Young entrepreneurs can find it more difficult to start and grow a business compared to their more seasoned counterparts. However, by partnering with the right development enterprise or seeking advice from a funding specialist, you can achieve your goals faster than ever before.
According to a recent report by the Global Entrepreneurship Monitor (GEM), South Africa scores poorly when benchmarked against youth entrepreneurship in fellow BRICs countries. The report states that only 7% of South Africans between the ages of 18-24 and 10% between the ages of 25-34 start their own businesses.
One of the leading causes of the culling of entrepreneurial spirit amongst the youth remains access to finance; however there are a number of entities that are willing and able to finance youth ventures.
Here are a few establishments, which could assist you in strutting down the path to business success.
Content in this guide
National Youth Development Agency (NYDA)
Gro-E Youth Scheme
The Youth Entrepreneurship Fund (YEF)
Umsobomvu Youth Fund
Free Mentorship Programme: The Mara Foundation
Mentorship Programme by Application: Bizco Business Consulting
Acceleration Programme: New Ventures Studio
Free online courses for young entrepreneurs
Grants and Funding
National Youth Development Agency (NYDA)
This government grant aims to supply funding to the youth of South Africa, and is currently broadening its offering by creating mentorship and development programmes.
Types of NYDA Funding
NYDA awards grants to both formal and informal businesses that are in the start-up or development phases. These government grants are also awarded to co-operatives; an autonomous association of people united to meet common economic and social goals through a jointly owned and democratically controlled enterprise. Additionally, the NYDA awards grants to youth that are actively involved in community development and facilitation projects.
Do You Qualify for NYDA funding?
You need to be eighteen years old at the time of application.
The grant needs to be for business start-up or growth.
You need to be between the ages of 18-35 years with the necessary skills and experience, or display the potential skill appropriate for the enterprise.
Only South African citizens residing within the borders of South Africa are eligible.
You will need to be part of the day-to-day operation and the management of your business.
Require a grant from NYDA of not less than R1 000 and not more than R100 000.
Once you’ve received the grant, if you’re still employed full-time, you might need to resign and present your grant officer with proof of resignation. This is a requirement of the grant because the NYDA requires you to focus completely on your venture and not split your focus with other obligations, such as a full time job.
How to Apply for NYDA Funding
Entrepreneurs or co-operatives that meet the following criteria are eligible for NYDA government grants:
Applicants must be between 18 to 35 years old. They must also have the necessary skills and experience or show the potential skills for the business and industry in which they wish to operate.
Applicants must be South African citizens with ID documents and operate their business within South Africa.
The applicant must need the grant to start or grow their business. The applicant must not need the grant as any other source of capital.
Applicants must involve themselves in the operation and management of the business on a day to day basis and must work on their venture full-time.
The business may be formal or informal, and categorised as a micro-enterprise.
The company must show potential to be commercially viable and sustainable.
Applicants should be sole traders or in the case of groups have a minimum of five people.
The Gro-E Youth Scheme offers both financial and non-financial support to youth initiatives. The aim of this scheme is to help young entrepreneurs contribute towards sustainable job creation. R1 billion has been set aside to assist with funding of businesses owned by individuals, under 35 years old.
This scheme provides loans at prime less 3% to enterprises that operate in the industries that fall within its mandate and aims to create new jobs for South Africans. Only South African citizens or permanent residents are eligible for funding.
Do You Qualify for Gro-E Youth Scheme funding?
A least 50% of the ownership needs to be by an individual under the age of 35.
Your business needs to be a start-up and the funding can go towards purchasing a building, machinery or working capital.
Your intention could also be to expand your existing business.
A business that demonstrates economic merit and has prospects of suitable profitability to be able to facilitate their funding obligation.
While the business is within the funding period, the cost per job cannot exceed R500 000 relative to the total funding required.
Broad-Based Black Economic Empowerment certification from an accredited verification agency, where applicable.
Ventures that are operating or expanding within South Africa.
Your funding period will need structure in order to meet the cash flow needs of your business.
Appropriate capital and interest payment holidays are a requirement that you must apply depending on the financial needs of your specific business.
