Shakes interviewed on Mix 93.8
Shakes Motsilili was interviewed on Mix 93.8FM. They wanted to hear his thoughts on entrepreneurship and it’s famed struggles and rewards. Shakes lays out beautifully the reality of the journey of an entreprenuer with transparency and honesty. Take a listen.
Transcript of interview between Darren and Shakes Motsilili on Mix 93.8
Who are you and what do you do?
First and foremost, I think the main thing is that I run a fund called Alumni Energy Investments, it is a registered financial services provider with the financial services conduct authority and it’s also approved by SARS under section 12 J – and that simply means that I am authorised to collect money from South African citizens and put into a pot and then I then look for companies to support.
My focus is the supporting of mainly startups in the energy and tech innovation sector and these are typically companies that find it very challenging to find funding especially when they are earlier in their trajectory.
What’s the criteria for the funding?
Very good question, we actually are not limited to, but we are going for constant stage type of business, so they haven’t made any cent at a point in time, however it is all about how the proposal is put together and the amount of research you’ve done, the forecasting that you have put on the table, the business idea itself and how you will be running the business and generating revenue. Interest enough a lot of people that I have found that have concept stage proposal that they have submitted to me is that there’s a lot that can be done in terms of analysing the market that you want to go into, having an idea of how much of the market share you will be targeting translating that into numbers and actually forecasting from year 1 up to 5 of what you expect in terms of revenue and costs as well as including even an expansion type of strategy when you would later on want to move onto other markets, if you want to move out to other countries or the globe.
So you can really go to town and give something that will allow a potential investor to analyse whether this is worth it or not. The advantages of going earlier is that you are able to become part of the business and one of the things that are always mentioned is that a huge responsibility that a VC fund has is actually the hand holding aspect that people forget where startups have a very high failure rate, and for me the big reason is that people when they start a business they are experts in what people want to put up in the solution, however running a business has many aspects, you’ll find that the entrepreneur is an expert elsewhere but knows nothing about financial management, marketing and so forth.
Now when a VC comes on board, the big responsibility that they take on is almost assisting the entrepreneur to problem shoot, hold their hand you know you give advice because now you are part of the business and are invested in its success and for me that’s a very critical element for the success of startups in general.
So it’s not a case of here’s the money now sink or swim
Exactly, we have termed it shared services Darren and what we do is that of all the companies that we support, one of the agreements that we go into with them is that we are going to provide a shared services support role to the countries and it’s a prerequisite its not only for success but also for our own realities. I mean if I give money to an entrepreneur I need to make sure as a fund manager that the money goes and does what it’s supposed to do, so I become an integral part of the business and making sure that things are working out okay.
And having said that it’s very exciting I end up being more involved in the business I support more than the fund itself and of course the fund raises capital and invest but most of my time is spent on the companies that I run on a daily basis, that for me is very exciting for the work I do and that really excites me. I end up knowing a lot about the different sectors and innovations and the reality is that there is a lot of negative things that can be said about the VC space, some of which I share myself, there is a huge issue about when venture capital money actually go and invest in business and mist VCs, it’s a fact you need to be a revenue producing entity for a bit of time before they even consider you, yet the reality is that in especially an economy like South Africa we have got such high unemployment rate, the way in which we can create jobs and deal in unemployment is with the supporting SMMEs and the earlier I think we can do that in the VC space is better and the more we increase the probability of success of these type of companies and indirectly deal with these issues of unemployment and economic growth.
So then spin off of the analysis is that it’s riskier earlier on and I beg to differ and I think that it’s a lot more hard work but if you do the hand holding aspect I was talking about, you tremendously change their probability of success, what happens when you are a fund and a bigger entity you tend to have a bigger network and bigger access to things, so as you said what happens when I’ve got a company that’s in a particular sector I may know someone that they can synergise with and even give that company to markets and even beyond on the boarders of South Africa.
If the company were by itself you find that it fails and not because they are not bringing a service of product that actually makes sense, but its other barriers of success that is made to exist for any small entity including funds but I just believe that money is one out of many, there are many other issues that you need ensure that you sort out for a business to succeed.
