Southern Africa’s venture capital sector closed off 2024 with R13.35 billion in active investments across 1 325 deals.

For the third consecutive year, ICT-focused start-ups continued to attract the lion’s share of venture capital (VC), accounting for nearly two-thirds of total investment.

This, as data shows Southern Africa’s VC sector closed off 2024 with R13.35 billion in active investments across 1 325 deals, according to the 2025 SAVCA VC Industry Survey.

Conducted by the Southern African Venture Capital and Private Equity Association (SAVCA), in partnership with research firm VS Nova, the annual research initiative shows the ICT sector accounts for 65.9% of deal value, three times more than the next sector.

Within ICT, the top-performing sub-sectors were software (20%), fintech (15.9%) and online markets (7.6%), according to the survey.

Nicola Gubb, interim executive director of SAVCA, comments: “Behind these numbers lies the story of a maturing market, more sophisticated capital deployment, deeper investor networks, and an encouraging shift toward early-growth stage funding, especially Series A, which speaks to a growing confidence in scalable local innovation.”

Regional hubs, particularly the Western Cape and Gauteng, remain vital, with notable growth also coming from beyond SA’s borders, the study reveals.

It further highlights that there are encouraging signals in critical areas such as health tech, which rose to 20% of deal value – its highest share since 2015. This shift was driven by renewed investor interest in life sciences, biotechnology and medical devices.

“The consolidation of capital into ICT and health reflects a maturing, digitally-focused VC ecosystem that is aligned with global investment trends. It also raises important questions about sector diversification, which remains a priority for long-term sustainability.”

Overall, a total of R3.29 billion was deployed to start-ups in 2024, comprising R2.62 billion in equity deals.

In addition, the survey this year reported for the first time on debt made available by VC fund managers, alongside their equity investments. This amounted to R670 million for 2024.

Series A funding climbed to 42.5% of all deals – more than double the proportion recorded in 2023 – indicating a shift toward early-growth capital.

The number of investment rounds also climbed to 222, up 20% from the previous year, into 110 companies.

While the overall equity deal value declined year-on-year, the survey also indicated an increase in deal volume that reflects a broader diversification of funding activity, including more co-investors and growing use of alternative instruments like venture debt.

Commenting on the findings of this year’s survey, Reabetswe Mjekevu, investment principal at SA SME Fund, says the insights are reflective of the current downturn in the exit environment.

“However, the findings also point to a maturing VC landscape that is laying the groundwork for an environment that is ripe for stronger, more sustainable exits in the future, signalling a promising outlook for both investors and founders alike.”

The survey confirmed that exit activity remains a major constraint, with just three exits noted in 2024. Fund managers cited the lack of follow-on capital, limited buyer universe and regulatory hurdles, including exchange controls, as key barriers to exit.

To unlock the next phase of growth, survey respondents identified several strategic priorities, including attracting foreign direct investment, building international networks to help start-ups scale globally, and increasing the supply of quality, fundable deals.

VS Nova founder Stephan Lamprecht states: “South Africa’s VC landscape is showing promising growth, with renewed government involvement − particularly through fund-of-funds initiatives − being closely watched for its potential to transform the asset class and even encourage greater participation from pension funds and insurers.”

“If 2024 has shown us anything, it’s that Southern Africa’s venture capital sector is steadily shifting gears from promise to performance. I remain deeply optimistic about the future we’re building together,” Gubb concludes.

The post Tech start-ups lead way for venture capital funding appeared first on SAVCA.

Southern Africa’s venture capital (VC) sector closed off 2024 with a record R13.35 billion in active investments across 1 325 deals.

Despite global economic uncertainties and constrained exit environments, Southern Africa’s venture capital (VC) sector closed off 2024 with a record R13.35 billion in active investments across 1 325 deals, up 24% year-on-year, according to the 2025 SAVCA VC Survey.

Nicola Gubb, interim executive director of Southern African Venture Capital and Private Equity Association (SAVCA), said the findings reflect an industry that has demonstrated remarkable tenacity and resilience.

“Behind these numbers lies the story of a maturing market, more sophisticated capital deployment, deeper investor networks, and an encouraging shift toward early-growth stage funding, especially Series A, which speaks to a growing confidence in scalable local innovation,” she said.

