develop a more favourable environment for start-up and early-stage entrepreneurial companies to grow and provide a solution to unemployment by providing angel investors with tax incentives, say business accelerator Aurik CEO Pavlo Phitidis and director of strategy and business acceleration Carien Engelbrecht.

They explain that business cycles in South Africa currently lack angel funding and business accelerator support, which creates a gap where start-up and early-stage businesses cannot grow or expand. Angel funding consists of individuals, angel investors, who invest money in a business to assist it through start-up and its early stages. Business accelerators are companies that offer support and assistance in launching and growing a start-up or early-stage business.

Phitidis and Engelbrecht say that government should offer angel investors tax incentives, as this will promote angel investment into entrepreneurial businesses and enhance job creation. Engelbrecht says that there are similar schemes overseas, where individuals can invest directly into a business and write the investments off against income while also avoiding paying capital gains tax. South Africa should work towards encouraging these investors.

“Government should be driven by the loss of 900 000 jobs in the past year. We are going to have three to four years of growth in which few jobs will be created in South Africa. Entrepreneurship is the answer and policies should create a fertile ground for entrepreneurship,” says Phitidis.

Engelbrecht adds that, if South Africa wants to increase job creation, its must grow entrepreneurial companies.

Businesses require support and funding, as all entrepreneurial companies begin with someone who is technically competent, but may not necessarily be competent in business and marketing aspects. An entrepreneurial growth company is formed when a technical expert forms a team with a diverse range of skills, including management expertise and entrepreneurial vision.

Engelbrecht says that good financial managers are expensive and most early-stage businesses cannot afford these services. Business accelerators can provide the same type of support and this allows the technical expert to focus on the technical aspects of the business.

“Acceleration is a viable service that [transforms] a small business into an entrepreneurial growth company,” says Phitidis.

Engelbrecht adds that angel investors want to work with business accelerators, as the commercial support that the acceleration service offers will improve the chances of commercial success and reduce risks.

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  • Great experience working with you to gain clarity of what needs changing in my business. Stephen Jordan Access to Africa - 25 August 2011, Marketing Module

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