I think you provide credibility as well for business whether they knocking on doors for new businesses it’s a lot harder than with an established business.
Exactly Darren and I mean I am in of an opinion that we are living in an communications based economy at the moment it’s all about relationships, you find that when you are associated with an entity which is vouched for and can work for you it changes your landscape so you are able to do a cross pollination of some sort amongst business that are there, and then its human nature as well if three years ago I helped you with your business if I come knocking to you and say that I have a business that needs help and I think that you can assist them, first of all I need to get you to provide the service at a very competitive price and it’s weird in the world we live in the big organisations get the cheaper prices and the smaller guys pay high prices it’s the weirdest thing because you’d think you want to charge the smaller guys cheaper because they are still starting out, even with banks the guys with big bucks pay zero fees yet the opposite is true for your blue collar workers, it’s strange and this is what happens in real life and we need to be smart and think out of the box as to how we of these realities refined to actually make these almost the environment and the landscape more suitable for success for these smaller companies because they are the critical ones.
I always say big business and government is not going to solve our employment break, if anything government in recent paths issues in Cosatu when our President wanted an analysis of staffing issues because government departments are over staffed and that’s a fact big business is into automation, is into reduction of staff numbers, if anything they are retrenching recently Standard Bank closed a number of branches I worry about the people who worked in those branches and how they have dealt with that, I am not really following it that much but the reality is that jobs are going to be made by small to medium enterprises, small company that says I want to hire 10-20 people, those are the people that are going to absorb the unemployment in our country. I want to say one last thing under that and it is scary that we have the most youth unemployment rate in the world and our unemployment rate in general was low
In general the countries in the world are below 6% and we are sitting at 25% at the moment.
Our youths unemployment is over 50 and that the worst in the world, so when you see people without work it’s not that they are not looking for work, it’s just that there just isn’t work we need to find ways to creating new opportunities so that we can absorb people, and obviously we can talk about education we can talk about lot of things that can be a spin off when we speak of salaries and unemployment, it has a knock off effect from their family members and this is how we need to be looking at solutions to changing the world and life for South Africans and Africans ion my opinion because my vision which is what I won’t go into is to make a bigger change in the African level and beyond the borders of the world.
(Commentary from listeners)
A lot of the times someone will send a long or lengthy proposal for their business, should they keep it short, explaining their idea and then get it out to you?
It’s a complicated question and I can tell you why, being an entrepreneur is very difficult. Entrepreneurs are both born and made, I think you can do a lot to make an entrepreneur but there are certain things you’d have to argue are born with it that will make you more successful as an entrepreneur, there are traits like resilience which are very hard to teach, what I have found is that most successful entrepreneurs are people that have failed but have still soldiered on and with a times option to go back and forth to formal employment and just plain refused and say I am going to do what is necessary to make my dream and vision a success.
It is a very painful process which is why I say it is a bit of both, there are certain individuals that would be driven to suicide and I’m not exaggerating. Having said that there is a lot of learning that can happen and a lot of teachings that you can do in these startups and entrepreneurial spaces to better equip any person to succeed, but come back to our question I would say research.
There are many interesting platforms that are made for entrepreneurs and what happens is that it makes room for networking for other entrepreneurs that can share what they have gone through and also share their success who can then give you strength. Most people see entrepreneurs as big guys with money and cars and don’t really know the journey it took for them to get there. I became an entrepreneur after I was married with kids which is a bit of a tougher route but I had to deal with the bank wanting to auction my house a number of times and I was fortunate to come out of them and stop the auctions but these are some of the things and stressors that some people would not be aware of that an entrepreneur goes through, it is really a drop in the ocean to have an entrepreneur that has had smooth sailing.
There is a lady that I know very well she was doing quite well but when she went to Silicon Valley in the States and when she got there the frequently asked question was how many businesses has she failed in, it’s almost like that friend of mine had an understanding that in that environment you must know what it takes going through a business and having failed and the fact that if you have gone through that you are better equipped to make the next business succeed because of the learnings from there.
My interest is for the success of the ecosystem and not really driven by personal success to be honest.