Despite 134% growth in VC investments, sector still lacks liquidity says investor

The number of South African venture capital (VC) investments grew by 134% to R872-million in deals in 2016 over the previous year, shows Southern African Venture Capital and Private Equity Association (Savca) data.

But a leading venture capitalist, Angel Hub Ventures lead investor Brett Commaille, says a lack of liquidity and follow-on funding is holding back the sector.

Speaking at a Savca event held at the PwC offices in Cape Town last week to launch a VC success stories booklet (opens as a PDF), Commaille said while in the early days SA internet billionaire Mark Shuttleworth’s HBD ventures was investing over R20-million in VC deals, these days deal sizes are way smaller – at R7.6-million in 2016, reveals the 2017 Savca VC survey (opens as a PDF).

‘I know the VC sector tells the story that the small deal size is good because it’s to teach proper management, but it’s also because that’s the funds we have available to us’

“I know we tell the story that (small deal size) is good because it’s to teach proper management, but it’s also because that’s the funds we have available to us,” said Commaille, adding that VC funds could invest in more deals if there were more funds available.

Similarly Knife Capital co-founder Keet van Zyl told Ventureburn on the sidelines of last week’s Savca event that the VC’s decision to in September open a London office came he said, because local fund managers and pension funds have not shown that much interest in investing in VC deals.

Read more: Knife Capital reveals deal with Swedish startup, bemoans lack of local funds

Featured image: Screenshot from Savca’s 2017 VC survey