The post Venture capital sector hits R13.35bn with tech and health leading investment activity appeared first on SAVCA.

The 2025 SAVCA Industry Awards will take place on Friday, 7 November 2025

This year, for the seventh consecutive time, the Southern African Venture Capital and Private Equity Association (SAVCA) will celebrate the transformative power of private capital. The 2025 SAVCA Industry Awards ceremony, set to take place on 07 November, will once again set the benchmark for the best in local entrepreneurship and innovation; boosted by the private capital asset class. SAVCA has now issued the final call for nominations, either from portfolio companies themselves or from their investment partners.

“Each year, we see the bar being raised higher than the year before. Likewise, the calibre of business leaders that we have the honour of celebrating, continues to inspire us as an industry body, as well as the investors who have real skills in recognising growth potential,” says Nicola Gubb, SAVCA’s Interim Executive Director.

Standard award categories (plus a brand new one)

The SAVCA Industry Awards has four categories, the first being for start-ups or companies supported by venture capital. Entrants in this category need to be less than 5 years old and be engaged in early-stage funding efforts (Series A or Series B, excluding seed/pre-seed revenue.

The second category is reserved for small companies with an enterprise value of under R200 million and revenue of under R200 million. Entering companies need to be established with positive operating cash flows.

Companies with an enterprise value and revenue of over R200 million (and under R1.5 billion) are eligible to enter the category for medium companies. Lastly, portfolio companies with an enterprise and revenue of over R1.5 billion can enter the fourth category, set aside for large companies.

This year, for the first time since the inception of the SAVCA Industry Awards, a new ‘GP Award’ category will be introduced. This award will recognise an individual from a fund management firm who has provided exceptional support to a portfolio company. To scoop this prestigious title, the GP professional must have been integral to the success of the transaction and to the subsequent growth of the portfolio company.

Nomination deadline just around the corner

All nominees must be headquartered in Southern Africa and able to show the demonstrated gains that have resulted from partnering with a private equity or venture capital investment firm, which must have exited in the past 18-24 months (leading up to December 2024).

After the nomination deadline (08 August 2025), all nominees will be reviewed. The judging panel – which consists of renowned business leaders and captains of industry – will release a shortlist of finalists for each category. These finalists will then be interviewed and individually assessed by the judges. The winners in each category will be announced at the SAVCA Industry Awards ceremony on 7 November 2025.

A word from the winners

Last year’s winners across all categories were testament to the resilience of local entrepreneurs and their relentless drive to excel – many times, against the odds. In particular, the SME sector, who are the backbone of our economy and drive job creation and innovation was celebrated. In this regard, hearX, who won in the Start-up and Venture Capital Award category, shared their encouragement for more nominations as we approach the upcoming 2025 Industry Awards. As a pioneering health tech company, hearX is committed to making hearing healthcare accessible worldwide. With a global footprint spanning over 190 countries and more than 2.4 million lives impacted, hearX exemplifies the transformative power of early-stage investment and innovation with purpose.

“Winning the SAVCA Startup Award for 2024 was more than a moment of recognition. It acknowledges the journey that hearX has taken from startup to global innovator and highlighted how far we’ve come with the trust and backing of our valued investors, partners, clients, and team. This award reminded us of the daily real-world change we’re creating and serves as inspiration for us to continue pioneering new ways in the hearing tech space.” says Nicole Myburgh, Marketing Lead at hearX Group.

As Vuyo Ntoi, SAVCA Chairperson concludes: “What we’re really looking for in this year’s nominations are portfolio companies who have stood out not only in terms of financial performance, but in how they’ve leveraged private capital to drive innovation, create jobs, expand into new markets, and build resilient, future-ready businesses.

We call on investor and investee companies to submit nominations – your success stories demonstrate the true value of the private equity and venture capital ecosystem in our region.”

Nominations can be made here:

https://research.krutham.com/jfe/form/SV_0xLkrDztxe5uEHc

The post Final call for nominations: 2025 SAVCA Industry Awards appeared first on SAVCA.

By: Southern African Venture Capital and Private Equity Association (SAVCA)

In a tough funding climate, many South African entrepreneurs might be wondering what they can do to make their businesses more appealing to investors. With signs of recovery in the venture capital (VC) and private equity (PE) sectors, there is growing interest in scalable, well-governed SMEs that show potential for high growth. However, competition for funding remains fierce, and founders must be prepared to meet increasingly rigorous investor expectations.

