World SME Day on 27 June is supposed to be a celebration of entrepreneurial grit. But for most small businesses in South Africa, it also exposes a harsh reality: only 1 in 4 SMEs raise enough capital to grow. The rest remain stuck — unable to hire, scale, or launch because their funding asks go nowhere.
And it’s not because money isn’t available.
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“Capital isn’t scarce in South Africa. Fundability is,” says Luncedo Mtwentwe AGA(SA), Managing Director of Vantage Advisory and host of the SAICABiz Impact podcast. “Most startups aren’t investor-ready — and by the time they realise this, it’s already too late.”
Funding Is Not a Lifeline. It’s a Skill.
South Africa’s entrepreneurs often make the same mistake: they only start looking for capital when the runway’s almost gone. By then, desperation has replaced strategy. “It’s no longer about potential — it’s about patchwork,” says Mtwentwe.
This reactive approach hurts startups at every level. Valuations take a knock, investor confidence drops, and founders lose leverage. Instead, Mtwentwe believes investor readiness must become a core leadership skill — developed long before funding is needed.
His view is echoed across the startup ecosystem. From poorly structured governance and messy financials to shallow teams and vague pitches, SA startups are falling short of what investors expect. Even those with strong ideas often can’t articulate how they’ll scale, execute, or generate returns.
The Geography Trap
There’s also a hard-to-ignore location bias. “Access isn’t just about merit. It’s also about geography and networks,” says Mtwentwe. Founders outside the main metros — or without the right advisors or co-founders — often find themselves sidelined.
“Unless you’re in the right province, you can forget about raising here,” one founder told him.
This funding friction is driving some South African founders to raise abroad, bypassing local capital altogether. But as Mtwentwe points out, that’s not a scalable strategy — it’s a workaround.
Why Capital Skips South Africa
It’s not just local bias. Capital is flowing into African tech but often into Kenya, Nigeria, and Egypt, where investor pipelines and support systems are better aligned. Speaking on the SAICABiz Impact podcast, investment professional Zama Khanyile CA(SA) pointed out that impact storytelling is a missing link.
“If we want global capital to land in SA, we need to talk about outcomes, not just income,” she said.
A Roadmap to Fundability
Despite the bleak numbers, the outlook isn’t hopeless. “You don’t need perfection — you need preparation,” says Mtwentwe. With smart execution, even lean startups can build fundable foundations. His top advice?
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Start Early: Give yourself 6–12 months to prep before you actually need capital.
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Get Your House in Order: Have clean books, a working compliance setup, clear operating systems, and actual contracts.
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Team Before Tech: “Investors fund people first,” says Ncumisa Mkunqwana CA(SA), CEO of Chapu Chartered Accountants. A weak back office can kill a strong product.
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Know Your Investor Fit: Match your stage and story with the right funder. Green finance and impact-driven VCs are opening new doors.
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Pitch Growth, Not Just Vision: Show traction — even if it’s just early customer interest or a waiting list.
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Get a Mentor, Not Just a Deck: Advisors and incubators can be your bridge to credibility and readiness.
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Show You Can Sell: Investors back revenue engines. No traction, no funding.
Time to Shift the Mindset
As B20 and World SME Day discussions heat up, the takeaway for South African founders is simple: capital follows structure, not just ambition. And structure isn’t about admin — it’s about building trust.
Raising money isn’t just a milestone. It’s a signal that your business is investable, executable, and scalable. That means it’s time to stop hoping for luck and start getting fundable.
