Venture capital in South Africa is resilient and growing, with entrepreneurs creating jobs, according to Endeavor South Africa managing director Alison Collier.
Endeavor South Africa's mission statement is to lead the global high-impact entrepreneurship movement to drive long-term economic growth and build strong entrepreneurship ecosystems in growth markets by selecting, mentoring and accelerating the best high-impact entrepreneurs.
Collier said this week that Harvest Fund III was on track for a first close of R150 million in September.
She said the fund had seen remarkable interest, not only from existing investors, but also from institutional investors and, in particular, pension funds.
Endeavor South Africa in March launched Harvest Fund III as it continues to invest in tech and tech-enabled companies from South Africa and the rest of the continent to help them scale globally.
It was targeting 25 to 30 investments within an existing pipeline of 127 Endeavor companies.
This after the success of Endeavor’s Harvest Fund II, which was launched in 2021 with the backing of its Endeavor entrepreneurs, mentors and five institutional investors including Sphere Holdings, Fireball Capital, Allan Gray, the SA SME Fund and Untapped (US).
Harvest Fund II raised R190m and has invested in 17 companies, making it the most active South African venture capital fund in 2021 and 2022.
Last year these 17 companies raised R7 billion, achieved a combined R5.7bn in revenue, growing at a CAGR (compound annual growth rate) of 123% and employed 9 600 people. They collectively created around 2 800 jobs a year, of which 75% were black South Africans and 90% youth.
Collier said these 17 fintech, telecoms services, edtech, retail and consumer tech companies were powerful growth and employment engines, while demonstrating that successful entrepreneurs did not rely on a thriving economy or political stability to succeed.
“The performance and job creation figures reflect a venture capital sector that is resilient, vibrant and provides over-indexed growth results in South Africa. No matter their resources, our entrepreneurs are rich in human capital. They are problem solvers and are driving innovation and raising private capital through the work that they do, and that’s what we are investing in.”
Collier said many of the entrepreneurs were operating around traditional industries, where they were able to solve market-related challenges, make products accessible quicker and often more cheaply than big companies could.
For example, MFS Africa has significantly reduced the cost of cross-border payments and expanded its services to 42 African markets and linked these markets to the US, Europe and Asia.
Similarly, TymeBank had grown to serve 7 million lower-income banking customers and offered the lowest online transaction fees.
One of Endeavor’s entrepreneurs, HelloPaisa, through its HelloPay solution, provided payment mechanisms for township entrepreneurs and small businesses that previously did not have facilities for customers to make card payments or transfers.
YeboFresh was reducing the cost of supplying fresh goods to township spazas and simultaneously providing them with working capital. This as Talk360 was reducing the cost of calling internationally, offering a cost effective calling from mobile phones to fixed lines.
Melvyn Lubega, a co-founder of Go1, a learning content expert aggregating content, said more than 8 million learners from more than 60 countries used Go1.
“Endeavor and its community have been partners and advisers to us since the start of our scale up journey in 2017, when we only had a presence in three countries. Their expertise and capital have been invaluable as a company looking to have a global impact.”
Go1 delivers high-quality education and training across a range of industries and topics. It became a unicorn in 2021, doubled its valuation to $2bn (R37bn) last year and acquired Germany company Blinkist this year.
BUSINESS REPORT