Telecoms accounts for most VC activity in SA
The telecommunications sector led the way in terms of venture capital transactions in South Africa between 2009 and 2012, according to a new survey.
Data published by advisory firm Venture Solutions and the Private Equity Association (Savca), found that the ICT and electronics sector accounted for 35% of overall deals, with telecommunications accounting for 16%, software 13%, and e-commerce 3%.
In a prior survey conducted between 2000 and 2010, 27% of deals involved ICT and electronics, while telecommunications accounted for only 5% of the pie, and software 18%. Deals in IT services accounted for 5% over the reported period.
The most recent survey considered the calendar years between 2009 and 2011, as well as transactions conducted in the first half of 2012, using data gathered through questionnaires and interviews with venture capital funders and other investors that conducted venture-capital-type investments.
The survey of 11 investment funds noted that a total of R835 million was invested between 2009 and 2012 through 103 investments, versus R2.638 billion through 197 investments up to 2010.
Broken down further, the survey found that 15 transactions had taken place already in 2012, up to July, with 26 transactions in 2011, and 25 in 2010. In 2008, as many as 56 transactions took place.
“The number of transactions spiked in 2008, and then dropped off in 2009 due in part to the onset of the global recession, but more because investors who raised money between 2005 and 2008 had invested the majority of their funds between 2006 and 2008,” Stephan Lamprecht, the chief executive of Venture Solutions said.
The survey found that 46% of transactions were executed by private venture capital fund managers with 51% of transactions executed by government backed venture capital fund managers.
Gauteng Province attracted the most transactions by province with 57%, followed by the Western Cape (35%) and Kwa-Zulu Natal (8%); Cape Town experienced the most transactions by city with 32%, followed by Johannesburg (30%), and Pretoria with 18%.
The preference for location of venture capital fund manager offices changed from the previous survey, with the majority of investors preferring the Western Cape (Stellenbosch and Cape Town) as the base for operations, despite the majority of investments still flowing to Gauteng based transactions.
Gauteng accounted for 43% while Stellenbosch and Cape Town was the location for 57% of fund managers.
The period for the most recent survey saw the launch of new funds including the set-up of local offices for international players such as Omidyar Network, Google’s Umbono, and Enterprise Development backed initiatives such as the SAB Foundation, Anglo Zimele and Edge Growth Social Investment Fund.
Related articles
Loading ...