The South African venture capital industry exceeded the R1-billion mark for the first time in 2017 – investing R1.16-billion, the Southern Africa Venture Capital and Private Equity Association’s (Savca’s) ‘2018 Venture Capital Industry Survey’ reveals.
The annual publication highlights start-up and early growth phase funding activity.
The report shows that, overall, at the end of 2017, R4.39-billion had been invested in 532 deals, which was managed by the 57 fund managers surveyed.
The total value of investments increased by 33% in 2017, while angel investors invested about R73-million, compared with R44-million in 2016.
The sectors that attracted the most investment from a value perspective, according to the survey, are manufacturing, which represented 10.2% of all active deals, as well as consumer products and services, and software, which represented 9.6% and 9.1% of all active deals, respectively.
Savca CEO Tanya van Lill says the association is “encouraged [by] the continued growth of the asset class”.
She adds that Savca is confident that, as the venture capital sector matures, an increase in exits will follow suit.
“What’s more, we’re particularly excited about the role and future impact that the increased capital flowing to the sector is expected to have on the economy. In line with this, our focus over the next few months will be on conducting research aiming to identify and quantify the overall economic impact of the venture capital and private equity asset classes,” she elaborates.
As a precursor to this, the survey contains a brief socioeconomic impact assessment, focusing on responses from 38 venture capital backed South African companies.
According to Savca’s statement, research shows that 77% of the surveyed businesses acknowledged the advantage that venture capital investment had on their ability to enhance employment opportunities within their respective enterprises, which included driving national job creation.
Meanwhile, successful venture capital investments will be celebrated at the inaugural Savca Awards, which will be hosted in Johannesburg on November 8.
The awards will be an opportunity to showcase the impact that strategic venture capital and private equity investments can make on individual companies and to the economy at large, Savca says.
Despite the tough economic climate and political uncertainty that characterised 2017, Van Lill highlights that the investment activity in the venture capital sector soared.
“Given the entrepreneurial spirit in the region, the significant impact of the small businesses on gross domestic product growth and an increase in investors, we are bound to see the upward trend of deal flow continue in 2018.”