In a bid to address the funding gap faced by historically disadvantaged person (HDP) entrepreneurs in South Africa, Amazon Web Services (AWS) has unveiled the fourth round of its Equity Equivalent Investment Programme (EEIP).
The programme is aimed at supporting black-owned and -led early-stage startups in the country by providing them with the necessary resources and funding to jumpstart their businesses.
The EEIP, which forms part of AWS South Africa’s broad-based black economic empowerment (BBBEE) programme, aims to empower 100% black-owned small- and medium-sized technology businesses.
While the programme does not take equity in the participating startups, it provides comprehensive support, covering financial, technical and business aspects.
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.
For entrepreneurs from historically disadvantaged backgrounds 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 remain the most likely sources of funding for most businesses in South Africa. However, acquiring this capital is fiercely competitive for early-stage entrepreneurs, with investors preferring to support more established companies.
AWS believes that enabling diversity is important to economic growth, job creation and poverty alleviation. However, its view is that the current limitations in South Africa’s startup ecosystem are leaving a majority of potential job creators unfunded.
Launched in 2019, the EEIP was created to support more equity and inclusion in the South African small- and medium-sized business ecosystem, focusing on selecting black-owned and -led early-stage startups using AWS cloud.
Those that qualify under the EEIP will be provided with resources to build and refine quality solutions for their customers. Founders in the programme can get up to R7.5-million in funding and programme 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 strategy as they go to market.
Only 100% black-owned innovative startups that are either building or planning to build using AWS cloud are eligible. Applicants must have a Level 1 BBBEE rating and be an exempted microenterprise or qualifying small enterprise.
AWS will provide preference to startups that are female-owned and -managed.
Organisations have until August 10 to apply.
“Our commitment to South Africa is growth, since starting the programme three years ago. It’s been phenomenal to [see] small businesses grow and thrive, offering their products globally through the programme.
“It’s a culmination of our commitment to deliver BBBEE programmes that go beyond transformation and deliver long-term impact to our customers,” AWS BBBEE programme manager Nomzamo Xaba says.