South Africa's small businesses 'fall madly' in love with venture capital

South Africa’s small businesses ‘fall madly’ in love with venture capital

Venture capital market, which is often associated with investments into large and high growth businesses, is on the rise in South Africa, mostly due to the ‘love at first sight’ being overwhelmingly felt by small and medium enterprises (SMEs) since the launch of the Business Partners Limited Venture Fund in October last year.

Most of these businesses are struggling and financially-strained requiring smaller investments to get their concept to market or move their ventures to the next level.

The Fund, which finances deals for market-ready products or concepts for up to R10 million (about US$1 million), has already concluded several deals, the most recent being with Triggerfish Animation Studios, Business Partners Limited executive director Gerrie van Biljon revealed this week.

Cape Town-based Triggerfish Animation Studios is an award winning animated film production company that produced the international acclaimed film Adventures in Zambezia.

“Many innovative products or services never hit the market despite their potential, as financial constraints prevent them from taking the concept further,” van Biljon said in a statement.

“The Fund is therefore specially focused on investing in SMEs, as opposed to most venture funds that focus on larger private equity deals.”

He also said that the Fund has a particular focus on high impact investments and new technology, businesses which could ‘shoot the lights out’, and Triggerfish is a typical example of the type of venture which will be considered.

“Having been branded by the international media as Africa’s answer to DreamWorks, Disney and Pixar following its first animation film Adventures in Zambezia (3D), and second film, Khumba, Triggerfish required venture funds for its upcoming film’s script and storyboard,” Triggerfish Animation Studios chief financial officer Jean-Michel Koenig said.

Other innovative businesses that received funding include a new technology packaging company, telecommunication companies in and a bio-tech company.

“These South African entrepreneurs have over the years invented and developed outstanding products and services,” van Biljon said.

Several venture capital queries have been received from SMEs throughout all industries, ranging from electronic products to new innovations relating to the agricultural industry.

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