Any economy is driven by innovation. This requires a vibrant entrepreneurial culture, creating start-up companies that are able to come up with new ideas to disrupt markets and propel change. Over the last few decades, venture capital has become a vital part of this process. It provides much-needed finance to start-ups and small businesses with growth potential to allow them to turn ideas into marketable products and services.

Elon Musk’s involvement with Tesla is a good example. He provided much of the initial capital the company needed to support production. Like most successful venture capitalists, however, Musk did far more than make money available. He became heavily involved, offering the company business development expertise and technical support to ensure he had the best possible chance of earning a return on his investment.

Business innovation is not limited to businesses focused on turning profits. Social enterprises with the potential to make social and environmental contributions, particularly in underserved and underresourced areas, are becoming a vibrant sector of the local economy.

Funds directed to this sector come predominantly through grants and donations. This is not ideal, and is unlikely to be sustainable, for two primary reasons. Firstly, given the large number of organisations that compete for grant funding as well as the onerous reporting requirements, there is a significant time cost incurred in applying for this money, with a disproportionately small chance of success.

Read the full article about venture philanthropy by Bakang Moetse at Business Day.