SA accelerator boasts startup success, R65m in revenue generated

Adding weight to its belief that business growth can be engineered, South African VC firm Knife Capital has just revealed “explosive” results of its second Grindstone accelerator programme. On average, the 12 participating companies collectively grew revenue by R65-million while creating more jobs.

The programme follows an already impressive Grindstone 2014 which climaxed in the acquisition of radar startup iKubu by Garmin. Grindstone 2015 had a tough act to follow, no doubt. “The success of our first programme meant that we’ve now set a precedent for ourselves, and we didn’t want to be a once-off hit,” said Andrea Bӧhmert of Knife Capital and director of Grindstone.

The year-long programme took 12 businesses — with proven traction — under Knife Capital’s wing, which entailed an intensive review of their strategies, introduction to relevant networks and building a foundation for growth.

Read more: These are Grindstone’s 13 tech startups for 2015

Topping last year’s growth results, the 12 participating Grindstone companies recorded 64% growth in year-on-year revenue (adding R65-million collectively), and 70 new jobs created in 2015. The average Grindstone company also doubled its customer base and expects a compound annual growth rate of 72% over the next three years, compared to 49% when they entered the programme. The participating companies also recorded a 22% increase in their YueDiligence score, which is Knife Capital’s official tool to measure key business fundamentals.

Read more: Major VC Knife Capital officially launches online due diligence tool

Other interesting findings include the average Grindstone business had been running for six and a half years, employed 12 people and the founders were 36 years old.

“The inbound interest from local corporates and international investors to partner with these companies are encouraging, and there are some real success stories in the making,” she said. Bӧhmert also pointed out that these companies managed to grow in revenue and created jobs regardless of the South African economy taking a hit.

“Over half of the Grindstone II participants received offers for full or partial acquisition during the past 12 months,” she continued. “Some of these opportunities are still under evaluation and/or negotiation, but being in the position to decline such offers if not optimal is a clear sign that the companies back their own growth strategies.”

B2B marketing agency MPULL was awarded R100 000 by Grindstone for showing the most impressive growth over the year. MPULL was responsible for almost half of the jobs created on the programme and increased its revenue tenfold.

Whether there will be a third Grindstone programme is yet to be revealed.