http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.17Change: -0.10
R/$ = 11.66Change: -0.08
Au 1276.65 $/ozChange: 17.35
Pt 1237.70 $/ozChange: 20.20
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Sep 25, 2012

Venture capital picking up steam in SA – survey

Back
Cape Town|Johannesburg|Pretoria|Africa|Fundamo|System|Africa|South Africa|Energy|Local Venture Capital Asset Class|Venture Capital|Venture Capital Transactions|Malcolm Sega|Savca|Segal|Communications Technology
|Africa|System|Africa||Energy|||
cape-town|johannesburg|pretoria|africa-company|fundamo|system|africa|south-africa|energy|local-venture-capital-asset-class|venture-capital|venture-capital-transactions|malcolm-sega|savca|segal|communications-technology
© Reuse this



Gauteng is South Africa’s largest base for venture capital transactions, but Cape Town received more venture capital funds than either Johannesburg or Pretoria, with R830-million invested in the venture assets capital class, the Southern African Venture Capital Association (Savca) reported on Tuesday.

In its ‘Venture Capital Survey’ report, which surveyed 11 fund managers recording 103 venture capital transactions between 2009 and July 2012, Savca stated that venture capital in South Africa was an active, albeit emergent, asset class.

Data from the survey also showed that the asset class was picking up steam, both in the number of transactions and in the number of fund managers. South Africa's high-growth entrepreneurial system is also producing notable exits.

“With only R830-million invested in venture capital, however, the asset class is substantially smaller in size compared with the funds under management by the South African private equity industry which is in excess of R100-billion, or in comparison to the market capitalisation of the JSE,” the report stated.

Savca executive consultant Malcolm Segal said that this raised questions about the role and impact of venture capital in stimulating the growth and development of the South African economy. "But the real figure may be as much as double the stated one because we know that there are numerous investors in the local venture capital asset class that did not participate in the survey as a result of our strict parameters, including angel investors, corporate investors, enterprise development initiatives and well-known entities such as business partners," he noted.

Meanwhile, the report stated that the largest portion of transactions concluded in the period was in the early stage of investments. Both start-up and growth capital attacked 37% each of the available funding while development capital accounted for 22% of investments by value and seed capital only 4%.

This showed a healthy appetite amongst investors in early stage and start-up transactions, despite a substantial decrease in the number of transactions by the public sector (normally executing early stage seed and start-up transactions) compared to the 2010 survey.

The biggest recipient of venture capital money has been information and communications technology, which attracted 35% of investment, followed by life sciences (health, pharmaceutical and medical devices) attracting 25% of investment over the period under review.

"Energy has not previously been a significant venture capital attracter because of its substantial capital requirements but over the research period the sector attracted 15% of total investment, making it the second-largest single sector recipient of venture capital funding," added Segal.

Over the survey period, 12 full exits and four partial exits were recorded. While fund managers were still reluctant to report exit information publically, each of the major venture capital fund managers surveyed reported having concluded exits during the survey period.

Segal noted that corporate merger and acquisition activity was mostly not reported publicly. “A notable public exit during the period was credit firm Visa's acquisition of Fundamo - a $110-million transaction."

CONSTRAINTS

The report noted that a lack of skilled entrepreneurs, lack of suitable management for venture capital invested businesses and a lack of exit mechanisms were seen as the greatest inhibitor to the success of venture capital funds.

In addition, fund raising, especially from institutional sources was reported as an “extremely difficult” process although some fund managers claimed to have received unsolicited interest from European venture capital family offices seeking investment opportunities in emerging markets.

"At Savca we intend that this survey would stimulate more in-depth analysis to create a clearly defined strategy for the development of the venture capital asset class in the country," Segal said.
 

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
SAA acting CEO Nico Bezuidenhout, Finance Minister Nhlanhla Nene and SAA chairperson Dudu Myeni
Updated 3 hours ago Finance Minister Nhlanhla Nene has assured that loss-making national carrier South African Airlines (SAA) will not receive another bailout from government, noting that the most recent R6.4-billion government guarantee had only been provided in support of an intensive...
Updated 3 hours ago South Africa's cumulative trade deficit was R95.3-billion in 2014, the South African Revenue Service (Sars) said on Friday. In 2013, it was R71.4-billion, Sars said in a statement.
Updated 4 hours ago Certain regulatory approvals remain outstanding in Telkom’s proposed R2.67-billion takeover of JSE-listed Business Connexion (BCX), the parties said in an update to shareholders on Friday. BCX noted in the statement that the Competition Authority of Botswana had...
More
 
 
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
 
 
 
 
 
This Week's Magazine
The international Square Kilometre Array (SKA) radio telescope – which is to be jointly hosted by South Africa and Australia with, later, outstations in other countries – may not yet exist, but international scientific working groups are already deciding what...
A free Web-based solar power plant capacity-planning tool offers project planners and developers, as well as governments, a means to assess the solar energy potential of thin-film solar PV power over an area of land. The tool was developed by thin-film solar...
As yet, no specific methodology, timeline or costs have been finalised to remedy the water ingress, excessive to contractual specifications, into the Gautrain tunnel between emergency shaft two (E2) and Park Station, says Bombela Concession Company technical and...
ASTRAPAK The group highlighted that executive strategic interventions and other group-wide business improvement imperatives were progressing favourably
The “seriously disruptive” electricity outages in South Africa have cost packaging group Astrapak more than R2-million in “irrecoverable downtime costs”, the company said on Monday, adding that the power cuts were negating some of the benefit of energy saving...
Bakkies and more affordable cars dominated South Africa’s new vehicle market in 2014. Unaudited data from the Department of Trade and Industry (DTI) shows that South Africa’s most popular vehicle in 2014 was the Toyota Hilux, selling 37 562 units.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks