Venture Capital is nowadays not an awkwardly unfamiliar term in the SMME platform of business discussion. Indeed this phenomenon couldn't be better dissected than by analysing Johannesburg-based Capitalworks' recent announcement that over R2.7-billion had been raised in six months! This early-stage, high risk, high return, "non-traditional" source of capital has become a significant financial aid to a number of privately owned businesses with well-planned and certainly ambitious forecasts.
In this segment we continue to review some of the private equity (PE) and venture capital (VC) options available to small and medium size enterprises in SA.
1.) Acorn Equity
The Acorn Group - founded in June 2009 by Pierre Malan – is managed by a dynamic team of experts, with a proven track record including healthy IRRs. Acorn currently has two live funds that are no longer open for investments. However, the Acorn Venture Technology Fund One is actively seeking viable investment opportunities. Business owners seeking capital in the short to medium term should also note that Acorn is currently raising funds for their third fund, Acorn SME Fund 2. This fund suggests that Acorn and the investors are recognising opportunities for growth and feasible returns in the SME sector.
Acorn has also aligned itself with several key players in the targeted investment markets to ensure a steady flow of deals. These strategic alliances create funding opportunities for a number of businesses in a diverse spectrum of promising industries. Acorn Equity has proven its ability to create and innovate when it comes to the structuring of acquisitions, the disposal of investments and the closing of transactions.
2.) Adlevo Capital
Aldevo is a Mauritius based company with a physical presence in Lagos, Nigeria. Adlevo adopts a multi-sector strategy and focuses on meaningful development in Sub-Saharan Africa through an increased application of technology to business processes. Adlevo's target market is primarily those companies with a large market opportunity and hence high growth prospects over the short to medium term. These are usually companies that operate on the principle of consumer-driven growth. The company is uniquely equipped to work with the management of portfolio companies, to drive operational improvements, and greatly enhance investor value.
3.) AngelHub (Pty) Ltd
This Cape Town-based Business Angel Investment Group seeks opportunities in high growth SA ventures with the core objective of accelerating growth sustainably and maximising returns. Their ideal investments will be in scalable companies driven by highly competent management with a firm grasp of their market and a clear understanding of their consumer demands. Lending is targeted at between R1-million and R10-million, which is ideal for most small and medium size enterprises with a clear and concise plan of achieving high returns within two to seven years. Of course, when it comes to private equity and venture capital entrepreneurs must be willing to part with ownership and be open to mentorship or advice from investors. Investor participation may be more active than other cases, depending on the nature of the business opportunity.
4.) Botenya Advisors (Pty) Ltd
Botenya is a Gauteng-based private equity firm, and the Botenya Infrastructure Fund is a BEE fund focusing on two primary infrastructure development components in SA. First on the agenda are technology, energy and the telecommunications infrastructure, followed by real estate infrastructure. These investment categories highlight a pivotal aspect of the general development agenda for most Sub-Saharan and African countries. Startups and young companies can consider Botenya, especially those involved in communications, media, eco-friendly energy infrastructure and related products. Small and medium enterprises can expect capital, proactive entrepreneurial support, and general mentorship when acquiring private equity via Botenya.
5.) Brait South Africa Ltd
Brait maintains a primary listing on the Luxembourg Stock Exchange and a secondary listing on the Johannesburg Stock Exchange. Brait SE is the European investment holding company and the general focus is on privately owned enterprises with high growth potential in emerging markets. The company has over 20 years of experience in raising capital and has over this time executed a disciplined approach to private equity investing. The focus has largely been in SA and Brait has established its fourth consecutive private equity fund (Brait IV) indicating further optimism in the SA marketplace. The company’s proven ability to combine domestic private equity investment skills with the experience of managing international private equity capital has produced a highly accomplished investment record. If you are looking for a business partner capable of executing complex, "non-standard" acquisitions, then Brait Private Equity is certainly worth exploring further.
The above five companies are all members of SAVCA and have to their credit proven industry experience, accompanied by a wealth of in-house knowledge. If you are in need of capital to realise the untapped potential of your market or unlock significant cash-flows based on a comprehensive, strategic business plan then you should explore PE and VC options - with an open mind.