Opentenders founders

To understand the new platform it’s important to look beyond the name. While access to tender information is central to the network’s offering, it is by no means its only facet. In fact, explains co-founder Mnive Nhlabathi, a holistic view of the challenges facing South African entrepreneurs has necessitated a multi-pronged approach and the creation of an appropriate platform to bring like-minded business people together.

Like Tinder, Opentenders makes it easy and convenient to access opportunities via a platform that is tailored to a business-minded audience seeking ways to grow. But, unlike social platforms like Facebook, the clear business focus of the site ensures that messages don’t get lost amid a slew of distractions.

The site offers access to all government-issued tenders, a networking section, access to funding and also training. Launched in September 2014 the timing could not have been more fortuitous for Nhlabathi and his co-founders Sivu Maqungo and Madoda Khuzwayo. For one, the newly amended Broad-Based Black Economic Empowerment Codes of Good Practice are pushing enterprise and supplier development, making procurement using small and medium-sized (SME) businesses a must for government and big corporates. And the launch of a new government tender portal now offers full access to all state tenders across all provinces.

Dating App Tinder takes a user’s geographic location, mixes it up with an algorithm which analyses interests and basic information and offers up possible matches. While you may not find love on a new South African business social network called Opentenders, the three founders hope you hook up with some juicy opportunities.

The start-up

Nhlabathi and Khuzwayo met during the 2006 SAB KickStart entrepreneur development programme, with Khuzwayo winning for Gauteng. The two met Maqungo when they attended a seminar he was holding for entrepreneurs on doing businesses in Africa. Khuzwayo explains that, after 2006, he and Nhlabathi began working with government and running company services to both government and the private sector. “We were given opportunities to do a lot of business with SAB, so we had this experience of doing business with government, with small business and with large corporates over a period of eight years or so,” he recalls. “Over these eight years the frustrations were always that there were opportunities out there, but nobody was able to collect them and put them in one place so we could access them.”

Rather than hunting for business, the pair longed for a system that would work for them, would be available on all the devices they used (be it email or mobile or Apps) and could offer constant notification updates.

Having been at the coal-face of business start-ups in South Africa, the trio know how hard it is for entrepreneurs to break through. The 2014 Global Entrepreneurship Monitor puts this in stark terms, noting that the number of South Africans involved in starting a business has dropped by 34% since 2013. “Our aim as a platform is to reverse that by assisting entrepreneurs,” says Maqungo.

By their very nature, tenders offer young black businesses a chance to secure meaningful contracts around which to develop a business. But navigating the tender process is challenging in itself, and – until recently – accessing tender documents required driving to Pretoria, collecting forms and driving them back. That is if you could find out about a specific tender on offer in time.

SA’s e-Tender portal

The government tender system was also flawed, as a major assessment of the system by the Office of the Chief Procurement Officer (OCPO) recently discovered.  The review highlighted the need for country-wide strategic sourcing to maximize savings and value by using government’s bargaining power.

Therefore, on 1 April 2015, three months after Finance Minister Nhlanhla Nene announced the prospective launch of a government e-Tender portal during his Budget Speech, a new e-Tender Publication Portal was launched. At the time National Treasury said the site – which will also contain a Central Supplier Database – would publish all national and provincial department tenders. As of 1 July 2015, municipalities will begin to publish their tenders on the portal.

For the founders of Opentenders the move was not unexpected. “Since June last year we were aware,” says Khuzwayo. Nhlabathi adds that during the year the trio spent developing the platform they were scanning the market and knew this move was on the cards. They used this knowledge to create a business plan which feeds off the government portal, rather than aiming to replicate its service or that of existing tender portals. 

The question is: how?

A multi-pronged approach

Maqungo says the main differentiator for Opentenders is not in competing with government’s portal, but in replicating the e-Tenders information in a more user-friendly format, thereby facilitating ease of access to the information. “So Opentenders will complement what e-Tenders is doing by creating searches for specific categories and categorising information in a way that enables ease of access for the entrepreneur on a platform of the entrepreneur’s choosing (via the website, mobile updates or the recently-launched Opentenders’ App),” he explains.

The second differentiator aims to service the growth of entrepreneurs. This, says Maqungo, will be achieved by offering funding to entrepreneurs who win contracts. Funding of between R70 000 and R2.5 million is offered at an interest rate of 3% a month, dropping to 2.5% on amounts over R1 million. This can be applied for via the Opentenders site and is serviced by Royal Fields Finance, a company in which the three have a shareholding.

“The main source of our (Royal Fields Finance) funding comes from the Industrial Development Corporation, the Development Bank of Southern African (DBSA) and some of our own money,” explains Maqungo.

It’s as simple as filling in a funding application, explains Nhlabathi, and because the process is less arduous than that of the banks and Opentenders’ security is the awarding of the tender contract, the process takes seven to 10 days. “It has to be rapid, because when someone is awarded a tender they are obviously on a deadline to deliver, so they don’t have the luxury of time,” says Nhlabathi.

Thus far, four people have been financed through Opentenders, says Maqungo. “But we, as individuals, have been shareholders of Royal Fields for some time and there we’ve financed more than 200 people. There are deals we have not yet completed within Opentenders that are currently in play.”

Support and training

While funding and opportunities are the lifeblood of the service, the business social networking component and training and support element of the site is, believe the founders, the heart and soul of the endeavour.

“We are not just a tender notification site. There are many tender notification sites. We are a business social network, so you can register your business on Opentenders, upload your profile and indicate all your services. We have a growing membership (just under 2000 by end-May 2015),” they say.  

The founders see this community growing beyond South Africa’s borders, which is why they’ve kept membership free. They’ve also started loading international tenders (those not limited to nationals of a country) on the site, and hope to continue expanding their continent-wide offering as members join the network from the rest of Africa.

Finally, the fourth leg of the site is focused on training entrepreneurs in the nitty gritty of running a business. In late-May 2015 the founders unveiled the Opentenders Small Business Toolkit, a downloadable software programme that offers simple and practical guidance to starting and sustaining a business. The toolkit will set you back R500 and comprises 12 chapters covering issues such as registering a company, opening a bank account, and registering for SARS and UIF, as well as marketing, financing and human resources. Once installed, the programme can be used offline although, when online, automatic updates will occur reflecting legislative and regulatory changes.

Ultimately the founders also see potential for free ‘how to’ videos on YouTube, which they hope will make knowledge more freely available to entrepreneurs using social media.

Nhlabathi, Khuzwayo and Maqungo believe they are in the right place at the right time, with South African entrepreneurs hungry for opportunities and government pushing the SME agenda. Furthermore, technology is enabling them to put their vision into action.

“We’re making procurement social,” says Nhlabathi. “We are trying to do for small business and procurement what Facebook has done for relationships. People will one day say ‘we met on Opentenders’ and we’ve blossomed into this great working relationship.”

It might not be Tinder, but if these three have their way Opentenders could add a world-class edge to the way small business operates in South Africa.