To unpack how entrepreneurs can improve their investment readiness, the Southern African Venture Capital and Private Equity Association (SAVCA) spoke to three members across the PE, VC, and hybrid spectrum: Tomi Amosun, Managing Partner at Summit Africa (PE), Janice Johnston, CEO of Edge Growth Ventures (VC), and Jade Buckton, Senior Associate at 27four Investment Managers (VC). Their insights provide a clear and practical roadmap for founders seeking to secure growth funding in 2025 and beyond.

What are investors looking for?

While investor priorities vary slightly across funding types, the fundamentals remain consistent: strong leadership, sound governance, and scalable models. For PE investors, operational excellence and investor alignment are crucial. “To become investment-ready, SMEs should understand the ‘why‘ behind seeking a private capital partner and be clear on investor fit. Not all investors are the same,” says Amosun. He adds that founders need to understand the implications of different investment instruments, as these dictate everything from return expectations to strategic involvement.

Johnston highlights the importance of scalability in the VC space. “Focus on business models that can grow quickly with limited marginal cost. Tech, platforms, and subscription-based services are naturally scalable,” she says, noting that early traction and clear product-market fit are more compelling than ideas without validation.

From a hybrid perspective, Buckton underscores the need for transparency and team strength. “Investors want to see accurate financials and a capable, committed leadership team. “Ineffective management is a common cause for funding applications to be declined,” she says. This applies to both early-stage startups and more mature SMEs seeking growth capital.

The investment case also improves when businesses show alignment with macroeconomic trends. According to Buckton, sectors such as renewable energy, fintech, and digital infrastructure are particularly attractive to both PE and VC investors, given their scalability and developmental impact. Johnston agrees, adding: “Funds are increasingly looking for innovation that solves real problems, particularly in underserved markets.”

What sends investors running?

Several red flags can derail a promising funding opportunity. For VCs, it often comes down to governance and clarity. “If a startup is not able to clearly demonstrate revenue streams or credible projections, or if it lacks a well-defined exit strategy, that’s a major concern an investor will look out for,” Johnston explains.

From a PE lens, Amosun cautions against operational immaturity, “SMEs often focus heavily on revenue and sales but can forget about internal systems, compliance, and succession planning. That imbalance can be risky when scaling,” he says. He also notes that personal and business finances should be clearly separated to avoid reputational and legal issues.

Buckton points to financial resilience as a key consideration. “Operating with only a couple of months of cash reserves is a red flag. It shows vulnerability to shocks and limited financial resilience,” she says. Overreliance on short-term debt, loss of key customers, or management opacity can also trigger investor concerns. Investors are looking for businesses with the right balance of ambition and operational readiness.

Smart funding, not just any funding

Chasing high valuations without substance can backfire. Buckton shares cautionary tales of startups that collapsed under inflated expectations. “A reasonable valuation gives you room to stumble and recover. Founders who optimise for hype can often end up with cap tables that leave them with little ownership and few options, especially if they raised multiple convertible notes at increasing valuation caps. Think carefully about the compounded dilution upon conversion,” she says.

Amosun notes that transparency and alignment should trump short-term appeal. “Smart investors are not just backing businesses but the people running them. If your story and values don’t resonate with the investor’s mandate, the relationship won’t last,” he says.

What steps can SMEs take to improve investor appeal?

Investors are looking for businesses with traction, transparency, and clear growth plans. Johnston recommends demonstrating product-market fit through real metrics like customer retention, usage, and revenue growth. “Even small wins show you’re solving a real problem,” she says.

Amosun advises strengthening internal systems and governance. “Ensure accurate, timely reporting and focus on optimisation and compliance, not just sales,” he says. He also encourages founders to tell a compelling growth story that aligns with investor timeframes. “A five-to-seven-year plan showing how capital will unlock value is more powerful than abstract ambitions.”

From Buckton’s perspective, being investment-ready also includes knowing your funding options. “Understand the variety of investment tools out there, from equity to blended finance. Choose what fits your business stage and goals,” she says, adding that non-financial support like mentorship and access to networks can be just as critical in early growth stages.

