Ahead of new deal Clifftop Colony head speaks on portfolio’s performance [Q&A]

Clifftop Ventures, the venture investment arm of financial firm Clifftop Colony, is expected to announce its fourth deal, an official at the company confirmed today.

Clifftop Colony corporate financial analyst Christoff Fernhout said the term sheets for the deal had been finalised and that the company is expected to make an announcement of the deal next week.

In March Clifftop Colony CEO Oliver Drews said the investment company had earmarked a fourth investment, “like Wyzetalk a seed investment”, and had spent the last “six months or so” getting to know the founders team and refine the business model together with them.

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Clifftop Colony’s current portfolio includes: enterprise collaboration platform Wyzetalk (since 2012), online store Loot (since 2014) and online audio services company iono.fm (since 2016 — see here).

In series of questions Drews touched on the performance of Clifftop’s portfolio and singled out what he believes are the four most ingredients for a successful investment.

This Q&A is part of a series of interviews that the publication is conducting with venture capitalists and angel investors in the SA tech startup sector (see the footer of the story for links to other interviews).

What kind of return on equity do you generally look at? And after how long do you typically look to exit? What percentage of equity do you usually look to take?

We are not a fund, we manage permanent capital platforms, so there is no formal exit requirement for is. We hold assets until the right time comes to exit.

How many of your investments have had exits, how many are making really good growth?

All three (Loot, Wyzetalk and iono.fm) are doing well, in terms of revenue growth, customer acquisition, cost control and other KPIs we set individually.

We have no specific equity return target but we do look at risk adjusted returns depending on the phase the investee company is in. We also have no target percentage.

Are there say three or four important ingredients to making an investment return good value for investors?

In terms of ingredients for success there are many, here are just a few:

• Give the company and the team time to build a base and define their offering to the customer.
• Develop a strong culture of excellence across the firm.
• Interact consistently with existing and potential investors to test your value proposition.
• Partner with a strong corporate finance firm which can show you different options and gives you a view on what goes on internationally.

Of those investments you have exited, what made them successful?

Of the three assets we have, we have only partially exited one (Loot). The other two, Wyzetalk and iono.fm, we have held since 2012 and 2016 respectively.

Do you look to do this yourself or team up with other investors (say as a lead investor)? Or maybe you look for a foreign or local company to acquire your stake or the company?

We love working with other investor groups, in fact we always look for experienced co-investors in our portfolio companies or also for companies where we are not invested in and frequently present these companies to investors overseas.

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Featured image: Clifftop Colony CEO Oliver Drews