Set against the stunning backdrop of Stellenbosch, the SAVCA Venture Capital Conference 2024 focused on the theme of adaptability in the face of change. This was captured in CEO Tshepiso Kobile’s opening analogy, comparing the venture capital industry’s need to evolve to LEGO’s shift from wooden toys to plastic building blocks (noting that there is an average of 80 LEGO bricks for every person on earth!).

The message was clear: much like the global economic landscape, the venture capital sector must continually innovate to thrive amidst uncertainty.

The conference was attended by RisCura’s Alternative Investment Team, Cami Mbulawa, Heleen Goussard, Daiyaan Edwards, and Touseef Banderker. 

Throughout the day, the importance of political stability and its impact on investment confidence came to the fore. Political economist Simon Freemantle highlighted the relative stability of South Africa’s Government of National Unity (GNU), which has created a foundation for potential reforms despite ongoing challenges. While foreign investors remain cautiously optimistic, South Africa’s pending exit from greylisting and its diplomatic efforts (such as hosting next year’s G20 summit) signal hope for a more stable economic future. 

Discussions also turned to the mindset of Limited Partners (LPs) in this fluctuating environment, with a strong focus on balancing the potential for high returns with the need for downside protection. LPs are increasingly prioritising investments that offer both economic returns and social impact, particularly in job creation. Collaboration with international investors and improved data to measure risk and return were identified as critical for securing long-term, stable capital. The delicate balancing act of patient capital and the urgency of economic transformation in South Africa was a recurring theme, especially as investors seek to address market risks while driving growth. 

The venture capital investment landscape itself is evolving, with innovative financing structures, such as revenue-based financing, gaining traction as a way to bridge funding gaps. Panellists emphasised the need for venture capitalists in Africa to deepen their understanding of local markets before considering international expansion. Sustainability was another key focus, with investors urged to support companies that can scale while maintaining solid unit economics. The relatively young venture capital ecosystem in South Africa was acknowledged, with discussions highlighting the need for long-term support to ensure successful exits. 

Environmental, Social, and Governance (ESG) considerations emerged as a critical factor in venture capital decisions, with LPs increasingly driving the push for responsible investing. In South Africa, social issues dominate the ESG conversation, unlike in developed markets where environmental concerns often take precedence. Despite this, many funds continue to grapple with how to effectively integrate and measure ESG impacts. 

The conference also highlighted the potential for venture capital to address broader societal challenges. Case studies from companies like 27four’s VitruvianMD, which focuses on cervical cancer diagnostics, and Kena Health, a platform connecting patients to healthcare providers, illustrated how venture-backed businesses can create meaningful, long-term impact, particularly in underserved sectors like health tech. 

Innovative financing models, such as blended finance structures that combine private debt and equity, were discussed as ways to unlock liquidity in early-stage ecosystems. Collaboration between General Partners (GPs) and LPs, with a strong focus on supporting entrepreneurs, was repeatedly highlighted. Ensuring that entrepreneurs are at the heart of these structures – receiving not only capital but also the appropriate support – was viewed as essential to fostering long-term success. 

The Public Investment Corporation (PIC) also shared its role in fostering entrepreneurship in South Africa, with its Early-Stage Fund directing significant resources towards youth, women, and disabled entrepreneurs, as well as high-growth sectors like hydrogen and electric vehicles. The discussion underscored the importance of preparing entrepreneurs to be ready for institutional capital, suggesting that more efforts are needed in terms of “preparation funding” to bridge the gap between startups and large-scale investment. 

A case study on Knife Capital’s exit from Quicket to Ticketmaster, a South African online ticketing platform, served as a powerful example of the value of good governance, strategic agility, and the right timing. This successful exit reinforced the importance of strong governance structures and shareholder alignment, particularly for first movers in niche markets. 

The SAVCA Venture Capital Conference 2024 provided a comprehensive overview of the key factors driving the industry forward. Adaptability, collaboration, and sound governance emerged as recurring themes, all underpinned by the need to create sustainable impact through venture capital investments. As the industry continues to evolve, the focus on long-term value creation and supporting entrepreneurs will be essential for ensuring that the sector contributes meaningfully to Southern Africa’s economic growth.