Shot in the arm for small businesses
In a proactive approach to investment, Vumela Enterprise Development Fund partners with small and medium enterprises (SMEs) for five to seven years, during which time the fund is committed to doing everything in its power to help that small business succeed.
With the tag line “building the nation one SME at a time”, the fund creates jobs by investing in high-potential small businesses that wouldn’t traditionally be able to access credit.
Entrepreneurs are kept accountable by having to part with equity and to answer to external shareholders. They are expected to create a number of sustainable, low-skilled jobs.
The fund also helps with growth and strategy development and, where possible, introduces investees to new markets. Where appropriate, it helps expanding businesses find further capital opportunities.
To qualify companies don’t need to be making a profit, but they do need to demonstrate a high chance of being competitive over the long term in order to preserve the jobs they have created.
To date Vumela has committed R96-million in capital to nine companies across various industries, ranging from manufacturing, IT technology and education to agriculture and mining services.
FNB Commercial, together with Edge Growth, manages the Vumela Enterprise Development Fund. “The aim,” said FNB’s commercial head of enterprise development, Heather Lowe, “is to be the first-level funder and to help grow a business to the next level through appropriate low-rate financing and strategic and operational support.”
The result has been the addition of 294 jobs to the economy. Over the investment term, Vumela expects the current portfolio to generate a further 380 jobs.
Vumela is a semi-commercial venture, so ultimately it needs to create a return for fund beneficiaries, but in a highly engaged and tactile way.
“There’s a significant human element,” said Lowe. “The team works with them through this journey.
“We are with these people when they go through some of their darkest times. We take them through a period of high growth, leading them through levels of competitiveness they aren’t used to.
“We are passionate about growth creation, because if we aren’t, where are we going to be as a country in 10 years’ time?” she asked.