SA sees 103 Venture Capital deals in 3 years

A survey released by the South African Venture Capital and Private Equity Association (SAVCA) has revealed that 103 Venture Capital (VC) deals, executed by 11 funds, took place in the country in the three years to July 2012, making the country Africa’s largest beneficiary of VC.

SAVCA said in a statement that 35 percent of the deals went to the ICT space, while 25 percent covered biotechnology, medical devices and health technology.

The report also stated that there was an investment of R83 billion (US$9.46 billion). 46 percent of transactions were executed by private venture capital fund managers and 51 percent of transactions by government-backed venture capital fund managers.

However, this figure may have been as much a double, since some deals were not disclosed to SAVCA and were no included on the survey. Examples include corporate venturing, enterprise development activities, business partners and angel investors.

“Gauteng was the largest base for venture capital transactions but Cape Town received more venture capital funds than either Johannesburg or Pretoria,” said the report.

The report found that the largest proportion of transactions concluded in the period was in the early stage of investments, including seed and start-up capital. Some 37 percent went into start-up capital, 37 percent in growth capital, while development capital and seed capital took 22 percent and 4 percent of the investment respectively.

2009 and 2010 saw substantial numbers of deals involving follow-on investments. “This shows a healthy appetite amongst investors in early stage and start-up transactions, despite a substantial decrease in the number of transactions by the public sector,” the report said.

Experts say that VC has picked up in recent years following the entrance of technology juggernauts such as Google, IBM and Intel into the South African market. South Africa’s finance ministry has also improved tax incentives to encourage more VC investments in the country.

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