Venture capital continues to grow in South Africa – survey

A survey of the venture capital industry in South Africa has shown 122 local startups received a record R1.39 billion from investors during 2020.

An online webinar hosted by the Southern African Venture Capital and Private Equity Association (SAVCA) unpacked the key findings of the 2021 Venture Capital Industry Survey.

The largest sector by investment value in 2020 was Agritech.

“During the first three months of COVID, many businesses temporarily closed down,” Investment Principal at Edge Growth Ventures and webinar participant, Vuyiswa Nzimande, said.

“Some were still committed to paying salaries but as a result, the turnaround time for their recovery post-COVID was prolonged. As an investor, we set aside funds to help these businesses where we could,” Nzimande added.

“The time between the onset of COVID-19 and now has given us a chance to be more aggressive in terms of our investment capacity and there is indeed a perception that the risk appetite has increased towards SMEs since the onset of the pandemic due to COVID Funding initiatives and new funds.”

Survey findings on venture capital investments in South Africa

According to the survey, the startup businesses received the amount from 76 South African early-stage fund managers over the course of 167 investment rounds.

In 2019, 69 early-stage managers invested R1.23 billion into local startups.

The majority of funding came from investors based in Cape Town.

Overall, 51.5% of independent managers governed the largest number of active deals. This percentage is up 7.2% since the previous year.

The largest sector by investment value in 2020 was Agritech. According to research company Tracxn, South Africa is home to 106 Agritech startups.

In addition, the public sector continues to serve as a major investor. The sector holds 28.1% of all active portfolios by value of deals which amounts to R1.75 billion.

In terms of gender equity, 51.3% of survey respondents said they had female equity.

“There is room for improvement in terms of the country needing more women-controlled teams and funds,” CEO of SA SME Fund, Ketso Gordhan, remarked.

“Having said that, our attitude towards diversity is improving and we need to recognise that.”

SAVCA will host another event on 15 November. The 2021 Venture Capital Conference will take place at Eureka Estate in Durbanville, Cape Town. In-person or virtual attendance will be available.

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Featured image: Markus Spiske via Unsplash