Polo Leteka believes that there remains one under-tapped asset that investors around the world need to start taking a serious look at: ventures founded and run by women. “Trying to convince a traditional investor to invest in a group of people that the world has always overlooked is very difficult,” she says.
It’s a battle she has tirelessly fought for the past 11 years since founding IDF Capital in 2008. The South African firm specialises in guiding aspiring entrepreneurs – in particular, women – through the process of getting funding. IDF Capital acts as a liaison between the entrepreneurs and investors, helping the former put together viable business plans before matching them with suitable investments.
“We noticed that many entrepreneurs are not able to get the required capital to build and grow their businesses because they could not meet the criteria that most investors look for, such as having collateral or a track record of running their own business,” Polo explains. “Sometimes, they are unable to articulate their proposals in a manner that allows the financier to properly assess the investment opportunity.
“We wanted to build a company that helps unlock capital and, once that capital has been unlocked, supports the entrepreneur to ensure that the capital is deployed appropriately and her business becomes successful and sustainable.”
Through helping small businesses, the company hopes to achieve its larger goal of steering South Africa’s economy. “It’s exciting to see an entrepreneur walk through our doors with an idea that has the potential to scale, create jobs for others and wealth for themselves,” Polo enthuses.
“The unemployment level here is quite high and these individuals may hold the solution to a very real problem.”
Unlike the conventional investor, Polo looks at more than just the numbers when deciding whether or not to support a startup. “We place a lot of emphasis on the character of the entrepreneur and how much work they are willing to put in,” she says.
“We want people with teachable spirits. It doesn’t matter how good an idea is; if we think the entrepreneur does not have the right attitude, we definitely will not invest in them.”
IDF Capital may exercise compassion when choosing its beneficiaries, but Polo wants to make clear that the firm is not a benevolent organisation. “IDF Capital is a commercial initiative,” she points out.
“I am an entrepreneur myself and this means that the company is still about exploiting opportunity to make a profit. I have my own ambition to become commercially viable and to create wealth for myself as an entrepreneur.”
For every idea that lands on her desk, Polo considers the potential size of its market as well as scalability before even talking about investing money. She expects the entrepreneurs who come to her to do their due diligence.
“One common reason many startups fail to gain traction is if they don’t carry out comprehensive tests on the market. They need to ask people questions about their products and find out what most people are willing to pay for them. If possible, they should even make some samples of the products, give them away for free, then start charging for usage after a while and look at the conversion rate. The market always gives the most valuable input on whether a new business can become viable or not.”
“The market always gives the most valuable input on whether a new business can become viable or not.”
Once the market has spoken, funding can be considered. For entrepreneurs who lack the financial acumen to use funding effectively, Polo likes to take advantage of a legislative requirement in South Africa that means corporations must contribute to entrepreneurship.
“We manage a few corporate funds that companies can invest in. Some of the money in these funds is allocated to educating our entrepreneurs – teaching them about managing finances and credit.”
Under Polo’s wing, entrepreneurs who started out with ideas that looked unfeasible come away with viable business plans. “Often, the numbers we present by the time we decide to take the idea to our investment committee look very different from what we started out with,” she says with pride.
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