In recent weeks, I have had several followers asking for help to push through the struggles of their startup. Mostly, this is a request for money, which puts me in a difficult position as there is often an assumption that I (and Fetola) am awash with free money to support everyone’s idea. 

The harsh reality is that worldwide it very difficult to raise money for a startup. The traditional way that people fund their ideas is through the support of ‘friends, fools and family’. What this means in most countries is that initial funding comes from friends with money, family with money or the rare occasion that angel investors (fools) will ‘drop some cash’. The reason raising start-up support is so hard is that most ideas fail and only one in ten angel investments succeeds. 

In a country such as South Africa, with so many millions of unemployed and great divides of wealth, the likelihood of rich friends or family is unevenly distributed, and many thousands of aspiring young entrepreneurs lack this wealthy network.  

One of Warren Buffett’s many pieces of wisdom is to ‘never invest more than 10% of your wealth in any one venture’. This means if you had R100,000 in investible savings you would be wise to limit support of the new venture to less than R10,000. 

And many startups require less than that. R5000 might make the difference between a good idea and getting it going. This means that if you have R50,000 in savings, then perhaps you could support a startup and make a difference to them, and the country. 

The next question is what makes a good startup? Personally, I look for the character of the entrepreneur. Are they resilient, determined and self-driven or do they moan about their fortunes, blame others for their struggles and constantly seek rescuing? 

Secondly, have they shown traction with their idea, done research, looked around at possibilities and made a reasonable start towards success, or have they fallen upon something that is easy to dream, but impossible to do?  

Thirdly, is their expectation of finance reasonable, or are they seeking unrealistic amounts of money with no experience or motivation to support their request?  

Lastly, if you decide that this one is worth your R5000 bet, what would you expect from them in return? Is a thank you enough? A progress report, even if it’s to document what did not work? An ongoing relationship binding you together in their business? A promise to ‘pay it forward’ and support another startup or community in future? 

Chances are, if you are reading this, you are either someone with the R5,000, a startup needing the R5,000 or someone managing such a fund. If so, I’d like to hear from you. Perhaps together we can create a wave of change in South Africa that helps to support the success of early-stage entrepreneurs and gets good ideas into action.