South African venture capital (VC) fund AngelHub Ventures invested almost ZAR20 million (US$1.7 million) in five startups in 2014 despite appearing to have a quiet year, though it will not announce which startups until they have made significant developments.
Though no announcements were made about any of the investments, Brett Commaille, chief executive officer (CEO) at AngelHub Ventures, told Disrupt Africa five investments had been made and AngelHub was working on a sixth, which he said made it one of the most active VCs in Africa.
“We’re going to be doing announcements around them in the new year but we time our announcements with significant developments in the businesses since our funding is merely one element in helping them reach their goals,” he said. “We don’t make a big fuss about the funding, we prefer making a fuss about the business.”
Commaille said AngelHub Ventures was built on the “sincere belief” there are young businesses and entrepreneurs coming out of South Africa and the rest of the continent that have the potential to change the way we of doing business and parts of people’s lives.
“All they need is the access to the right networks, skills and funding to boost them to achieve that potential,” he said. “There are plenty of global businesses that started in the same way, yet many seem to have forgotten it is possible. I’ve also always been more of an optimist than a pessimist and found that there were far more reasons to believe it can be done than it can’t.”
He said the quality of startups in South Africa was getting better all the time as startups discover the wealth of information available online and people take the step to becoming entrepreneurs.
“The more experienced entrepreneurs we have the better the businesses are that they start to build,” Commaille said.
He said, however, many startups lacked the ability to package their product and company for customers.
“They need to get better at getting customers. Often there is too much focus on how wonderful the product will be without interacting with the users of that product to see whether and how they will buy it.”
He said AngelHub was interested in startups that could do it without the fund’s help, just slower.
“So they are “street fighters”, they make it happen with minimal resources and focus immediately on getting customers onto their product,” Commaille said. “They’re doing with five people what a Silicon Valley company does with 25. We’ve invested into some like that and we encourage them to keep that approach as it gives them huge runway and makes them spot gaps that others don’t.”
AngelHub Ventures has primarily invested in South Africa so far, something Commaille puts down to the youth of many of its investments, meaning it needs to be near enough to support and assist.
“So we tend to invest in companies originating in South Africa but growing globally. We’ve looked at some opportunities further up in Africa but we’d need a strong local partner to fulfil the hands-on roll locally for us to be really interested.”
He is confident there are many opportunities in South Africa, though he said as it has a relatively small local market, the country needs to build things that can scale internationally.
“We’ve got a history of some global tech players that have been birthed in South Africa and plenty of young techies and entrepreneurs who realised there is an opportunity for anyone willing to go the hard yards,” Commaille said.
“We have quality developers, even though we need many more. Cape Town in particular attracts them because of the lifestyle offered here which allows guys to code through the night and go for surf at sunrise. It’s the best of both worlds. You also have a concentration of funders in the area who actively build the ecosystem required for these hubs.”
He said more successful startups would attract more funding into the country and the continent in general.
“There can certainly be more funding. We need to get more of our businesses achieving success internationally to show that there is cool stuff coming out of Africa. We also need to tell the stories of the many global business that started here,” he said.