Finally, building relationships matters. All three experts encourage founders to attend industry events, engage with incubators, and use platforms that connect SMEs with capital. According to Johnston, “Founders who make themselves visible and are open to constructive feedback often stand out. Coachability is a signal that you’re resilient and investable.”

A strategic partnership

Meeting a checklist won’t attract private capital. Showing that your business is resilient, scalable, and aligned with investor goals, will. Founders who combine vision with operational excellence will be best placed to access the funding they need to grow. While investor sentiment may fluctuate, the fundamentals of strong business building never go out of style. Focusing on financial discipline, governance, market validation, and relationship building, will help today’s entrepreneurs turn investor interest into long-term partnerships that fuel real, sustainable growth.

The post How small businesses can become more attractive to private capital investment appeared first on SAVCA.

Tshepiso Kobile, SAVCA CEO

We regrettably announce the departure of our Chief Executive Officer, Tshepiso Kobile, who will be pursuing new professional opportunities. The SAVCA Board extends its appreciation to her for her leadership during a pivotal period for the organisation and the broader private capital industry.

Appointed during a time of transition, Tshepiso provided stability and strategic direction as SAVCA reoriented itself for the future. She led the recruitment and onboarding of a new executive team, helping to build internal capacity and position the organisation to serve an increasingly complex and evolving investment environment.

Under her leadership, SAVCA strengthened its voice in regulatory and policy discussions. With her at the helm, we played an active role in shaping elements of the Conduct of Financial Institutions (COFI) Bill and contributed to engagements with the Competition Commission and the Department of Trade, Industry and Competition (DTIC), particularly on public interest considerations in merger transactions. These efforts helped to ensure that private capital is appropriately considered in key policy frameworks.

Tshepiso also represented SAVCA at key international industry body engagements, helping to raise the profile of Southern African private capital on the global stage. During her tenure, SAVCA expanded its advocacy efforts and contributed to discussions on responsible investment, market development, and cross-border capital flows. A strong proponent of industry diversity, she supported initiatives that encouraged the advancement of women in private equity and venture capital and helped position the association as a platform for broader inclusion across the ecosystem.

The growth of SAVCA’s flagship conferences during her time – including the successful relocation of the annual Private Equity Conference to a larger venue to accommodate record attendance – speaks to her meaningful contribution. She has also played a key role in broadening our mandate to more intentionally include all providers of private capital – equity, mezzanine, and debt – ensuring a more inclusive and representative voice for the industry.
We thank her for her contribution to SAVCA’s continued relevance and effectiveness and wish her well as she embarks on the next phase of her career.

The board will soon undertake a process to recruit a permanent CEO. In the interim, to ensure operational continuity and momentum on strategic initiatives, the board has seconded one of its directors, Nicola Gubb, to act as Executive Director in the interim. Nicola is a seasoned executive and director with decades of experience in private equity and broader financial services, including leadership roles at WDB Investment Holdings as Chief Investment Officer, and earlier positions at Vunani Capital, RMB Fund Managers and HSBC. She will support SAVCA’s senior managers in maintaining the Association’s day-to-day operations and driving its key programmes until a permanent CEO is appointed.

For further enquiries, please contact: info@savca.co.za

The post SAVCA CEO Departs the Organisation appeared first on SAVCA.

During a thought-provoking panel discussion at the recent Southern African Venture Capital and Private Equity Association (SAVCA) Private Equity (PE) Conference, industry experts explored the current state of infrastructure in South Africa. The panel, moderated by Lungile Mashele, Sector Specialist in Energy and Infrastructure at the Public Investment Corporation (PIC), discussed issues ranging from demand and supply imbalances, funding gaps and project challenges, to suitable funding models and collaboration structures for public and private sector investors.

Challenges facing project development

There are several challenges that South Africa faces from an infrastructure development and investment perspective, notes Mameetse Masemola, Acting Head and Deputy Director-General of Infrastructure Investment Planning and Oversight at Infrastructure South Africa (ISA). “Key to this is the lack of focus and allocation of resources towards project preparation and planning, which results in an inadequate investment-grade infrastructure project pipeline.”

ISA plays a crucial role in assisting project owners – ranging from state-owned enterprises to water and energy authorities – with preparation and deal packaging to make projects viable for investment. “For National Treasury to consider these projects, baseline information needs to be in place, and we work closely with sponsors to ensure that happens,” Masemola added.

