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Here are eight facts you should know about venture capital in South Africa
The value of venture capital (VC) investments rose by a whopping 134% to R872-million in 2016 over 2015, while ICT makes up 17% of the value of deals. These are just two insights revealed the 2017 VC survey by the Southern African Venture Capital and Private Equity Association (Savca).
Savca CEO Tanya van Lill said in the report, which was released in September, that the introduction and improvement of Section 12J tax deductible investments had driven greater flow of capital to VC and from a broader base of individual investors.
In 2016 the SA Revenue Service (Sars) recorded R1.8-billion raised by 49 investment vehicles registered for the tax incentive, having already invested into 56 qualifying companies. Not all of these Section 12J investment vehicles focus on VC as an asset class.
Ventureburn has drawn eight key facts from the survey, using three screengrabs of graphs from the survey itself. Here they are.
1.The value of VC investments in 2016 rose by 134%
The reported value of VC investments made during 2016 was R872-million in 114 deals — an increase of 134% over the R372-million invested in 93 deal in 2015. The average deal size has almost doubled – from R4-million in 2015, to R7.6-million in 2016.
2.Two in five deals were early-stage investments
Seed funding and startup capital combined make up half of all deals concluded to date by number and 40% by value. Growth Capital, by comparison, comprises 37% in number and 36% in value of disclosed deals.
3.ICT deals make up 30% of all deals and 17% by value
Deals involving the ICT sectors account for the largest portion of investments (30% of all deals concluded by number of deals and about 17% by value of deals). Life sciences (biotechnology, health and medical devices) comprise 19% of the number of active deals and about a quarter by value of all deals — most of these are held by government fund managers.
4.Western Cape accounts for highest number of deals, Gauteng biggest value
The Western Cape accounted for 56% of all deals concluded in 2016 (41% of deal value), while Gauteng accounted for 32% of deals (but 49% of deal flow).
5.R3.6-billion was invested by angel and venture capital funds in last 10 years
A total of R3.6-billion in 537 deals was invested by angel investors and venture capital funds between 2007 and 2016.
6.As at the end of 2016 a total of R3.5-billion was invested in 461 deals
Investments were managed by 53 different fund managers, up from 36 in 2015, while fund managers involving a more diversified range of operating structures and investment mandates. Government funds invested in 23% of deals by number and comprised 39% of deals by value. Similarly, Angel investors comprise 30% of deals by number but only 6% by value.
7.There were 14 exits in 2016
The number of exits doubled in 2016 to 14, compared to eight in 2015. In addition the survey reported that 38 exits took place between 2012 and 2016 – with 55% of deals exited profitably.
8.Angel Investors invested about R89-million in deals in 2015 and 2016
Of this R44-million was invested in 2016 and R45-million in 2015. Between 2014 and 2016 angel investors disclosed 112 deals to the value of R122-million. The value of deals still invested in Angel Investor portfolios is currently R271-million.