South Africa: An Amplified Desire for Success

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Business Day (Johannesburg)

6 October 2008
Posted to the web 6 October 2008

Nicola Mawson
Johannesburg

State grants are not quick and easy to access, but can be the only means of raising capital to export.

HIGH-end audio equipment manufacturer Valve Audio could expand into the European Union (EU), but is hamstrung by a lack of access to capital.

Schalk Havenga, who founded the company in 1994, says he has had "vast interest" from dealers in Greece, Israel, Portugal, Canary Islands, Germany and France, among others.

However, to export to the EU he would need to take each product through the European safety certification programme to be allowed to put the CE mark on his products. And that would mean paying out R35000 for each amplifier that he wanted to export.

Valve Audio manufactures and designs amplifiers, pre-amplifiers and a phono stage, targeted at audio fanatics. Havenga says this is part of the reason the company battles to access finance. "Banks normally put money on sure bets."

A recent order from the US has been put on ice because of the economic slowdown and the sub-prime crisis, which has curbed spending on luxury items.

Although local sales are more profitable and the US only accounts for about a third of production, an increase in volumes through exports would bolster the company. "Even poor sales overseas would be excellent compared with the best sales here."

Havenga's first amplifier, the Black Widow, took three years to fully develop before being released on the local market. He says developing the product cost R100000 that he funded out of his own pocket. Once the amplifier was ready, he registered the company in 1994 and has since developed a range of amplifiers that cater to enthusiasts from entry level to top end audiophiles.

At the end of 2005, he started exporting his products to the US.

Havenga says this has bolstered the company's local, more profitable, sales as being an exporter has given the one-man-band credibility.

His products have been shown at Consumer Electronic Show -- the world's largest show of its kind in Las Vegas -- since 2006 as well as the Rocky Mountain Festival. The amplifiers are distributed in the US through Music Direct, which also presses its own long playing albums, and in Canada through Audio Basics.

The Black Widow, a hybrid design power amplifier capable of 200 watts per channel, set the stage for the rest of the range. As Havenga grew up during an era where both vacuum tube and solid state was applied to audio technology, it was only natural that Valve Audio would marry these two technologies.

As a result, Valve Audio became a manufacturer of a range of premium quality hybrid amplifiers.

Havenga says the hybrid formula had been attempted before, but without any success. But getting the concept to work meant many long nights and dipping into his own pockets. He says he expanded as "money and time permitted, and the market developed".

When he started the company, funding for small enterprises was not available in grant format as it is today and now -- despite the availability of grants -- Havenga has not managed to successfully apply for one, a situation he attributes to the amount of red tape involved.

However, he was intending to meet with a government department to investigate a potential grant that may aid him in achieving CE status as well as in growing the business, as he already has a model sketched out.

Havenga's endeavour to start up a company to produce hybrid amplifiers - which combine the valves of old with more modern transistors - came after he had been doing repairs in the audio-video field for some time. However, he was not satisfied with the daily grind and wanted something a bit more challenging that would allow him to innovate.

A meeting with international amplifier manufacturer Jeff Rowland, of Jeff Rowland Design Group, at the repair workshop - Hi-Fi & TV were the service agents for the Jeff Rowland Design Group products in SA - inspired Havenga to develop the amplifiers.

Havenga, who is an accredited service provider for the Tshwane University of Technology and provides on-the-job experience for students, hand builds each amplifier for individual consumers, who can follow the process from start to finish through a serial number.

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