Most nascent entrepreneurs raise funding from a combination of savings, goodwill of family and friends and angel investors to convert their idea into a prototype or a minimum viable product (MVP). For entrepreneurs from historically disadvantaged backgrounds (HDPs) in South Africa, pre seed funding is a bigger struggle as many don’t have familial wealth or assets accumulated and lack access to angel investment networks.
According to the 2022 Global Entrepreneurship Monitor Report, banks and venture capital funds are still the most likely sources of funding for most businesses in South Africa. But getting this capital is fiercely competitive for early-stage entrepreneurs, with investors preferring to support more established companies.
Even at the Series funding stage; access to funding remains a challenge for HDP startups, with majority of VC funding in South Africa going to white-male owned or led startups. in 2022, South African startups raised over $500m. More than half (55%) went to White South African male led organisations and 34% to non-South African founders. Only 9% went to startups led by Black, Indian and Coloured South Africans, with female led organisations getting only 3%. Financial support to get started and still having enough cash (runway) to operate a business can make or break a startup founder’s hope of going full-time to get their product to market faster. Constantly having to balance customers’ needs, critical to their success, with wooing investors for funding limits their time on fine-tuning products to attract those customers. Enabling diversity is important to economic growth, job creation and poverty alleviation in any country. And the current limitations in South Africa’s startup ecosystem, given its 90% African, Coloured and Indian population is leaving a majority of potential job creators unfunded.
Launched in 2019, AWS Equity Equivalent Investment Program (AWS EEIP) program was created to support more equity and inclusion in the South African small and medium-sized ecosystem. To encourage diversity and enable more innovative South African startups to launch, scale and grow, the 2023 AWS EEIP intake will focus on selecting black owned and led early stage startups.
Support for Black Owned Tech or Tech enabled startups
The AWS EEIP program will provide black owned and led early-stage startups using AWS cloud with resources to build and refine the ‘best in class’ solutions for their customers. Founders in the program can get up to R7.5m in funding and program benefits over 24 months, helping to limit the pressure of competing priorities with funding. The capital will cover hiring and developing the best team, paying for office space and other administrative overheads to support their business growth. Startups will also receive AWS technical service credits to build and deploy their solutions as well as business advisory services to guide their ‘Go To Market’ strategy. See the AWS EEIP program guide for details on what successful applicants can expect during the 24-month period.
Who can apply?
100% Black owned innovative startups building or plan to build using AWS cloud are eligible. Applicants must have a Level 1 B-BBEE rating and be an Exempted Micro Enterprise or Qualifying Small Enterprise. AWS will give preference to startups that are female owned and managed.
Organisations can apply up to August 10th 2023, 23:00 SAST. Visit https://aws.firstdistribution.com/aws-equity-equivalent-investment-program/ to review the full eligibility requirements and terms and conditions of application.
