Funding Opportunities: A List of Investors that Back SA Startups. Last year was the most successful year of fundraising by African tech startups, according to the Disrupt Africa African Tech Startups Funding Report.
Africa’s investment landscape for entrepreneurs is slowly changing as more less risk averse venture capital flows into the continent. Today sources for investment capital for African businesses are growing beyond family and government funding.
International investors are actively searching for African unicorns to invest in with venture capitalists discovering opportunities on the continent that offer double digit returns on their investment. In 2017 alone R31.3 billion was invested, a 102% increase over the previous year.
Over the past few years, investors have also moved away from wanting to invest just in technology and digital retail. In 2016 the ICT sector made up 30% of all deals, but there was more money being invested in biotechnology, health and medical devices developed in Africa and agritech.
As the amount of money investors are channeling into Africa grows, now is the best time to consider approaching both local and international investors for your company.
Goodwell Investments is an Amsterdam based investment fund which takes a hands-on approach to funding startups. It offers microfinance and startup funding for African SMMEs. It also offers entrepreneurs’ assistance strategy, planning, fundraising, governance and reporting.
Greycroft Partners is a US-based venture capital company which mainly invests in digital media and tech startups. They target early-stage companies with young founders, typically in “seed” or “Series A” rounds according to Fortune. They also have a keen interest in startups that are headed by female founders and entrepreneurs, according to the same report. They recently invested in a Kenyan bitcoin payment solution, BitPesa and Nigerian payment solution, Flutterwave. They have two funds available: Greycroft IV, a $204 million venture fund and Greycroft Growth II, a $365 million growth-stage fund. Greycroft Growth II starts at $10 million and will invest up to $35 million in a company.
Kgatelopele is a South African private equity firm that funds under-developed black-owned businesses that show growth potential. They assist with raising capital, help source talent and develop growth strategies for their clients with the aim of raising value.
Accion is a US-based non-profit organisation that focuses on providing services to underserved consumers and businesses. In 2017, they partnered with Quona, a fund that invests in fintech startups with a social purpose. Some of the startups they have invested in include Nigeria’s fintech solution Lidya and South Africa’s insurance company AllLife.
Rising Tide Africa invests between $50000 and $500000 in women owned startups. The fund is an early stage investor in ‘digitally and technology-enabled companies’ that will improve the lives of African women and the lifestyles of the continent.
VC4Africa is a networking platform that links Africa businesses with investors and provides mentoring and support for African entrepreneurs.
The recently launched Jack Ma Foundation’s Africa Netpreneur Prize which offers an annual $1 million prize for 10 new enterprises that “tackle Africa’s challenges and further its digital economy through entrepreneurship.” The prize will run for 10 years and it’s hoped to encourage – without excluding anyone – women and youth. Applications for the first year of the prize open on the 15th of January 2019.
Kalon Venture Partnersis a South Africa-based section 12J venture capital fund and is one of a few 12J funds that invests in tech startups. Their focus is on disruptive tech startups. Last year they invested in shopping app, Snapnsave, solar power financial system, Sun Exchange, and online payment processor, i-Pay. The company invests as little as R110 000 and as much as R20 million into startups.
Knife Capital is Cape-based venture capital firm. Their target is post-revenue stage companies that require funding for growth or expansion, with a strong product or service offering and a scalable business model. They recently invested in SkillUp, a Cape Town-based that offers parents and students across South Africa access to thousands of highly skilled and vetted tutors based on grades, subject, location, and budget. Machine learning company, DataProphet, also secured funding from the firm earlier this year.
The South African venture capital fund manager, 4Di Capital, was founded in 2009. It invests in high-growth tech startup opportunities across seed, early and growth funding stages. Aerobotics, the aerial data-analytics specialist and startup, Lumkani, both secured seed-funding from 4Di Capital. Lumkani developed a low-cost system that detects early signs of shack fires and helps to reduce damage and destruction in urban informal settlements. This year 4Di had launched its third investment vehicle, 4Di Capital Fund III (US$9.4 million), with the SA SME Fund as the initial anchor investor.
SweepSouth Founded by Aisha Pandor and husband, Alen Ribic, was the first beneficiary of the Naspers Foundry, launched this year. The online cleaning services platform received R30 million from the fund. Naspers Foundry is a R1.4 billion startup fund that backs South Africa-focused technology startups. Naspers has said it will invest a total of R4.6-billion over the next three years in the local technology sector.
The Vumela Fund, a R588 million social venture capital fund, is managed by Edge Growth on behalf of the Vumela Trustees. Founded in 2010, the objective of the fund is to invest in, and grow SMEs, as well as provide growth support services to both investee and non-investee companies. So far, the Vumela Fund has made 19 investments – one of which is Giraffe, a recruitment startup that secured a round of equity funding.
Fishea is an investment and support fund for businesses operating in Sub-Saharan Africa. Fishea which is owned AFD and advised by PROPARCO, makes equity investments in businesses, banks and microfinance institutions. The fund’s investment target is €250m (R40 billion). The initiative aims to promote growth and jobs in Africa and pays special attention to the growth of small and medium-sized businesses. JUMO, which provide loans and savings-products to customers through mobile phone networks, has already received a US$ 3 million (R44 million) investment.
Enygma Ventures Fund
This investment fund focuses on female entrepreneurs and women founders who are based in Southern Africa or the SADC-region.
Enygma Ventures forms part of the Africa Trust Group, a South African-based early-stage gender-lens investing group. They are committed to investing in Africa’s women entrepreneurs encompassing enterprise development, and access to markets and trade facilitation.
According to Ventureburn, Enygma Ventures reported they had made available $1-million in growth capital funding to existing businesses wanting to scale up and accelerate their growth.
Kgatelopele Venture Capital and Private Equity Pty (Ltd)
This 100% black owned firm focuses primarily on private equity and venture capital asset classes. According to its website, Kgatelopele Venture Capital and Private Equity Pty (Ltd) targets mostly black under-developed businesses with potential for growth if supported.
Kgatelopele aims to start, develop and manage businesses and form partnerships with SMEs, without the founders having to relinquish control of their businesses.
Khula Lula, a South African venture capital innovator, offers access to micro-financing to African tech startups. According to its website, Khula Lula specialises in both angel investment and public equity investing.
To date Khula Lula has made nine public equity investments and one private equity investment. Last year, Portia Dhlamini of Native Nylon was chosen as the first recipient of the fund’s pre-seed capital (R200,000). Native Nylon’s e-commerce store launched in November 2020.
Launched in 2008, MEST is a Pan-African entrepreneurial training program, seed fund and tech incubator for tech startups in Africa. According to Ventureburn, in September last year $700 000 was allocated to seven selected African tech startups that had graduated from its 2020 training programme.
According to its website, they offer investment of $50k to $250k to help launch and scale early-stage companies. In addition to funding, MEST offers 18 to 24-month incubation at the MEST hubs and access to MEST’s Africa-wide tech community.
MEST Africa which is founded by the Meltwater Foundation has incubation hubs are located in Accra, Ghana; Lagos, Nigeria; Cape Town, South Africa; and Nairobi, Kenya.
Before you approach
Before approaching investors educate yourself in, at least, investment basics. Understand that they want to see how your business is going to make them money, especially if you want to exchange investment for debt rather than equity.
Most important. Different investors will offer different opportunities, so be willing to adapt your strategy to meet the demands and expectations of the investor offering you financing.
Article courtesy of SME South Africa