Cape Town-based hardware incubator Savant is looking to scale up its impact after raising ZAR110 million (US$7.8 million) from the SA SME Fund, which it will use to itself launch a venture fund.
A hardware technology incubator, Savant was established by Nick Allen in 2005, and provides commercial support to innovators and inventors who have developed science and engineering based technologies and products.
“We assist innovators with the type of commercial skills they are typically lacking, and in particular have historically focused on assisting with fundraising. Our approach is that less is more – we concentrate on quality over a quantity, and believe that working with fewer, quality businesses will have a greater impact,” Allen told Disrupt Africa.
Savant partnered with the Seda Technology Programme in 2015 to grow its reach, and founded its seed fund in 2017 with funding from the Technology Innovation Agency (TIA). The funding secured from the SA SME Fund, which launched in2016 and is capitalised by almost 50 JSE-listed firms, will be used to launch a venture fund, which Allen said will add the “next piece of the tech commercialisation puzzle” to the incubator’s offering.
The Savant Venture Fund will invest primarily in pre-revenue, market ready hardware technology companies with IP-driven competitive advantage, and local and international market opportunities.
“Our preference will be to invest in companies that have come through our incubator and seed fund, but we will also review external opportunities. Companies in our incubator that have already gone to market locally are also potential targets to grow them onto the international stage,” said Allen.
Savant has been busy since its founding in 2005, with Allen saying it had been fortunate to have worked with companies like Leatt Corp and Snuza, that have successfully taken their innovations onto the global market, while it has another three companies taking their products global at the moment.
“Before our partnership with Seda we took on very few new clients per year, and the vast majority of these have gone to market successfully. Following our Seda partnership we have significantly increased the number of clients we worked with to 10 to 15 companies per year, and our pipeline is now full of very early stage companies,” he said.
“We are, however, already seeing great promise in some of these, with Quickloc8, IntelligentSafe and SmartBlade looking particularly promising. In total our companies have raised over ZAR180 million (US$12.8 million) and generated over ZAR4 billion (US$284 million) in revenue. Job creation is well over 200, although we have only started to track this properly once Seda came on board.”
The recent funding came about after Savant approached the SA SME Fund through a board member in the middle of last year.
“We have been looking to raise a fund for some time now in order to fill the funding gap between technology development funding from the likes of TIA, and the typical South African VC appetite that only kicks in post-revenue,” said Allen.
“South African investors are looking for traction to validate the commercial viability of early-stage companies, but this typically leaves South African hardware technology startups, in particular, in a big funding hole.”
Savant, he said, had experienced this funding gap for many years, and believed the SME Fund’s mandate to to fulfil unmet needs and promote early-stage South African companies was a good fit with what it was doing.
“The funding from the SME fund will be the catalyst in the establishment of a larger fund – we are pursuing a number of additional funders – and the validation of the Savant investment model,” said Allen.