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A little more than a year ago, I had breakfast with Keet Van Zyl, from Knife Capital. He told me he was about to launch an accelerator programme for “scale-up” companies.
My response: “Oh dear, not another one”.
Knife Capital is a Southern African growth equity fund manager and advisor that focuses on innovation-driven ventures with proven traction. What the company wanted to do was prove that growth could be engineered through its Grindstone accelerator programme — an entrepreneurial leadership academy of some sort.
A couple for months later, the programme launched and the company selection programme began. I chatted to Andrea Bohmert, also a partner at Knife, about the programme, still a doubting Thomas that yet another accelerator programme could actually make any real difference.
In the weeks leading up to the selection of the final 10, van Zyl and I had another discussion and he explained that “growth can be engineered if entrepreneurs took certain steps in their business”.
It has been nine months since the Grindstone companies began their journey to growth and, when we look at Knife’s report card for the journey, “all 10 companies experienced an average of 61% increase in revenue while mastering business fundamentals”.
It seems my doubts were wrong. According to Grindstone, it completed its first year with all 10 participating companies experiencing significant business growth. The 10 businesses were taken through an intensive review of their strategies, the companies were provided with the necessary support to build a foundation for growth through the transfer of skills and introduction to relevant business networks.
The point of the experiment, which will be carrying on, is to help entrepreneurs identify the strengths and weaknesses of their businesses. Once this is done, they are then shown how to implement their growth strategies while closing growth gaps and improving funding readiness to facilitate potential investment. Seems quite simple, n’est-ce pas?
Not quite, the companies have to be ready for the hard choices that could be ahead.
“We set out to prove that by offering the right guidance and support to coachable entrepreneurs, we can engineer growth on a significant and sustainable scale,” says Bӧhmert. “The fact that all 10 companies have experienced growth clearly demonstrates that is possible and the team is looking forward to taking everything that we have learnt into the next Grindstone programme starting in a few months.”
Coachable is the operative word. The Knife team admits that there were some challenges it faced in trying to prove its theory, such as the opportunity cost of time and money from its own kitty. The chosen companies needed to be willing to do what was needed, they needed to them to listen to the experts that were brought in and truly interrogate their business models and growth plans. While Knife Capital has an option to invest in any of the companies should they require equity funding, Grindstone had its own dragons to slay.
“The challenge was that while we were assisting companies to scale their Business models, we needed to find ways to scale Grindstone itself,” says van Zyl. “Our vision is to establish the Grindstone model as blueprint for scaling businesses in Africa; to be used by corporates, entrepreneurs and Governments alike.”
Knife has put together a rather nifty infographic (below) to highlight some the significant changes that the 10 business went through during the programme. Here are some highlights from the results:
- Average growth of 61% year-on-year revenue
- Addition of R43-million in revenue across the ten companies
- Double the number of key customers
- Creation of 43 new, direct jobs
- Average increase of company valuation by 100%
- Increase “mastering of business fundamentals index” by 20%
On the back of the programme, Knife ran an internal competition for the company that showed the most growth. The prize: an all expenses paid trip to Boston to attend AGC Partners East Coast Technology Growth Conference. In Grindstone’s view, computer vision and radar company iKubu achieved the best growth metrics while mastering and documenting their business fundamentals. CEO Franz Struwig will be attending the conference in October when he will have the opportunity to present to leading private equity investors, corporate buyers and other leading private company CEOs.
On the back of Grindstone One, Knife is geared up for the next year and is calling for applications. It will be partnering with the likes Microsoft, ENS and DHL for the next year. South African SMEs with a proven track record can apply via Knife Capital’s website.