Futuregrowth, an asset management company, has invested an undisclosed amount of venture capital funds in one of the country's more prominent startups, SweepSouth. The investment is from the Futuregrowth Development Equity Fund - a portfolio specialising in equity and related investments in socially responsible projects and businesses or developmental assets, forms part of Futuregrowth’s suite of developmental investments.
According to Futuregrowth, SweepSouth met all the criteria that are necessary for early-stage companies, namely: a large addressable market in the informal sector, disruptive, having a positive social impact on the economy and the management team has proven credentials in building the company to where it is now, as well as engaging in ongoing innovation.
“SweepSouth is an early-stage business disruptor that, instead of solving a Silicon Valley problem, is solving South African-specific problems. The company has taken a large segment of the informal sector, which is one of the biggest employers in South Africa, and formalized it, giving people protection and security in their working environments," said Amrish Narrandes, Head: Unlisted Equity Transactions at Futuregrowth.
The Tefo Mohapi Show: Kamran Elahian on building and investing in startups and how to boost innovation in Africa
The struggle of building a startup
It's quite easy, looking from the outside, and observing entrepreneurs and the startups they have founded to think that it is all smooth-sailing and fun. It is anything but smooth-sailing.
It is even more so for founders of technology startups across Africa as Aisha Pandor, co-founder of SweepSouth previously alluded to in an interview with iAfrikan.
"I think in South Africa we don’t necessarily have the luxury to work on company ideas that are a little bit more fun and frivolous or very bleeding edge, particularly in the B2C space. There’s a lot more impetus to work on solving challenges that are impeding societal or economic progress."
Added to this challenge, is that of being able to connect with venture capitalists who not only understand the environment in which the African startup operates in, but also being able to connect with them to establish rapport and trust. Something which ends leading to the skewed numbers regarding which type of startups receive funding in Africa.
"But there have been challenges like trying to pitch our idea to investors who are mainly male and white, so in some cases struggled to connect with the impact potential (both ROI, economically and social) of what we’re trying to do. Furthermore, having children has meant trying to find a balance between the often necessary long hours of work or time spent away from home, and building a happy family life," added Pandor in the interview.
One of the stated reasons that Futuregrowth gave as a reason for investing in SweepSouth is the startup's social impact. According to Narrandes, SweepSouth's social impact credentials are impeccable.
“SweepSouth has played a material role in empowering previously vulnerable informal workers by giving them a voice and the ability to control their destiny because they have flexibility and control over their own time,” said Narrandes.
SweepSouth also says it takes social impact seriously. The startup reports that 71% of the people it hires through its platform were previously unemployed and 29% were underemployed. A significant 84% of SweepStars, the name the startup calls the people who provide services on its platform, are primary breadwinners at home, making the income they earn through the platform vital in enabling them to support their families.
“We are uplifted each time we see our SweepStars referred to in this way, as it represents how a positive idea can take shape and can change the negative language that has been so deeply entrenched," said Pandor.
The on-demand economy has in some quarters been punted as a possible solution to South Africa's unemployment problem. We had a chat with Aisha Pandor, CEO and Co-founder of South Africa's SweepSouth, on her journey building an on-demand startup in South Africa.
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