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Over the past three years, angel investor network Jozi Angels has made 15 investments totaling over R6-million says its founder and director Abu Cassim, who believes angel investing is picking up in South Africa.
The Johannesburg-based network of 18 angel investors was informally started around 2015 and incorporated in 2017.
“We’re coming off a low base,” said Cassim (pictured above) in an email, adding that angel investing is still “a relatively new concept” in South Africa, with not many people familiar with what’s required or involved.
“But activity is picking up with respect to both interest and number of deals,” he added.
Jozi Angels is made up of 18 angel investors and was informally started in 2015 and incorporated in 2017
He said that although there’s more venture capital (VC) funding in the ecosystem — which he attributes to changes in the Income Tax Act — accessing that capital still remains a challenge for startups.
“VCs expect startups to be at a certain level in terms of business maturity before they consider funding them. Angel investors help bridge that maturity gap,” he noted.
Jozi Angels aims to foster more of this early-stage investment in startups.
Some of the startups the network has invested in include tourism platform Tour 2.0, media and advertising company Geist, Noah VR, aerial data solutions company Omnipresent, social marketplace Momslist and marketing research consultancy Neural Sense.
“We consider ourselves the fuel for the rockets,” he said.
Angel investing, as Cassim puts it, “is a team sport full of risk, adventure and potential reward”.
“It should be noted that investing in to early stage startups is a risky strategy, as statistically most of them fail. Understanding this risk is important as an angel investor,” he said.
As Jozi Angels is a closed group of select investors, potential members interested in joining the network first have to be vetted.
“All network members are approved before being able to participate in deals. Screening factors include their economic base and ability to tolerate risk, their ability to contribute to network investments (financially and otherwise) and alignment with the entrepreneurial spirit that we embody,” he said.
‘Investments tend to be illiquid’
Cassim said his organisation continuously tries to educate as well as guide those entering the angel investing space.
He cautioned that there is a “long list of risks” associated with angel investing.
“Investors should be aware that their investments tend to be illiquid”, he said, adding that even in those instances that a company does well, it takes several years to realise returns.
“On the other end of the spectrum there will be many investments that fail outright,” he said.
“The trick is to invest in a diversified portfolio to give yourself a better chance of catching the next big thing.”
Featured image: Jozi Angels founder and director Abu Cassim (Supplied)