Switzerland-based global investment advisory firm U-Start, which has African operations in Cape Town, says it is keen to co-invest with prominent local angels, venture capitalists (VCs) and private investment entities in Africa to help fast-track the entrepreneurial ecosystem.
This is according to Zachariah George, chief operating officer for Africa at U-Start, who told Disrupt Africa the company was looking to facilitate more deals in the e-commerce, online marketplace, fintech, internet of things and digital health and wellness sectors in 2015.
U-Start specialises in direct and indirect VC investments in the tech and digital sector for private investors, VC funds, corporate ventures and wealth management institutions. In Africa, it invests in Series A and Series B rounds of African tech-enabled ventures with strong and prominent local co-investment partners, and provides access to international markets.
George said U-Start was looking to scale up its investments in Africa due to the continent’s “tremendous potential”, and help startups that traditionally struggle for access to funding.
“The investment coming in tends to be more later stage and not at the angel and seed level – which is where the vast majority of ventures need support – financial and non-financial,” he said.
“There is a need for more pooling and co-investment amongst various VCs and investors to collaborate instead of competing for a small pie of quality deal flow. Government needs to provide greater support at the seed funding stages without onerous application procedures and monitoring and evaluation requirements that are too cumbersome and bureaucratic that it precludes ventures from approaching government.”
He said the U-Start Investors Club, formed in October 2014, would assist with encouraging co-investment. The club now boasts more than 50 private investors from six regions across the globe with an average net worth of US$50 million.
“In the last five months alone, the U-Start Club has invested EUR4 million (US$4.3 million) into five international early-stage ventures. The most recent investment is a South African based digital health and wellness startup in the wearables category for which 10 private investors from the U-Start Club collectively invested US$500,000 into a seed extension round.”
George advised startups to engage more in commercialisation planning, and avoid too much focus on product development without focusing first on the revenue model and customer conversions. He also stressed the need for startups to establish advisory boards and governance mechanisms, which forms part of understanding what investors want.