Venture capital firm Empowerment Capital on February 1 announced that it had approved and placed a total of R162-million into 13 South African start-ups between July 2019 and February 2021, with R32.5-million approved for placement in three new ventures in the coming weeks.

Although investment activity was subdued across the board in 2020, it was an extraordinary deal making year for Empowerment Capital and its investment funds Andzani Ventures, Imvelo Ventures and Thuthuka Nathi Ventures, says Empowerment Capital executive director Anton Baumann.

"The company had its most active year yet, aggressively and proactively executing investments in South Africa’s up-and-coming entrepreneurs," he adds.

The deals closed span a range of sectors including agriculture and food and beverage, but with a bias towards a variety of technology platforms and marketplaces that "provide their corporate investors with strong transformation prowess and a promising model for attractive returns on their investment, while also addressing their transformation objectives that most often go beyond black economic empowerment scorecard requirements".

"The successful entrepreneurs who received equity investments do not just receive capital, which allows them to quickly scale their operations, but they also receive hands-on support and mentorship from the Empowerment Capital team in the form of management and stakeholder support, strategic marketing, mentoring, access to extensive business networks and most importantly, access to market."

Successful businesses and their owners require different forms of support as they evolve from concept to start-up to a sustainable and profitable company. The South African environment is dominated by large and established market players, says Empowerment Capital executive director Mark Fitzjohn, who is a co-founder of venture funds Andzani, Imvelo and Thuthuka Nathi.

Empowerment Capital is seeking aggressive growth as it enters the next phase of its business, which will involve raising funding with institutional investors for further support of the small, medium-sized and microenterprises (SMMEs).

"The focus of the next 24-month growth phase is a second raise of third-party institutional investment into a portfolio of de-risked investment assets backed by strong listed corporate partners that value both financial returns and meeting social upliftment and transformation objectives.

"All of the Empowerment Capital’s funds have been set up to promote commercial investments into the SMME sector and are conducted in the true spirit of transformation, empowerment and nation building," says Baumann, who is also a co-founder of venture funds Andzani, Imvelo and Thuthuka Nathi.

"We provide support to SMMEs at various stages of their growth path while ensuring that the capital invested goes to supporting sustainable growth," adds Fitzjohn.

The company has pioneered mutually beneficial long-term equity investments in the SMME sector as a form of sustainable and impactful enterprise and supplier development with its corporate partners Sappi, Capitec Bank, Shoprite Checkers and others.

“We looked for investees with strong leadership teams that offer our corporate partners attractive investment opportunities, which we believe are able to drive inclusive growth in the South African economy through solutions that address the current challenges faced by consumers and society,” says Baumann.

“2020 was a pivotal year for us to show how promising tech start-ups can showcase the value offered by corporate venture capital,” says Fitzjohn.