South African VC firm AngelHub Ventures, which includes former FNB chief executive officer (CEO) Michael Jordaan amongst its backers, appeared to have a quiet 2014. But the reality was quite the opposite, and under the guidance of lead partner Brett Commaille, the firm is equally active this year.
Disrupt Africa reported in January AngelHub Ventures invested almost ZAR20 million (US$1.7 million) in five startups in 2014, while this year the company – which includes GoMetro amongst its portfolio companies – invested in South African e-book company Snapplify.
The appearance of calm at an in fact rather busy company is testament to AngelHub’s preference to shout about its portfolio companies only once they have achieved something, with raising funding simply being a means to an end. Commaille told Disrupt Africa the firm is there to help as much as any particular startup needs it.
“VC is about using your networks, experience and funding to help the business achieve it’s goals. Our involvement depends entirely on what is needed by each company. At times we’ve had to be a bit more hands on but ideally our focus is working with the management team to refine the strategy and advise on implementation,” he said.
Born and raised in Pretoria and a graduate of the University of Pretoria, Commaille began his career with Deloitte and spent two years working in Saudi Arabia for PwC before returning to South Africa as a merchant banker at Standard Bank dealing with young companies and company financing. He was there at the very start of South Africa’s VC industry as CEO of Invenfin Venture Capital, before setting off on his own to work with startups. All this led him to AngelHub, which launched in 2011.
“All the while I’ve worked in, co-founded and co-funded plenty of startups in my own capacity, learning plenty of expensive but valuable lessons along the way,” he said.
AngelHub became AngelHub Ventures last year after Jordaan and Kevin Harris came on board in place of Keet van Zyl and Andrea Bohmert, now running Knife Capital. Commaille describes the new entity as a culmination of years of building the angel investor ecosystem in South Africa, which involved educating investors on the VC space and the right timing for the right opportunity.
“Some of our investors, who were keen to do more in the space, appreciated the methodical approach to investing into startups and early stage businesses employed by AngelHub. They expressed interest in raising a formal fund to pursue suitable investments and agreed to provide the initial funding,” he said.
“We simply operate on the principle of applying a methodical investment approach to identify, evaluate and invest into suitable businesses that are likely to deliver significant returns, either though our holding them or through eventual sale where appropriate.”
For Commaille, operating such as fund in South Africa is more exciting now than it has ever been.
“We’re seeing more quality opportunities than before. The networks are more prominent and easier to access and we’re seeing more investors entering the ecosystem than before,” he said, adding that the involvement of corporates such as FNB and Microsoft, with its BizSpark programme, was assisting this development.
Angel groups and venture funds are, as a result, making more investments across Africa. AngelHub Ventures has a specific requirement when it comes to startups, which Commaille describes as “those demonstrating they solve a real pain point, one shared by a large enough market”.
“This greatly increases the chance of sustainable growth. Importantly, it needs to be led by a quality team that gives us the confidence they can drive and manage that growth,” he said.
To grow the tech startup ecosystem in South Africa, Commaille believes there is a need for more collaboration between parties that can boost the momentum or remove barriers.
“That would include funding of VCs by institutional investors, government incentives for angel and SME investors, increased government incentives for startup businesses and removal of red tape and regulatory businesses holding back the creation and growth of startups and investments into them by local and foreign investors,” he said.
AngelHub Ventures investments outside of South Africa, for the time being, are unlikely.
“It’s a challenge with South Africa’s tight excon regulations making the process of getting funds outside our borders quite difficult,” Commaille said.
“We’d also need the right partner close enough to the investee to give the hands on support so often needed in early stage businesses. So it’s possible but certainly not easy for us.”