On 29 March 2011, Microsoft announced the beneficiaries of its R500 million investment in growing several sustainable, independent and majority black-owned software companies in South Africa over the next seven years. With this deal, Microsoft is taking a high-risk, high-reward approach, by striving to create a new model for entrepreneurship. The size of the deal makes this the biggest deal of its kind by an IT company in SA.
Microsoft entered into an Equity Equivalence programme because, as an internationally held company, it cannot sell shares in its local subsidiaries. Thus, with the guidance and approval of the Department of Trade & Industry, Microsoft is selecting local black-owned companies with potential, and helping them become significant players who create software that the market wants.
Through this programme, we hope that the market will come to associate BBBEE with real entrepreneurship, job creation, business/enterprise development and skills enhancement.
With expert advisors guiding us, we finally selected four small black-owned software development companies with no more than 30 employees, which turn over less than R10 million a year. Henceforth, we’re going to focus our time, energy and resources on enabling them to become global technology companies by 2018.
The four selected partners are:
- Pietermaritzburg-based Chillisoft, who make software solution for the health industry;
- Cape Town-based Maxxor, which creates consumer, mobile and gaming software
- Security solutions specialists, BUI, from Johannesburg; and
- Durban-based Home Grown Solutions, who creates prepaid software solutions for local government on a cloud based model
Our BEE investment will fuel innovation in new high-growth areas currently underserved, including safety and security, healthcare, education, consumer, mobility and cloud computing, and grow the market for all players in the process.
In fact, the next Request for Proposal (RFP) process starts in June 2011. By this process, Microsoft would like to go out and select additional companies to include in the EE programme going forward.
It’s part of the company’s greater broad-based black economic empowerment strategy, and will raise its BBBEE rating from Level 4 to Level 2. And we’re making this bold move because it makes good business sense: by improving our local relevance, helping South Africa realise its potential and growing the country’s technology industry, we all win.
We’re aiming to create a new model for entrepreneurship, and set a higher benchmark for developing talent in the industry. Through the success of this programme, the market will come to associate BBBEE with real entrepreneurship, job creation, business/enterprise development and skills enhancement.
South African talent will play a vital role in the development of a sustainable, more inclusive technology industry, and Microsoft supports individuals as students, technologists, innovators and entrepreneurs to realise their full potential.
Importantly, the programme will increase the size of the local software economy for all technology players, and leave a legacy for other entrepreneurs to follow.