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Authentication and mobile security solutions company Entersekt made history this week by becoming the first South African startup to raise funding from the global investment firm.
Entersekt, which was founded in 2008 and now services clients operating in 45 countries, intends to use the investment to drive further international expansion and to fund research and development. No further details of the investment were provided by Endeavor.
Endeavor Catalyst is the co-investment fund of global non-profit Endeavor. Endeavor Catalyst was launched in 2012 to invest in Endeavor Entrepreneur-led companies.
Endeavor Catalyst exclusively invests in Endeavor Entrepreneur-led companies
Although Endeavor South Africa opened its offices in 2004, this is Endeavor Catalyst’s first investment in South Africa.
“We believe in the growth potential of Entersekt and in the idea that you can potentially build scale-up companies in every market across the world where Endeavor operates,” Endeavor Catalyst managing director Allen Taylor said in a press release.
The Silicon Valley-based global investment fund has investments in Latin America and the Middle East. One of its investees, software development company Globant, has gone on to launch an initial public offering on the New York Stock Exchange.
Multi-step selection process
“Achieving investment is no easy task, every company goes through a rigorous, multi-step selection process as Endeavor screens thousands of entrepreneurs from around the world,” Endeavor South Africa managing director Catherine Townshend said in the same release.
The five-stage selection process starts off with nomination. Endeavor entrepreneurs can be nominated through one of three ways — application, search and referrals. Entrepreneurs can either apply online or self-nominate themselves. Endeavor proactively searches for nominations and it also accepts referrals from members of the Endeavor network.
Once nominated, entrepreneurs go through a first opinion review. This entails an hour-long meeting between the entrepreneur and a portfolio manager where the candidate is assessed on whether their business fits with Endeavor.
Endeavor candidates then go through at least five more interviews with senior mentors as part of the third stage of the selection process, the second opinion review (SOR). The interviews aim to ascertain candidates’ personal qualities and examine their business strategy, growth potential and innovation.
The SOR is followed by a local selection panel (LSP) where mentors and local board members interview, deliberate and select candidates that will progress to the final stage, the international selection panel.
The final stage of the selection process sees candidates get interviewed by global business leaders who then deliberate and select Endeavor Entrepreneurs by unanimous vote.
Entersekt founders Schalk (pictured) and Dewald Nolte were selected as Endeavor Entrepreneurs in 2015.
“We identify those with the best talent and potential for impact during a six to eight-month due diligence process. At the end, only the very best entrepreneurs are selected to be a part of our portfolio,” said Townshend.
Then comes the hard part
After completing the selection process, entrepreneurs then only become eligible to receive Endeavor Catalyst funding after they raise an equity financing round of more than $5-million from VCs and growth equity funds.
Earlier this year in June, Entersekt concluded a “multi-million dollar” funding round with Rand Merchant Investment Holdings’s AlphaCode and Nedbank Private Equity’s BoE Private Equity Investments.
“It is a gruelling process underscoring exactly how impressive the Entersekt success story is,” added Townshend.
Featured image: Entersekt CEO Schalk Nolte