Budget constraints are another major challenge that Masemola raises. “While the ministry allocates capital over a three-year cycle, we have a R1.6 trillion infrastructure investment gap – this is the gap between the current project pipeline and the funding available.”

Innovative financing models for infrastructure

Blended finance has emerged as a critical tool in making “un-bankable” projects more attractive to investors. Refilwe Mokanse, an Infrastructure Finance Specialist at Infrastructure Finance, highlighted that their organisation currently has 26 blended finance projects in different stages of development. “Some are in advanced stages, going through due diligence, while for others, we are still engaging with the market to gauge interest,” Mokanse said. “Our mandate is to identify projects that are initially un-bankable, assess their feasibility, and structure them in a way that reduces risk and attracts financing.”

Expanding on the blended finance approach, Mokanse explained, “A blended finance model includes various sources of funding, such as grant funding from the government and viability capital from the Infrastructure Fund, which can take the form of a grant, a concessionary loan, equity or debt, depending on what is required to de-risk a particular project.

“The aim is to create an environment where the private sector can step in with the relevant funding. This could take the form of commercial finance, development finance institution (DFI) funding, multilateral development finance, and ideally, increased engagement with institutional investors to secure their participation in these projects,” he added.

To this point, public-private partnerships (PPPs) were identified as a critical mechanism for infrastructure investment, “PPPs create a strong opportunity for asset managers to provide funding either through the project SPVs or companies responding to the bids,” Mokanse noted. “We look at successful global models and assess their applicability to the South African market.”

In the energy sector, decentralisation has been a growing trend in recent years. From an investor’s perspective, Mosa Molebatsi, Senior Investment Associate at Mergence Investment Managers, explained that there are two buckets of projects in this regard. “On one end, larger off-takers like a mining company or manufacturing plant are looking to set up decentralised energy solutions to meet their energy demands off-grid. On the other hand, for the smaller portfolio players, we typically invest in aggregators that are driving projects in the sub-1MW space.” The latter model works as there is competition from international developers. The 3rd model, which is within the Residential space, has been lagging as the risk – return dynamics here are quite different.

Water infrastructure: A critical risk to business continuity

While energy has been a primary focus for South Africa, panellists stressed that water infrastructure is an equally pressing concern. “For the longest time, we’ve seen significant attention given to electricity, but water has often been neglected, especially at a corporate and industrial level,” said Mike Smith, Principal at The Water Fund. “This needs to change at a government, municipal and corporate level, because water is the single biggest risk to business continuity in South Africa. Without water, industry simply stops.”

The biggest funding gap, according to Smith, exists at the Critical National Infrastructure (CNI) level. “The CNI projects in the water space are extremely complex. Consequently, the transaction and due diligence costs that are required for those projects are difficult and expensive. This is compounded by the fact that at a CNI level, the projects are relatively small – often less than R100-million. We believe that project finance is the best approach here as it puts the vested interests and risks in the right hands – those of water service providers.”

Collaboration is key

Despite their varying viewpoints, panellists were all in agreement that greater collaboration between the public and private sectors is crucial for scaling up infrastructure investment. “We need to ensure projects get the buy-in they need from both sides to be bankable,” Masemola concluded.

The post Scaling up private sector-driven funding models for large infrastructure appeared first on SAVCA.

Tshepiso Kobile, CEO of SAVCA

The global private equity (PE) and venture capital (VC) landscape continues to face significant challenges, with lower levels of fundraising and subdued deal activity in 2024 compared to 2023. Despite these macro headwinds, the Southern African private capital market demonstrated resilience, buoyed by well portraying record levels of fundraising by PE firms in 2023, sizable investments across sectors, and opportunities in high-growth sectors like energy and FinTech.

Impact investing has gained significant prominence this past year, as investors increasingly seek to balance social and environmental impact, with achieving financial returns. General partners (GPs) have demonstrated their commitment in this regard by embedding ESG into their firms and portfolio companies.

In terms of VC activity, co-investments emerged as a significant feature, highlighting the collaborative nature of the sector. Southern African PE managers also attracted considerable foreign capital, particularly from European development finance institutions (DFIs). Furthermore, private debt has continued to gain traction as an asset class, reflecting a divergence in investment strategies seen across the continent.

