by Tania Reid, Chief Experience Officer of Ithemba Office Solutions

Last year, I was approached by an investment fund with an opportunity. The brief from their client was to find a majority woman-owned stationery company that they could invest in. After hearing my pitch at an event, they were sufficiently impressed to put Ithemba forward for this fantastic opportunity. 'That is the power of a good sales pitch' but that is a discussion for another day.

What followed was a race to provide updated financials, management accounts, sales projections, automating our manual invoicing system, requesting letters of reference from existing clients and letters of intent from new prospects and many more interviews and meetings, to secure the imminent investment. After 8 years of boot-strapping, stress, sleepless nights, and the age old question that every entrepreneur has asked themselves, ‘Should I give up and find a job’, my breakthrough had finally come.

"... of every R1.00 that is invested through enterprise development funds, only 20 cents reaches the entrepreneur. The balance is generally held for administration costs and fund manager advisory services."

And when the only step left was to present the final proposal to the committee, and agree to the amount of the investment versus the percentage of equity they wanted, I received an email, not a call, explaining that by using the August 2017 EBITDA, the amount falls below our valuation of the business and below their investment minimum.

Everyone I spoke to, which ranged from a COO, mentors and fellow entrepreneurs who had been through the same process with the exact same outcome, had shared the same opinion. The reason for the non-investment would’ve been evident at the beginning of the process and not at the end. Research has shown that the EBITDA should never be the only measure used to determine whether an investment was going to be made into a business or not.

On further investigation, the statistics speak for themselves, because of every R1.00 that is invested through enterprise development funds, only 20cents reaches the entrepreneur. The balance is generally held for administration costs and fund manager advisory services.

Based on our calculations, to qualify for the investment, we had to be generating a turnover of R3 million per annum. Now I have to ask, with that amount of turnover, why would my 100% black woman-owned business, B-BBE level 1 contributor business need an investment.

But instead of becoming demotivated, it has fired a resolve in me to get my house in order with regards to systems, resources, processes and finding other routes to funding. Sure my confidence took a knock, AND Ithemba hasn’t gotten it 100% right all the time, but what business has? What fund managers and corporates need to understand, is that they are messing with peoples’ livelihoods when they waste our time.

Woman entrepreneurs start their businesses with the odds stacked against us already. We have to work harder than our male counterparts just to get a seat at the table and for women of colour, it is still just that bit harder. Giving up has never been an option for me! The laws of the land couldn’t stop me from dreaming about owning my own business one day, so one investment funds’ EBITDA calculation will never be a reflection of who I am and what my business can achieve.

Tania Reid is the founder and chief experience officer of ithemba office solutions based in South Africa, and has over 17 years of sales experience in office automation, stationery and consumables. She is known for her honesty, excellent customer care skills and that she runs her life and business with integrity. Tania is a big believer in “When you are Blessed, you Bless others”. She won the opportunity to go to Australia to represent the Branson Centre of Entrepreneurship by joining serial entrepreneur, Creel Price on the Ultimate Growth Adventure Bootcamp and pitched her business to James Caan of Dragons Den fame. So every second month, she facilitates “Knowing Your Worth” classes with young girls between the ages of 14-18 at the Khaya Centre Mount Olive, Lehae south of Johannesburg, where the unemployment rate is 80%; and also contributes monthly to events held for the aged at the Kensington Old Age Home, Cape Town which is also her hometown. Read Tania's startup story here.