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Entrepreneurs must be willing to fail – RMI CEO

WATCH: What RMI looks for in an entrepreneur.

JOHANNESBURG – Herman Bosman, CEO of investment company, Rand Merchant Insurance (RMI), which holds stakes in Discovery, OUTsurance and MMI, says that bravery and an ability to take risks are lacking among local entrepreneurs.

“There is a cultural aversion in South Africa to fail in business,” said Bosman, comparing this with the United States, where many venture capital investors view failure as a kind of right of passage that results in learnings crucial to successful entrepreneurs.

South African investors, including RMI, also tend to view failure unfavourably, Bosman admitted.

“It takes longer to start a business than you think. I remember being at RMB [Rand Merchant Bank] in the late 90s when OUTsurance was making losses and there were thoughts of closing it,” he told Moneyweb this week.

Alongside OUTsurance, RMB’s start-up track record includes Discovery, Momentum and FirstRand.

“It’s quite a process to find businesses that we want to partner with and which can become our third generation of entrepreneurs,” said Bosman, referring to RMI’s latest entrepreneurial venture, Alpha Code.

RMI was unbundled from RMB in 2011 and today is invested in Discovery, MMI, OUTsurance and RMB Structured Insurance.

Alpha Code is about supporting entrepreneurs with the resources, networks and skill sets they need to build good businesses, Bosman explained. This may include anything from using RMI’s premises and Wi-Fi to gaining access to its associate businesses and other entrepreneurs.

For example, at Alpha Code’s first event, two entrepreneurs were introduced who have subsequently partnered to start a business.

As a standalone entrepreneurial club, Alpha Code businesses don’t have to and may never be invested in by RMI, said Bosman. “We’ve looked at 80 opportunities to date. There are always five or six on the boil, but at the moment nothing is imminent,” he said.

Would RMI ever sell out of its investments in Discovery or OUTsurance? “The answer has to be yes, we are financially oriented and our shareholders expect us to deliver returns on investments, whether we do it ourselves or on disposal. But our starting point is never to sell,” Bosman said.

Watch the video with Herman Bosma to find out more about Alpha Code and what RMI looks for in an entrepreneur.

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