Seed Engine – Rare opportunity for South African Startups

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Getting  venture capital funding is a rare opportunity for South African startups.  The ideal situation for early stage companies seeking funding would have the following:

  1. Some funding (without losing a massive chunk of equity based on a fair valuation) and support;
  2. Mentorship and coaching;  and
  3. Networking with other funding opportunities and hard-to-reach networks.

 
They are opening a new round of applications on the 1 September 2013. Our advise is that you arrive early and take time to carefully fill out the form early. Demand is likely to be great.

(Editor’s Note: Before you ask, Zapreneur is not applying for this. We think we are reaching product-market fit, and will be bootstrapping). 

Seed Engine Ticking The Boxes

Let us take a closer look at the features (i.e. funding, mentorship and networks) to Seed Engine. In sum, it  ticks all these boxes, and then some. In fact, this is one of the few competitive processes available to South African startups.
 

1. Funding and support

Seed Engine provides R 100 000 capital in exchange for 20% of equity, and gives your startup a valuation of R 500 000-00.  In addition, winning applicants will receive R 300 000-00 in services from a range of companies.  This includes:

  • Werksmans Attorneys now assist Seed Engine and its start ups with legal documentation, compliance and advice.
  • Absa have joined Seed Engine for the next programme contributing operating capital.  They have also sponsored trips to both Stellenbosch and the United Kingdom, geared towards enhancing skills and promoting start up trade relations with international stakeholders including entrepreneurs, corporates and potential investors.  This partnership includes the University of Stellenbosch, CEDAR, Vumali and EDFM.
  • Amazon Web Services have committed $3000 worth of data driven products for each Seed Engine start up.
  • PKF, one of the largest accounting and auditing companies in the world, offer the ventures financial planning, first year audits and general guidance.
  • Microsoft has shown their support by providing Bizspark packages and naming Seed Engine one of the key network partners in the South African context.
  • Office space.

That sounds like a good deal for a company starting out.

2. Mentorship and Coaching

Besides the legal and accounting support provided, Seed Engine has several experienced entrepreneurs to offer coaching and mentorship.
 

3. Linkages to other funding and opportunities

Here is where is gets really interesting. In South Africa most entrepreneurs lack the networks to make their dreams a reality. Seed Engine have pulled together a range of partnerships that assist in building these linkages. Seed Engine has partnerships that build networks, and they highlight the following:

  • Strategic partnerships are in place with both local and international early stage venture capital firms. Amongst these are Grovest, the first Section 12J fund in South Africa, and U-Start, which is an international organisation that seeks investments via Seed Engine.
  •  The South African Venture Capital Association (SAVCA) has endorsed Seed Engine as one of the more prominent feeders of deal flow to the strong venture capital community in the country.
  •  The Sable Accelerator, based in Silicon Valley has built a strong relationship with Seed Engine in profiling its underlying ventures with its international network of venture capitalists, angel investors and distribution partners.

After twelve weeks in their programme, selected businesses get to WOW other investors and get media coverage during their Demo Day.
 

 What is Seed Engine looking for?

 
Marc Elias, CEO of the Seed Engine Business Accelerator  describes the five pillars that they look at, as follows:

“Seed Engine looks for five pillars which point to likely success for a start up.

  • ·         A product or service that is novel or innovative.

  • ·         An opportunity – a disruptive response to a market change or the creation of a new market.

  • ·         A business model that is tested and validated.

  • ·         A team that has the skills to execute.

  • ·         A market – an understanding of your target market’s requirements and the market’s prospects and limitations.”

Elias continues, “We are looking for entrants for our next programme – early stage tech entrepreneurs who have extraordinary ideas with international appeal and who are ready for a life-changing journey.”
That is official line on what they are looking for. This being the second round of funding, applicants can however draw lessons from which companies were successful in the first round. The successful companies were:
 

  • IntelliCred.com  is an online brand protection and authentication business, enabling businesses to protect their brands, control their members and affiliates and increase their revenues through secure and trackable channels and trust seals.
  • Cirqls.com brings trust into the online shopping experience by connecting buyers and sellers via their social circles, creating a new channel of e-commerce.
  • After-Class.co.za is a social education network offering peer-to-peer support for students and teachers across school borders, allowing users to share relevant curriculum based content and updates with their communities
  • Zehoo.me is a mobile document aggregator that grabs, filters and organises users documents from multiple sources, in a simple and easy to use manner.  The app is geared to help users who  experience the problem of having multiple boxes of information.
  • ChowHub is an online restaurant discovery and order platform built to satisfy its customers.  The team have developed a user-friendly system that will ultimately be the destination food platform for all restaurants and customers.
  • onQ optimises restaurant processes, making them more efficient throughout the dining and retail experience.  The cloud based POS brings a new element of disruption to the industry.

We think the following lessons are worth noting:

  • All the businesses are online businesses. This might present an opportunity for offline businesses.
  • Offline and online linkages – Startups like Chowhub and onQ link the online and offline world, and this is a major opportunity for South African entrepreneurs.
  • Social is important.  After Class and Cirqls (which I guess is pronounced as Circles) link social networks to buying and education.
  • These guys are building this in South Africa!

 Learn More

A good place to start is watching the following video which explains the rationale of Seed Engine, where Seed Engine is described as “an incubator on steroids”. (Takes a few seconds to get to the interview).

 

Good Luck! Remember this opens on the 1 September 2013.

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