Challenges faced in 2024

Persistent global challenges weighed on investor sentiment, resulting in noticeable hesitation to make substantial commitments on the continent. While the full impact on the Southern African region remains to be seen, this cautious approach has undeniably influenced investment flows.

Exits remained a challenge, despite reaching their highest levels in five years during 2023 (R21.3bn). South Africa’s muted economic growth, compounded by systemic issues such as loadshedding, transport constraints, and the lingering effects of state capture, has placed significant pressure on the growth of businesses. These challenges have contributed to subdued PE performance, with pooled internal rates of return (IRR) yet to recover to pre-2016 levels.

Enabling growth through reform

To unlock the potential of private capital in Southern Africa, sustained political stability and effective policy implementation are critical. The momentum introduced by the recent Government of National Unity (GNU) offers a valuable opportunity to build investor confidence, but execution will be key to maintaining this optimism.

An enabling regulatory environment for startups is equally important. High-growth businesses hold the potential to drive economic recovery, but they require supportive policies to attract capital and achieve scale.

The introduction of the two-pot system in South Africa this year marked a significant shift in the financial landscape. Allowing citizens to withdraw approximately R22 billion from retirement funds, this system provided a much-needed lifeline for households struggling with rising costs while preserving long-term savings.

Looking ahead, the two-pot system has the potential to streamline capital allocation, particularly for institutional investors. By ensuring liquidity needs are met through dedicated short-term provisions, this framework may facilitate greater investments in longer-term asset classes.

Energy, tech and beyond

As mentioned, the energy sector remained a focal point for PE investment in 2024, driven by structural reforms and the region’s transition to sustainable energy solutions. On the VC front, FinTech, software, and eCommerce continued to attract significant investment. Globally, emerging areas such as clean-tech and bio-tech have started to gain traction, signalling potential opportunities for local adaptation.

Artificial intelligence (AI) is also set to disrupt traditional industries in Southern Africa. While its growth may be constrained by the availability of capital, the technology’s transformative potential cannot be overlooked. Similarly, green hydrogen production and infrastructure development present promising opportunities for institutional capital to drive sustainable growth.

A future shaped by collaboration and intentionality

Southern Africa has all the building blocks for substantial growth: a growing middle-income population, good internet connectivity, rich natural resources, and trillions worth of institutional capital seeking financially sound and impactful investment. Realising this potential, however, will require intentionality in investment strategies.

As we look towards 2025, the resilience demonstrated in 2024 provides a strong foundation. With collaboration, innovation, and a commitment to reform, the private capital sector is poised to play a pivotal role in shaping a more sustainable and prosperous future for Southern Africa.

The post 2024 in review: A transformative year for Southern African private capital appeared first on SAVCA.

Tshepiso Kobile, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA)

Despite growing concerns about the turbulent macroeconomic outlook, the high interest rate environment and fundraising challenges, Southern Africa’s Private Equity (PE) industry has surged forward. With 2024 being referred to as the ‘ultimate election year’ on both local and global fronts, PE firms were called to navigate their way through a frenzied economic climate in the lead up to voting day and beyond. Still, business sentiment remained positive heading into the new year, with fundraising activity rising to a 13-year high.

A steady upward climb in PE fundraising

This was one of the key findings of the recently released SAVCA Private Equity Industry Survey 2024 (measuring the 2023 period), which is conducted annually by the South African Venture Capital and Private Equity Association (SAVCA). The survey found that funds raised in 2023 were 43% higher than the previous year, closing off at a high of R28.1 billion.

59% of these funds were raised from investors outside of South Africa – an encouraging indicator of the industry’s growing attractiveness to the international investment community and yet another indicator of an industry in rapid recovery after a 3-year, post-pandemic downturn. Along this vein, European and US investors made up 45% and 22% of investments from outside South Africa respectively.

Commenting on this is Tshepiso Kobile, CEO of SAVCA, who says that “The engines of the PE industry are gaining traction, and all signals point to noticeable growth and even untapped potential. On a global scale, PE is up against some serious odds, including economic uncertainty and political upheaval. Locally, the picture looks very much the same, although – true to its reputation for being resilient, PE has continued to push through and demand attention as an asset class, continuing to return capital back to investors and drive impact.”

