South Africa’s VC sector for tech startups matures

The formation of a new angel seed fund AngelHub Ventures was announced today following the buy-out of former company AngelHub by two of its angel investors. AngelHub founder-CEO Brett Commaille says the new fund is being established in order to keep up with the demands of fast-changing technology and investor landscapes.

“When we started AngelHub at the end of 2011 we had a simple objective: to bring the promise and potential of South Africa’s startup business environment to the attention of experienced investors and facilitate this interest into real investment to grow these businesses. We’ve since seen the establishment of a number of new incubators and investment companies, and we believe it’s only the beginning.”

One of the angel investors leading the change is former First National Bank CEO Michael Jordaan, an active and passionate player in the local tech venture capital scene. “It is generally underestimated how, in the next decade, existing large businesses will be disrupted by small, focused entrepreneurial teams who use technology to create new business models. We hope to invest in such teams once they have proven the concept and help with their rapid growth.”   

According to Commaille, the growth and maturation of the local venture capital market over the past few years has created a space for a next tier of angel seed funds. “We always believed AngelHub would work best with its own investment fund. With Michael and Kevin Harris on board, we can now leverage our extensive network of local startups and our strengths in deal management and focus on what we’re best at – growing great local tech businesses.”

Part of AngelHub Ventures’ strategy is to link startups with great investment potential to existing success stories within the broader group’s stable. “There’s great strength and opportunity in linking companies we invest in with companies such as Mxit, who can offer great marketing and market research capabilities, or Multisource, who offer convergence solutions in 47 countries across Africa. This unlocks additional value for our investments and enables startups to achieve high-growth phases quicker and more cost-effectively,” explains Commaille.  Kevin Harris, AngelHub Ventures’ second investor adds,  “We’ve invested in many early sage business.  You need few aces up your sleeve that give your startups an unfair advantage.  We think we have that in companies like Mxit and Multisource.”

It is an exciting time in the local venture capital space. Two former AngelHub founders also established Knife Capital, a local growth equity fund manager focusing on the tech sector. The company recently made history after it became the first South African listed growth equity fund following its acquisition by Africa Dawn Capital.

AngelHub Ventures will retain its links with angel investors as it sees the opportunity for future co-investment or eventually investment in its fund.  In its two years as a business angel group, AngelHub facilitated 5 different investments with the last two having just been completed.  These last two deals included 13 different investors, including Michael Jordaan.  The new fund, however, allows AngelHub to focus more on the companies rather than raising the funding, which is sure to be a boost for the companies.