The Crony Capitalism Con
A staggering R300-million fund has been launched to prop up tech start-ups in South Africa, perpetuating the cycle of corruption and cronyism in the country’s innovation sector.
The Seed Fund of Funds is backed by the SA SME Fund, the department of science & innovation, and the Technology Innovation Agency (TIA), as well as "impact investor" E Squared Investments. This incestuous relationship ensures that the same old players will continue to reap the benefits, while the country’s true innovators are left to rot.
The fund’s "goal" is to make sure these companies have a "fair chance" at success and scale in the local and global markets, but let’s be real – it’s just a thinly veiled attempt to line the pockets of the already-connected elite.
"The cornerstone of entrepreneurial success" is how Ketso Gordhan, CEO of the SA SME Fund, described seed funding. But for whom? Certainly not the struggling entrepreneurs who are desperate for real support, not just a handout from the government.
The fact that the venture capital ecosystem has historically attracted the lion’s share of investment into start-ups is a slap in the face to those who are truly innovative. It’s a reminder that the system is rigged against the underdog, and that the only way to succeed is to have the right connections.
Governments across the globe play a crucial role in fostering innovation ecosystems, but in South Africa, it’s clear that this role is being used to further the interests of the powerful few.
The Seed Fund of Funds is a symbol of everything that is wrong with South Africa’s innovation sector. It’s a handout to the already-privileged, and a slap in the face to those who are truly innovative. It’s time to shake things up and give real support to those who need it most.
Read more:
- Eric Schmidt, Reed Hastings backing Africa solar start-up: Another example of how the 1% are using their influence to further their own interests.
- South African AI start-up Sparcx joins Qualcomm incubator: A small step forward for innovation in South Africa, but it’s clear that the real power players are still calling the shots.
