Lesson 1, Topic 1
In Progress

2.1 An extensive list of financial institutions offering funding for new ventures is compiled with a view to selecting the one best suited to the particular venture.

ryanrori January 7, 2021

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You an find a list of financial institutions that offer funding to new ventures in South Africa on the link below


“AltX and the new era of business finance”


The establishment of AltX (pronounced all-tex), the JSE’s new parallel market for small and medium businesses, is likely to change the face of commerce in South Africa. For the first time in our history the country will have a market through which promising smaller enterprises can attract capital. South Africa is a late-comer to the idea of a parallel market. It is not surprising that the USA, the home of private enterprise, was the first into the field. Back in 1970 NASDAQ was founded as an alternative to the NYSE, but it was only in 1995 that alternative markets began to proliferate. Today, fully 55% of the members of the World Federation of Exchanges, to which all major stock exchanges belong, have an alternative exchange. Most successful of these is AIM, the UK market that started with 19 investment companies and today lists 700 companies with a combined market capitalisation of 10 billion British Pounds.

“We’ve looked at markets around the world, both the successes and the failures,” says Noah Greenhill, who heads the new board. “We’ve learnt from them and adapted the best elements to our own circumstances.”

“If only 1 000 of the most promising small and medium businesses can be helped to reach their full potential the effect on the national economy will be profound”

Noah Greenhill’s own interest in the sector was aroused when he did an MBA research report on Critical Success factors for an Over-the-counter Share Market. He feels that the JSE, as it has functioned in the past, has not reflected the reality of South African business. “There are only a few big companies, but a great many small and medium companies. It is time that the JSE reflects this and plays a role in generating finance for this sector.”

He sees AltX as an exciting opportunity that can make a fundamental difference both in the lives of many business people and in the economy as a whole. “This is an opportunity to help small businesses to grow into big ones,” he says. “It is a truism that every big company was once a small one, but this is often forgotten.”

He wants to get smaller companies past the limitations of imposed by financing their businesses through house bonds and overdrafts. “Neither are good options. There are some 300 000 small companies registered in South Africa. If only I 000 of the most promising can be helped to reach their full potential the effect on the national economy will be profound.”

One of the most quoted pieces of business wisdom is that no project succeeds unless it is driven from the top. In this Greenhill is fortunate. Referring to AltX, Russel Loubser, chief executive of the JSE, has declared his commitment to “the burgeoning SME sector.”

Government too is enthusiastic about the possibilities that AltX creates. “We believe that its establishment will promote black economic empowerment and assist in creating sustainable employment,” says Dr Alistair Ruiters, director general of the DTI.A listing on AltX is less onerous than one on the main board or even the venture capital and development boards, but companies will be responsible for shareholder funds and will still have to comply with strict reporting procedures.

A company that is listed on the JSE main board has to have a three-year history of pre-tax profit of not less than R8 million. There is no lower profit requirement for listing on AltX. These are not well-established companies and an investment in this sector will not be as safe as it would be in one of the country’s great mining houses. But it is also true that these companies will be among the most promising enterprises in the country and some will certainly multiply their investors’ funds many times in a few years. The wise investor in AltX companies will probably back the jockey, rather than the horse. Those who invested in a young Raymond Ackerman, a young Bill Venter or a young Anton Rupert did very well from the proceeds.

In one significant aspect Greenhill’s approach to the companies on his board is different to anything we have seen so far. His planned method of operation is one of sales, marketing and relationship management. “I intend to market AltX to the asset management industry, the private client brokers and the retail investment community.” He sees information as being essential to the investment community and intends to see that they have it. Forums will be facilitated to which the investment community will be invited and companies listed on AltX will be able to do presentations at them. In the struggle to attract investment, Greenhill sees real value to companies that are listed. “Their compliance with a code of corporate governance and the fact that results are published regularly counts for a lot when compared to an unlisted company,” he says. “But it has to be seen that AltX is a process that will take time to mature. This is not a one-day game. The JSE is in AltX for the long haul.”