Venture Philanthropy

Time for a bit of a rant kids.

Maybe Cape Town should become a Venture Philanthropy hub.

In the last 3 months I’ve learnt that Cape Town is not very good at Venture Capital. We have projects like Silicon Cape which aim to replicate an idea: hot cars, hot clubs, hot chicks, nice views, smart people + a mountain.. just no real money and no balls.

You can get “nurture” capital.. a few old guys who like to tell you what to do for a stake in your business. Not very exciting. You can get all the incubation you need for the next 25 years of running a 2 man business. Pick your innovation hub. You can get free hosting. You can get trade shows, conferences, maybe some form of mickey mouse government grant money which restricts what you can do with your IP.. if you like filling in forms for 2 years. You can win a business plan competition to get access to a bank loan. Awesome.

You can even get some tech journos to blow smoke up the bum of your nurtured, incubated, free hosted replica of an existing idea.. it’s like Digg, but.. it’s like Technorati, but.. it’s like Youtube, but.. Ebay, Fon, Geocities (2.0), Facebook.. yes, and if you are really really awesome you can get Naspers to buy your replica and put it on their shelf.. like a little Star Wars replica.

Excited yet?

Look, I’m sure it’s happening. It’s just _freeekin_ slow. Lots of talk. Many, many OK ideas. Not so smart people and very few with experience in running businesses.

Talk to the VC’s and you hear stories about yet another guy who wants to build a perpetual motion machine.. or even worse a mobile payment system. The VC’s have “mandates”.. good reasons to say no. They manage money for the big dogs. The big dogs want their return or the people who manage the funds don’t get a bonus.. so the people who run the funds sit on the money until the perfect cookie comes around to fit their mold.. until it never comes and they bet on some b-rate business.. usually one with a nice spreadsheet, but we all laugh about those later.

The VC business in SA is small. Very very small. A little sewing circle. Probably immature. They have a comfortable little ecosystem… you like small things, he likes IP and trademarks, she likes going global, he likes industrial stuff, hmm… that’s about it really.

Venture Capital in the US needs to re-invent itself very soon and the VCs we have here even more so. Some of our local VCs still need to discover Agile and lean startup thinking.

Maybe we can’t blame our VC’s. It could just be that they just don’t find good people with solid ideas and experience to invest in.

Some say what Cape Town needs is more success stories. Teams who make it big.. so the top tier techies walk away with good money which they can invest in the next round of startups. Sure.. but I suspect there are a lot of talented techies in businesses which are supposed to make it big which can’t work out how many shares they own between all the BS and the team building time. Even more of a problem is that most of these talented techies are very comfortable and don’t have any appetite for risk.. (aka balls).

Now, do you remember the question at the beginning of this post?

Good. Sorry about the little detour.

I was having ~coffee (hot chocolate really) with Alan Levin today and he mentioned how Cape Town could be brilliant for venture philanthropy. Gateway to Africa. Mobile innovation. Many rich people around (for 6 months of the year). Many of whom have enough money to fund things which have an impact.

Makes sense to me. Maybe the days of the pure profit maximising business is over (for a while). Maybe we should be building ethical empires. Maybe we should not be trying to replicate the Intel/HP/Apple dream. Maybe we should come up with big ideas which have an impact and are sustainable.

Is there a venture philanthropy organisation in Cape Town? Any better ideas?

I guess this is my way of pointing out a problem but also suggesting a solution.

Maybe we need to change the dream a bit and find some new parents brave enough to raise this teenager we call #siliconcape.

10 thoughts on “Venture Philanthropy

  1. I love the idea of a venture philanthropy addition to siliconcape – the beauty of our community , although contrasted by it, right next to a seemingly hopeless poor one, is that we can engage, talk, listen and help – and we don’t have to go on an MBA tour to a ‘poor’ country to do it – how do we explore this

    Look forward to thoughts

    Bob

    1. Hey Bob

      Very true.. Cape Town is a perfect lab environment. Needs, innovation.. and a good story is sometimes all you need.

  2. Hey Joe,

    In your usual fashion, I think you’ve nailed a very relevant issue in a coherent and insightful way, but used a 30lb hammer when a 4lb one would have done. Useful in stirring up debate and thought and maybe, just maybe, some action. I think there are a good few ppl who might be keen on a more philanthropic approach, but then in the current climate, many of us tend to get distracted by trying to make ends meet while bootstrapping the next-big-thing that might just be the next-little-nothing.

    I think the start-up / innovation environment here needs to mature and I think it will take patience. I’m no experienced, hard core entrepreneur, but I’m willing to learn and to do my bit in growing that environment. Just what is the most effective way, I’m not 100% clear yet in my own mind.

    Keep up the rants. We all need a good KITA now and then. ;)

    Dave

    1. Hi Dave

      More than one hammer gets distracting (-;

      My theory is that in the current climate it’s maybe easier to fund a business that’s about doing well and doing good.

      If you subscribe to Ayn Rand’s logic, you need to do well and then maybe later do some good… but I think the two should mix. You can be a capitalist and a philanthropist.

      I think in the next 10years the most successful businesses are those who conquer the moral high ground.

      We’ve build this into TrustFabric.. it’s 26% foundation owned. Credit to Maz from Broccoli Project fame who shared some of his thinking on a Lions Head walk.

  3. There is in fact a venture philanthropy organisation here in Cape Town! heart is a non-profit organisation that incubates start up social enterprises through seed, venture and capital phases of development.

    This month we are also launching a Hub for social entrepreneurs at our office in Woodstock. This affordable space gives social entrepreneurs instant access to office infrastructure and functions as a dynamic, energetic and creative, melting pot for like-minded people to meet, share ideas, collaborate, learn from each other and discover new ways of working together towards common service objectives.

    I would encourage you and your readers to check out our web site for more information, and, if you are so inclined, to reach out to us if you have expertise, contacts, funding, etc. that would help further our cause.

    1. Ellie

      An organisation like “heart” is exactly what I am looking for. Want to mix with some other like-minded social innovators.

      Could you please send me both the web and physical address.

      Email: dyl.crom@gmail.com

      Thanks so much

      And Joe, btw, great post. We need to be speaking out more about this. Social innovation is the door to social change. And if we don’t have moola, we can’t facilitate either.

      Bless your heart and “balls!”

      Dylan

  4. Man I had this big thought-out reply to this post last night and decided to do it today instead. Too bad that I’m way too cynical for that right now. Ah well… another time, perhaps :)

  5. This is the kind of conversation that gives me hope. I am seeking funding for an emerging NPO aimed at improving education and developing the youth in South Africa. Alas I am in Port Elizabeth and without a mountain that looks like a chair how can I possibly compete with Cape Town.
    I am psyched about this expansive idea and hope that you manage to develop it. I am looking at Ellies organisation and hope to discover an opportunity there.
    On the edge of a double-dip recession I would be interested to see how many people would throw money into social ventures.
    Keep up the banter guys.

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