Evidence of this can be seen in the marked optimism of local PE firms when compared to their global counterparts. The PE Survey found that Southern African PE firms are more optimistic about an increase in exit activity in the next six months than global PE firms – currently 41% of local firms expect an increase of 10% more as opposed to only 24% of global firms who expect the same.

A dramatic increase was also seen in the proportion of investments (by number) made by PE firms with Funds Under Management (FUM) of over R5 billion, which stands at 58% in 2023, compared to 11% in 2022. Likewise, 51% of respondents reported their expectation of seeing accelerated growth of their FUM, compared to just 38% in the previous year.

ESG and impact front and centre

According to the survey, it’s full steam ahead for PE, and ESG (Environmental, Social and Governance) and impact investing are leading the charge. The past few years have seen ESG rise in prominence as an important consideration by PE firms when making investments and similarly, a key expectation of LPs.

As per this year’s survey, 35% of local PE firms now have dedicated ESG professionals. In addition, 55% of respondents said that their fund has a specific impact investing mandate.

When asked about the elements of ESG that these investors are placing particular emphasis on, 92% of respondents reported that their investors require measurement of portfolio company performance against specific metrics. Increased reporting on ESG and the tailoring of investment strategy to meet ESG requirements ranked as second and third most prevalent investor focus areas, respectively.

In tandem with this consistent push for a greater focus on sustainability both in terms of the social and environmental aspects of PE investments, survey respondents also commented on the nature of their ESG policies. 66% of respondents said that the top component that makes up their ESG policy is adhering to external global sustainability initiatives (for example, Principles for Responsible Investments), with the responsibility for setting ESG priorities placed at the highest levels within the firms (i.e. at Board level).

These findings are indicative of a PE industry in which “ESG concerns have now become embedded in decision making and are seen as integral to operational success,” according to Kobile. “This in turn, speaks volumes about the ability of the PE sector to contribute to a growing greener, digitized and more inclusive economy.

We should never underestimate the capacity that sits within PE to foster resilience in ventures. This is evidenced by the growth in Revenues, Employment and EBITDA that was reported by the PE portfolio companies for the 2021 – 2023 measurement period, in a battling economy. With more and more PE firms keeping this objective top of mind, we will undoubtedly continue to see great examples of the positive contribution the industry can make towards our broader national goals,” she adds.

PE driving transformation progress

This was in fact one of the chief findings to emerge from the nation-wide analysis of the role of PE and Venture Capital (VC) in supporting and delivering on national policy objectives. The #InvestingForGrowth analysis was commissioned by SAVCA and conducted by research firm, Intellidex (now Krutham) in 2023.

Objectives such as job creation featured prominently in the final report, which found that while national employment growth found itself in the red at -4.2%, employment growth within PE investee companies stood at 4.2%. The report also found that PE and VC firms have thus far made an important contribution towards improving the BEE performance of the companies within their portfolios.

According to the report, investee companies reported significant improvements on several BEE scorecard components, namely ownership (up by 54%), management control (up by 38%), skills development (up by 68%), enterprise and supplier development (up by 71%) and socioeconomic development (up by 63%).

This coincides with the findings of this year’s PE Survey, in which fund managers reported improving diversity both within their Boards, as well as within their teams, with an increasing proportion of PE firms with over 30% women promotees across all levels. A further 62% of PE firms reported having more than 50% black management – up from 60% last year.

Concluding her remarks, Kobile noted that the PE sector is transforming the local investment landscape. “In line with SAVCA’s 2024 theme of ‘Synergy with Collaboration,’ we are confident that a truly inclusive and progressive industry where the unique qualities of all members of our society are harnessed, is well within our grasp.”

The post Survey results: SA Private Equity fundraising activity surges to a 13-year high appeared first on SAVCA.

This insight comes from the South African Venture Capital Association (SAVCA), which unveiled the findings of its 2023 Venture Capital Survey, which was published on Thursday, 18 July 2024.

The survey indicates that South African start-ups secured R3.3-billion in VC funding last year, with an additional R2.1-billion raised through co-investors.

In alignment with the global trend towards VC-type investments, the ICT sector-encompassing dynamic subsectors such as fintech, edtech, software, e-commerce, and online markets-continued to dominate investment activity across various sectors, according to a statement by SAVCA.

