So, your startup is looking for money then? If you head to angel investment network Jozi Angels make sure you can within seven years, generate return of 20 to 25 times what the network invests in your startup.
Since it was founded by in 2015 by Abu Cassim, Jozi Angels has made 15 investments in the past three years totaling over R6-million. That’s an average of R400 000 per investment.
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It means that after seven years investors will want on average — at least R8-million returned to them from each investment. That is no small money.
Read more: Jozi Angels made 15 investments worth R6m in last 3 years – Abu Cassim
Ventureburn emailed Cassim a number of questions, as part of a series of interviews with venture capitalists and angel investors in South Africa tech startup sector (see the footer of the story for links to other interviews). Here’s what he had to say.
Ventureburn: What kind of return on equity do you generally look at?
Abu Cassim: Return on the entire portfolio with a return of 5% of 10% in excess of the listed stock exchange. Each company should have the potential to return 20x to 25x.
VB: After how long do you typically look to exit?
AC: Our network has not had an exit yet, but we typically advise that investors will not see a liquidity event for seven to eight years. Some angels do take risk off the table at subsequent funding rounds but selling some of their own equity in the raise.
VB: What percentage of equity do you usually look to take?
AC: On average between 15% and 20%
How many of your investments have had exits, how many are making really good growth?
AC: Roughly 40% are failing or have failed, 20% of businesses are surviving, 10% are making revenue but running out of runway, 20% are growing and looking up and 10% are doing really well.
VB: Are there say three or four important ingredients to making an investment return good value for investors?
AC: Strong team able to get passed roadblocks. Good group of early adopters or partners. Good grounding or hustle prior to looking for funding.
VB: How many of your current investments have had second or third-round investments?
AC: None have received 2nd round funding but a couple are in the market for funding to expand. Deals were very close but fell through at the 11th hour.
VB: What are the names of the startups that have exited and then those that have an above targeted return on equity?
AC: Tourism platform Tour 2.0 and marketing research consultancy Neural Sense.
Read more: HAVAÍC holds onto five investments despite two offers, says Ian Lessem [Q&A]
Read more: Market readiness key when investing in startups – 4Di Capital founder [Q&A]
Read more: Startups need at least 10x in 5 years to be good investment – VC, angel investors
