Venture Capital continues to grow in SA

Interest in SA venture capital (VC) has seen steady growth. This growth in interest could translate into expanding opportunities for investors as well as entrepreneurs, according to the CEO of the Southern African Venture Capital (SAVCA) and Private Equity Association, Tanya van Lill, who commented on the Global Entrepreneurship Congress.

“South Africa’s venture capital (VC) ecosystem is evolving, with more fund managers entering the industry and growing investor interest in the asset class. This increased activity is generating positive spinoffs for local, innovative entrepreneurs seeking funding,” said van Lille in a press release to Ventureburn.

SAVCA recently launched their VC Survey, tracking activity in the VC industry from 2011 to 2015. The survey showed that there were 168 new deals which were closed by 21 public as well as private VC fund managers and angel investors.

2016, according to van Lill, also showed substantial activity. “The past 12 months have seen a healthy number of new and follow-on VC investments in technology-enabled businesses, however, the interest of VC firms extends well beyond ICT-type businesses into more conventional industries, such as agriculture and housing.”

VC in SA has been growing despite a slump in economic growth

According to the International Monetary Fund (IMF), forecasted economic growth for the country was in decline with 2017 forecasted to have a growth of only 0.8% slightly better than 2016’s 0.3%.

“…in the current challenging economic climate we have seen that VC investors have continued to have an appetite for investment in startups, especially high-tech VC type businesses, which are still in short supply in South Africa,” said van Lill.

Another key point noted in van Lill’s talk at the GEC was that corporate involvement in the VC industry has continued to increase. This is especially noticeable with banks and financial services trying to stay ahead of disruption by supporting fintech incubators and investing in fintech startups.

“We’ve had some relatively large funds raised over the year, and more corporates are getting into the space. Companies are realising that they need to look at startups for innovation,” concluded SAVCA member and AngelHub’s lead partner, Brett Commaille.