There is no prescribed minimum for owner contribution.
In order to support the government’s New Growth Path (NGP) and Industrial Policy Action Plan (IPAP), businesses in the following sectors can apply for funding:
1. Green industry
Waste management and recycling.
2. Agricultural value chain
3. Manufacturing activities
Automotive, components, medium and heavy commercial vehicles manufacturing
Clothing, textiles and footwear, and leather
Forestry, paper and pulp, and furniture
Fabrication, capital and transport equipment
Plastics and chemicals.
4. Strategic high-impact projects
High-impact cross-sector projects.
5. Mining value chain
Downstream mineral beneficiation
6. Tourism and high-level services
Business process services
7. Media and motion pictures
Motion pictures production
Media value chain – broadcasting (radio and television)
Media expansion – including new media
Film production and animation.
8. Knowledge economy
How Does Gro-E Youth Scheme Work?
Funding is at prime less 3%, to businesses that will create jobs.
A maximum of R50 million per project is available.
The funding will be available over a five-year period or until the scheme depletes, whichever occurs first.
You will need to use your funds within one year from the approval of funding. If you miss this deadline, pricing reverts back to normal IDC pricing.
Reduced loan pricing will be available for five years, after which normal IDC pricing will apply.
If you require finances in excess of the scheme’s limit you can access more capital through traditional IDC funding.
Pre- and post-investment support and mentorship is available where needed.
Gro-E Youth Scheme offers programmes that provide non-financial support for entrepreneurs. This backing is available during pre- and post-approval stages. The support also includes services such as assistance to distressed clients.
The Youth Entrepreneurship Fund aims to promote businesses led by youth. The fund aims to achieve this by providing grant funding and business development programmes. Youth pay in a commitment fee for the assistance package that suits their needs.
Do You Qualify for Youth Entrepreneurship Funding?
This fund is open to all South Africans irrespective of race or gender, who are still in or outside of the schooling system. Candidates need to be within the ages of 18-35. There is encouragement of black youth to actively partake in this opportunity to create businesses. The fund also encourages parents, guardians and corporates to invest on behalf of the youth to create wealth.
How to Apply for Youth Entrepreneurship Funding
Starting a business is not a single moment but a process and there are no shortcuts. As a result of this, YEF places a priority on training, mentorship and business coaching.
This is the process leading up to its grant disbursement:
First you chose the package that you need and complete the necessary documentation online.
Second, the business validation process starts. Included in the validation processes are the assessment of your business, guidance and the refinement of your business plan. There is an emphasis placed on business validation, which means your business will need to be innovative and commercially viable. Existing businesses should display the potential of being scalable.
Third, once they’ve evaluated your business for market readiness, the dispersal of the grant will begin. You can only use the grant for the business and nothing else.
Fourth, to ensure the success of your business, mentors will guide you in the process of building your business. Numerous platforms can ensure that your business receives as much support as it needs, both physically and virtually.
What are the Required Contributions and Benefits?
The YEF have created two types of support for youth-led business. This includes financial and non-financial support. The financial support comes in three packages depending on what your business requires. Each package has a corresponding fee structure, as follows:
Silver: R166 over a 12-month period = R2 000
Gold: R333 over a 12-month period = R4 000
Platinum: R500 over a 12-month period = R6 000
Its non-financial support is equally as important, therefore the YEF pays particular attention to this element of business. A reputable academic institute will offer you non-financial intervention, and a network of mentors. These mentors all boast core competencies in the realm of business development.
Contact Details for the Youth Entrepreneurship Fund
Umsobomvu Youth Fund is a government initiative that creates opportunities for South African youth in entrepreneurship and the creation of new jobs. This voucher programme is not a loan programme. The voucher programme provides support services to both new and existing youth-run businesses.
Do You Qualify for Umsobomvu Youth Funding?
You will need to adhere to the following requirements:
Your business should also be within the following sectors:
Information Communication Technology (ICT)
How Does the Umsobomvu Youth Fund Work?
