While the US is seeing a downturn in Series A tech startup funding, 2012 has been a bumper year for seed/angel deals. In more risk averse arenas like South Africa, the feeling is that investors have traditionally been reluctant to throw money at idea-stage startups without active revenue streams. That’s what makes Seed Engine, a new early-stage startup accelerator and incubator, so intriguing.
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In exchange for equity, 10 startups will receive R100 000 startup capital to turn their ideas into business plans, with the wind of three 13-week accelerator bootcamps at their backs. At the end of the programme, the teams will be introduced to potential investors that are willing to invest amounts between R200 000 and R2 million.
Entries were supposed to close 9 December, but have been extended — indefinitely. Marc Elias, who heads up Seed Engine tells Ventureburn that the decision was made to re-open entries after his team became “a bit inundated with requests to reopen them.” “The reality is that applications never close. They will stay open, regardless of the first top 10 we select. The residual applications will be considered for second and third accelerator activations, together with all new applications,” says Elias.
Elias has been involved in numerous startups through Redwood Capital where he helped budding businesses reach stages where they become marketable and trade worthy.
“The search is now on to find the ten best distinctive and disruptive business concepts that deserve a chance at success. We are looking for early stage entrepreneurs who have a big dream to fulfil,” says Elias.
Elias acknowledges the risk involved in investing in idea-stage startups: “The primary investment principle at any stage of investment is the assessment of risk. Typically, in the South African context, investors are known to have a low appetite for risk.” He adds that Seed Engine has been developed to address this issue. “The group has therefore developed its accelerator programme to reduce significantly the risk profile of the accelerator participants and improves their chances of success, as well as giving them the opportunity to raise additional capital for their ventures,” he says.
Tiber, the property owner and construction company are assisting with rent for the first accelerator, while Redwood Capital will float the bill for developing the workspace. Redwood will also mentor the finalists through the activation process. Further coaching for Seed Engine will be done through Urban Everest, a coaching and leadership facilitation company.