SAVCA noted that ICT as a primary sector nearly doubled in the number of investments compared to 2022, accounting for 87.6% of the total (up from 48.1% in 2022).

The post South Africa’s Tech Sector Attracts Significant VC Investment Surge appeared first on SAVCA.

The performance of the venture capital (VC) sector in South Africa defied the downwards trend in annual deals seen since 2020 as investments hit the R3 billion mark in 2023, displaying the level of resilience that has since become synonymous with the start-up ecosystem.

The Southern African Venture Capital and Private Equity Association (SAVCA) yesterday said the local information and communication technology (ICT) stole the show once again, capturing investor interest and reiterating the sector’s position as a frontrunner in economic development and innovation.

This was one of the key insights to emerge from this year’s SAVCA VC Survey Launch 2024 – an annual research initiative by the SAVCA launched last week in Cape Town.

SAVCA CEO Tshepiso Kobile shared her ongoing conviction that the VC industry must continue to play a pivotal role in supporting high-growth start-ups and early-stage businesses, while also enabling innovative solutions to our unique challenges as a country.

“The need to continuously reflect on this question and keep a close eye on the development of the sector is why research like the VC survey is so critical,” Kobile said.

“Today, equipped with the most recent data, I am proud to answer that yes, VC is alive and on a positive trajectory in South Africa – both in terms of active and sizeable deals.”

This year saw total capital flow to start-ups reach more than R3bn for the first time since the launch of the survey 14 years ago in 2010.

Holistically, since inception of the survey, the South African VC asset class had R10.73bn invested in 1 106 active deals.

Activity by the number of deals has remained stable, with a slight decrease in 2023 as the number of entities receiving funding slowed down, with more investments going into the same companies.

Notwithstanding the decrease in number of deals in 2023 (184 compared to 195 in 2022; and 186 in 2021) deal activity remained higher than the pre-Covid-levels of 162 in 2019; and 167 in 2020.

“Across the continent, we have seen VC gain popularity as an investment strategy,” Kobile said.

“Our economy depends on this sustained investment into our entrepreneurs and into innovative solutions that can help leapfrog South Africa into a more competitive and inclusive economy,” he said.

Similar to the previous year, a noticeable feature was the growth in co-investment activity, demonstrative of corporations and foreign investors investing alongside early-stage fund managers.

The ICT sector, which combines several active sub-sectors such as Fintech, EdTech, Software, eCommerce and Online Market continued to outweigh the investment activity in other sectors.

ICT as a primary sector almost doubled in the number of investments compared to 2022, amounting to 87.6% (48.1% in 2022).

Fintech remained the front-runner by value (18.3%) and number (14.8%) of deals, followed by Software at 9.8% of the total number of deals (6.7% by deal value).

eCommerce made a significant jump from 2022-levels – a testament to the continued uptick in online shopping that was seen and rapidly developed during and after the pandemic years.

In terms of the types of fund managers engaging in active deals, independent funds led the charge in 2023 at 66.2% of the total number of deals in the active portfolio of VC investments – up from 61.8% in 2022; and 57.8% in 2021.

This was followed by captive corporates at 34.3%, with angel investors making up a small proportion of active deals at 7.1%. Interestingly however, the average deal size of VC transactions by angel investors amounted to R6.15 million – a relatively large value when compared to the average deal size coming from independent funds, which currently equate to R7.47 million.

Safeera Mayet, head of policy and regulatory affairs at SAVCA, said they have been at the forefront of engagements with the government to create the most enabling working environment in which VCs can thrive and operate.

“The most significant development of late has been the implementation of the Remote Work Visa which allows individuals employed by foreign companies to work remotely in South Africa. This legislation will go a long way towards driving growth and innovation, as well as allowing foreign workers to impart and share knowledge through their interactions with South Africans,” she said.

“The next priority on the list is the South African Reserve Bank exchange control regulations that apply to technology and telecommunications (TMT) companies. In essence, SAVCA and its partners have been paramount in calling for the relaxing of exchange controls in order to attract foreign investment into TMT companies and to grow the capital base available for VCs,” Mayet said.

The post ICT sector leads the charge as Venture Capital investments in SA hit R3bn mark appeared first on SAVCA.