The voucher programme provides support in the following areas:
Bookkeeping – once off clean-up
Business plan development
Business and financial administration
Tender application support
Branding and design of business forms
CC and PTY registrations.
Contact Details for theUmsobomvu Youth Fund
Every Wednesday morning at 10:15am, a UYF Information Session transpires and after this session you will receive an application form that will allow you to apply for support services.
For general queries you can also visit its headquarters at The Business Place, 7 Anton Anreith Arcade, 1st Floor, Cape Town on weekdays between 09:00 to 16:30 or call +27 (0) 21 425 7816/7/8/9.
Free mentorship programmes
The youth of South Africa are on the back foot with regards to access to education. According to the Institute for Justice and Reconciliation report, young people tend to lack the skills or experience to navigate the business world.
How can unskilled and inexperienced youth create a successful long-lasting business venture? The UYF’s solution to this problem includes: Mentorship programmes, online courses and accelerator programmes.
Free Mentorship Programme: The Mara Foundation
The Mara foundation is offering a free online mentoring platform, called Mara Mentors. This mentoring programme allows ambitious entrepreneurs and global business leaders to connect, while business experts can engage with entrepreneurs via the Mara Mentors web-based platform and mobile application.
Mara Mentor enables ambitious and aspiring entrepreneurs to connect with international peers and business leaders. This platform aims to empower entrepreneurs through the provision of resources that comprise of:
Discussions and debate forums
Industry news and updates
The knowledge of world class mentors.
Entrepreneurs gain encouragement, support, guidance and vital feedback that will help you to evolve your business idea and plan.
Mentorship Programme by Application: Bizco Business Consulting
Bizco Business Consulting (BBC) offers a consulting programme that is unique and allows it to work exclusively with a limited number of start-up companies on a one-on-one basis. BBC expects a commitment from entrepreneurs of at least three months, as it is extremely selective and the programme is highly intensive.
Do You Qualify for Bizco Business Consulting’s Mentorship Programme?
You must be a South African Citizen over the age of 18.
Accelerator programmes aim to jumpstart businesses. You will increase your chances of raising venture capital from a third-party after graduating from the programme. Mentorship, is another advantage of an accelerator, as you’ll be in contact with other entrepreneurs working within the accelerator.
New Ventures Studio is a platform for young (16-35) individuals, aimed at those who are working towards being successful entrepreneurs. It specifically focuses on those who have realised the importance of upskilling themselves before trying to navigate unfamiliar territory in entrepreneurship.
The programme is an eight-week long insightful course and the five individuals who successfully complete it join the incubator.
You do not need to have a business in order to apply for this opportunity and each of the 20 successful applicants will receive a R35 000 scholarship to attend the eight-week entrepreneurship course.
By taking advantage of the various funds and incubator programmes on offer, young entrepreneurs are able to realise their goals faster, and more efficiently. However, acquiring funding and being part of a mentorship programme isn’t enough to excel in your sector. The programmes highlighted here serve to motivate and drive entrepreneurs to explore new skillsets, push proverbial boundaries and empower people around them by offering employment opportunities and the prospect of a better life.
Education doesn’t always have to cost you a fortune; you can now undertake courses from leading academic institutions in the comfort of your own home, for free. From these online courses you can learn about business and starting up.
The courses offer self-paced modules, which means you can do it when your diary accommodates; either four, six, eight, 12 or 20 week periods.
Here are four online course platforms that you and any other entrepreneurs can benefit from:
This platform can teach you key tools and steps to building a successful start-up. It has a comprehensive course on acquiring the knowledge and skills necessary to see your business grow towards its next milestone.
This platform has an emphasis on tech-based courses including:
Explore a wide range of business skills from project management and negotiation to leadership skills and online marketing strategy. lynda.com’s Professional development tutorials can help you learn SEO, spreadsheets, word processing, including:
Nicole Crampton is an SEO specialist who contributes to both ExpertHub and Entrepreneur.com/za. She has studied a BA Journalism at Monash South Africa and has continued her studies with a Creative Writing degree from UNISA. Nicole has completed several courses in writing and online marketing, and continues to hone her skills and expertise in digital media, digital marketing and content creation.