Involving business angels and mentors in Cape Town


Preparing SMEs and investors for finance and capacitating mentors

SUMMARY
BiD Network runs the worlds’ largest online SME community with 38,000 members: entrepreneurs, investors and coaches. The platform provides entrepreneurs in Cape Town with access to local peers, coaches and business angel groups. Aside from the online platform, BiD Network works together with local partner organizations in 18 countries worldwide to directly support SMEs as they obtain financing to start and grow their companies. BiD Network does not yet have a partner in Cape Town; entering into a partnership with a Cape Town-based entity would take roughly 3 months. 

The solution for the abovementioned challenges entails:
* Sourcing and selecting viable SMEs by organizing a business plan competition in Cape Town and surroundings;
* Preparing the most viable SMEs sourced through competition for finance, supported by international and local mentors.
* Engaging business angels in Cape Town and surroundings; this may be accomplished in part via direct outreach as well as by showcasing profitable, investment-ready companies on the BiD Network web platform.
* Facilitating the establishment of a business angel network in Cape Town;
* Training individual investors in financing SMEs; 
* Facilitating the matchmaking process.

The average investment size of companies matched by BiD Network is 135,000 USD. This shows that we have been able to identify and service profitable, growth-oriented companies in the segment that faces the most obstacles in obtaining financ...

PROBLEM
At the moment, most South African investors view SME equity investment as unprofitable. While there are several funds which are successfully providing equity finance to SMEs in South Africa, further development of the industry is dependent on bringing more (individual) investors in to provide a larger number of SMEs with access to risk capital finance; therein demonstrating that this can be a profitable sector. Research suggests that risk capital investment in South African companies with a finance requirement under USD 700,000 face significant obstacles. 

Furthermore, SME Equity Finance in South Africa is further compromised by the fact that there are not enough mentorship services for SMEs.

SOLUTION
BiD Network runs the worlds’ largest online SME community with 38,000 members: entrepreneurs, investors and coaches. The platform provides entrepreneurs in Cape Town with access to local peers, coaches and business angel groups. Aside from the online platform, BiD Network works together with local partner organizations in 18 countries worldwide to directly support SMEs as they obtain financing to start and grow their companies. BiD Network does not yet have a partner in Cape Town; entering into a partnership with a Cape Town-based entity would take roughly 3 months. 

The solution for the abovementioned challenges entails:
* Sourcing and selecting viable SMEs by organizing a business plan competition in Cape Town and surroundings;
* Preparing the most viable SMEs sourced through competition for finance, supported by international and local mentors.
* Engaging business angels in Cape Town and surroundings; this may be accomplished in part via direct outreach as well as by showcasing profitable, investment-ready companies on the BiD Network web platform.
* Facilitating the establishment of a business angel network in Cape Town;
* Training individual investors in financing SMEs; 
* Facilitating the matchmaking process.

The average investment size of companies matched by BiD Network is 135,000 USD. This shows that we have been able to identify and service profitable, growth-oriented companies in the segment that faces the most obstacles in obtaining finance.

IMPACT ON ECONOMY
Year 1: 
* 75 applications submitted by SMEs in business plan competitions.
* 25 full business plans submitted by SMEs.
* 15 SMEs supported by international or local mentors.
* 5 SMEs ready for finance.

Year 2:
* 10 investors signed up in BiD Network;
* 3 pitching sessions/ investor meetings for SMEs.

Note that from 2005 – 2010 BiD Network has matched 89 SMEs and investors worldwide for a total of 12 million USD.