South African venture capital (VC) firm Silvertree Capital is planning to make more investments next year after a relatively quiet 2014, with the Kenyan capital Nairobi a target as the company looks to expand its operations.
Founded in 2013, Silvertree has invested in predominantly e-commerce companies, including Healthcart.co.za, Cybercellar and Wine.co.za.
Paul Cook, founding partner of Silvertree Capital, told Disrupt Africa the firm had been relatively quiet in 2014 on account of its investment model, which sees the firm get more heavily involved in a smaller number of investments than traditional VCs, but was looking to raise more funding and make one or two investments in the first quarter of 2015.
“We need to continue growing the size of our activities,” Cook said, saying the company was looking at Nairobi as a possible destination.
“Not because it’s the biggest opportunity necessarily but because it’s easiest to get things off the ground,” he said. “Most likely we wouldn’t partner because of our model. It is not obvious who we would partner with. In an ideal world we like to work with existing businesses that have got good traction because it gives you more to play with.”
Cook said the company was looking into ways of getting a more structured approach to its pipeline of startups ripe for investment.
“We don’t have a particularly structured pipeline approach because we don’t have a partnership organisation,” he said. “It is an area that we are thinking of at the moment. Because we don’t come across as many startups as we would like.”
However, in terms of obtaining funding to invest in startups, he said Silvertree did not come across the same problems as founder themselves do.
“People talk about there being a shortage of funding, but they mean as a startup. But we’re one level up the hierarchy in that we help a number of startups. In general there’s a lot of appetite in Africa at the moment and a lot of interest in it,” he said.
Disrupt Africa reported last month Cook told the U-Start Africa conference in Cape Town the Silicon Valley VC model was not appropriate to Africa, which faces issues with teams, the size of markets and the difficulty of making a successful exit.
Silvertree has been operating under a different model, taking big stakes in fewer ventures and spending a lot of time working with their portfolio of startups in order to build the businesses.
“We go much deeper into fewer investments than a VC would. We have not done many deals this year but that’s on purpose,” he said.
“As time goes by we do step back, they all have managing teams. As time goes by a lot is internalised. Shortly after our investment we are hands-on involved.”
