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Cape Town based fund manager Knife Capital’s new accelerator programme Grindstone, aimed at post-revenue startups, will help managers cultivate a growth strategy to scale their business and ultimately attract further investment, by taking CEOs out of their comfort zone.
Grindstone describes itself as a part-business accelerator, part-investor and part-advisor [programme]. It is the first programme of its kind in South Africa by focusing on post-revenue startups rather than pre-revenue, but what really sets it apart is its idea to focus a CEO’s attention to areas outside of their core expertise, giving them access to new management skills and support structures.
Andrea Böhmert, Director of Knife Capital, and who is in charge of Grindstone clarifies:
“Often, the reason that businesses do not grow and excel is not because they’re bad at what they do. Usually they are very good in their core business but neglect areas outside their comfort zone such as HR Management, Finances, Compliance or Sales and Marketing, which can inhibit growth and, in some cases, cause a company to fail.”
This tactic will allow Grindstone to help managers identify the areas of strength and, more importantly, weakness in their companies, so that they can implement an appropriate growth strategy.
Grindstone kicks off on 29 August 2013 with a funding readiness workshop, open to 50 companies selected from the initial list of applicants. This workshop will cover the different types of funding, as well as government incentives and support programmes, and will even see investors pitching to entrepreneurs.
From there the 50 companies will be whittled down to 20, which will be chosen to participate in the Knife Capital/UCT Graduate School of Business high-growth investment course, called Find-Make-Grow-Realise. This costs R2 500 per company, and all monies received will be used to advance high-growth black entrepreneurial skills development in South Africa, putting BEE entrepreneurs on the UCT GSB investment course via the EntFarm initiative.
The final 10 companies will then be chosen for the nine-month Grindstone programme, which costs R10 000 per company, with all monies to be used in a ‘Stokvel’ manner for the CEO of the company that shows best improvement in their growth metrics.
Knife Capital does not profit from these fees, and will derive income via long-term upside incentive of investing in some participating companies cultivated through the programme on an arm’s-length basis and from commission on external funding arranged (if needed). Furthermore Knife Capital will not take equity in any of the companies participating upfront, unless the companies agree on arm’s-length funding terms later on.
Grindstone applications close 23 August.