The Southern African Venture Capital and Private Equity Association (SAVCA), the industry body and policy advocate for private equity and venture capital in the region, has released its 2017 Venture Capital (VC) Success Stories report. This report highlights the role that VC plays in supporting South African business, and follows the launch of the SAVCA 2017 VC Survey that revealed that the value of VC investments increased by 134% in 2016.
The 15 case studies included in the report cover multiple sectors ranging from e-commerce and transport, to augmented-reality gaming and health and wellness. “It is amazing to see so many home-grown businesses realising their full potential. It is clear, as showcased by the R3.5 billion invested by the end of 2016, that VC has had a tremendous impact on the development of the local economy,” says SAVCA CEO, Tanya van Lill.
“Early stage capital is essential for investee company growth, but VC adds additional valuable contributors to long-term success: strategic and operational expertise, sound corporate governance, expanded business networks and improved business processes.”
The publication not only enables VC practitioners to highlight their successes, but also captures the experiences of the entrepreneurs and business owners with whom they partner.
Continues, van Lill. “According to the World Economic Forum (WEF), creative thinking is among the top skills needed to thrive during the fourth industrial revolution. These businesses certainly demonstrate that innovative, disruptive, well-managed and relevant companies – in partnership with reputable VC players – are well placed for sustainable growth. From an app that enables affordable public transport, such as GoMetro, to one that allows for seamless, online food ordering (orderTalk). South Africa’s entrepreneurs are certainly driving the kind of local innovations that stack up well against international peers.”
“The 2017 VC Success Stories report validates that together, SAVCA’s members form a meaningful ecosystem of positive influence, patient capital and professional insights; driving economic growth and fostering innovation for South Africa and beyond,” van Lill concludes.
Success Story Examples
SweepSouth (investors Edge Growth) launched in June 2014 and is an on-demand online platform for booking home cleaning services. The platform connects its customers with cleaners who are background-checked, fully-insured and rated by users. The company has seen exponential growth, has attracted seed and Series A investment and has won numerous awards, including participation in the “500 Startups” accelerator programme in Silicon Valley. SweepSouth has also created employment opportunities for predominantly low-skilled women, employing 20 full-time staff and approximately 3800 registered cleaners.
A mobile app (investor Kingson Capital) that enables informal convenience stores, or spaza shops, to order stock straight from big brands and suppliers. They benefit from lower bulk-buying prices and direct delivery, saving them a trip to the wholesaler. The app also allows owners to earn additional income by selling products such as mobile airtime and data, life insurance policies and electricity, directly from their handsets. To start buying and trading, shopkeepers need to register on the app and make a deposit into their automatically created e-wallets. Spazapp, which takes a percentage of all sales processed through its system, has led to the creation of over 250 jobs through the training of young people as agents.
Augmentors Game (Augmentors)
Cape Town-based augmented reality gaming start-up, Augmentors, was founded by Michael Deon and Kyle Haffenden in February 2016. Following a capital injection from Newtown Partners (R 500 000) on reality television show, Shark Tank, Augmentors conducted the first initial coin offering (ICO) in South Africa, raising US $1 million within 30 days. The game uses augmented reality, which is cutting edge technology that superimposes a computer-generated image on a user’s view of the real world, allowing illusion and reality to collide. The game also uses the Bitcoin blockchain, which allows unique ownership of digital assets (in this case creatures).
From modest beginnings in the co-founder’s home in 2015, dinner kit delivery company UCOOK (investor Silvertree Internet Holdings) has grown significantly, distributing up to 1 200 orders a week to clients in Johannesburg, Cape Town, Durban and Port Elizabeth. Up-and-coming South African chefs – including food writer and TV show host, Sarah Graham – design boxes of hand selected, fresh ingredients and compile step-by-step recipes for customers to prepare themselves. Menus are revised weekly to suit health and time conscious consumers as well as vegetarians. The company is now delivering 40 000 to 50 000 meals on a monthly basis, and employs 16 full-time and 40 part-time employees.
CarZar (investor Silvertree Internet Holdings) is an online car buying service that provides an alternative to vehicle trade-ins and private selling in South Africa. The business, officially launched in April 2016, was co-founded by Michael Muller and Fernando Azevedo Pinheiro. Individuals seeking to sell their vehicles can submit details via the CarZar website, and receive an instant quote in seconds based on current market data. Customers can then book a vehicle inspection at one of the CarZar buying centres in Gauteng and Cape Town. Home-based inspections are available to sellers based in Cape Town, Durban and Port Elizabeth. Sellers are presented with cash offers at the inspections, after which, CarZar will make an instant payment and complete all the paperwork. CarZar has experienced a 30% turnover increase per month and has grown from 2- 40 employees within a year.