Venture capital investments in SA hit the R3 billion mark

The Southern African Venture Capital and Private Equity Association (SAVCA) released its annual VC Survey Launch 2024, revealing positive developments in the South African venture capital (VC) market for 2023.

Key findings:

• Total investment: For the first time since the survey’s inception, total invested capital surpassed R3 billion. Since the survey’s launch 14 years ago, the South African VC industry has seen R10.73 billion invested across 1,106 deals.
• Deal activity: While the number of deals decreased slightly in 2023 compared to 2022, the overall activity remains higher than pre-pandemic levels. This indicates a trend of larger investments being made in a smaller number of companies.
• Dominant sector: The ICT sector, encompassing sub-sectors like Fintech, EdTech, Software, eCommerce, and Online Marketplaces, continued to attract the most investment, capturing nearly 88% of the total capital flow. Fintech remained the leader within ICT, followed by Software.
• Fund management: Independent funds were the most active investors, followed by captive corporate ventures and angel investors. Interestingly, angel investors made a smaller number of deals but with a relatively high average deal size.
• Diversity in fund management: The survey highlighted a positive trend in diversity within fund management teams. Over 70% of respondents reported being rated B-BBEE Level 4 or higher, with a significant number having female CEOs or black founders.

Industry leaders’ perspective:

• Tshepiso Kobile, SAVCA CEO, emphasized the importance of VC in supporting high-growth startups and fostering innovation. She noted the need for an enabling regulatory environment to further strengthen the ecosystem.
• Stephan Lamprecht, Founder of VS Nova (SAVCA’s research partner), highlighted the significant growth in VC investment from R273 million in 2014 to R3.28 billion in 2023.

  He stressed the need to continue supporting entrepreneurs by increasing the number of businesses receiving funding.

Looking forward:

• SAVCA remains committed to advocating for regulatory reforms that create a more favorable environment for high-growth startups.

  This includes supporting the proposed South African Startup Act and advocating for relaxed exchange control regulations for technology and telecommunications companies.

The 2023 VC landscape in South Africa demonstrates a positive trajectory with increased investment and a maturing ecosystem.

Continued efforts towards creating a supportive regulatory environment are crucial to further unlock the potential of the VC sector and foster innovation in the South African economy.

Also read: Understanding Forex: A Beginner’s Guide