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Naspers shuts down Foundry: A setback for SA start-ups?
The announcement by Naspers to shut down its R1.4 billion South Africa-focused technology investment fund, Foundry, has sent shockwaves throughout the African tech start-up ecosystem this morning, writes Ventureburn editor-in-chief Ivor Price.
Foundry was established in 2016 with the primary objective of investing in early-stage technology start-ups in South Africa. It was aimed at supporting the growth and development of these start-ups by providing them with the necessary funding and resources they need to succeed.
However, as the global pandemic continues to impact the global economy, venture capital firms have taken a hit globally. The decision to shut down Foundry is part of Naspers’ broader strategy to slim down its operations and focus on core businesses. The group has also recently sold off several of its other tech investments, including its stake in Tencent, a Chinese tech giant.
This news has raised concerns among tech entrepreneurs in South Africa and across the continent.
There is a fear that the closure of Foundry will have a negative impact on the growth and development of tech start-ups in Africa.
Many entrepreneurs rely on venture capital funding to help them get their businesses off the ground, and the closure of Foundry may make it harder for them to access the capital they need to grow.
However, while the closure of Foundry is a setback, it does not necessarily mean the beginning of a major pullback in South Africa and Africa VC. Naspers’ decision to shut down the fund may be related to their own strategy and not necessarily indicative of the broader trends in the African VC market. In fact, according to a recent report by Partech, African start-ups raised a record $1.43 billion in funding in 2020, despite the challenges posed by the pandemic.
Moreover, there are still several venture capital firms and angel investors actively investing in African start-ups. For example, Y Combinator, a Silicon Valley-based start-up accelerator, has invested in several African start-ups, including Paystack and Flutterwave, both of which were acquired by foreign companies for over $200 million. Other notable investors in the African tech ecosystem include TLcom Capital, Novastar Ventures, and Ventures Platform.
While the closure of Naspers’ Foundry fund is undoubtedly a setback for the South African tech start-up ecosystem, it is not necessarily indicative of broader trends in the African VC market. There are still plenty of investors and venture capital firms actively investing in African start-ups, and entrepreneurs should not lose hope. Moreover, the pandemic has accelerated the adoption of digital technologies across the continent, presenting significant opportunities for tech start-ups to grow and thrive in the years to come.
- Ivor Price is the editor-in-chief of Ventureburn along with the Food For Mzansi Group publications, Food For Mzansi, FoodForAfrika.com and Health For Mzansi which he co-founded.
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