SA VC shoots the lights out

High-impact entrepreneurs are attracting substantial venture capital investment, according to figures released by Endeavor South Africa. In the process, they are creating jobs and growing exponentially, and buck current economic and business trends in South Africa.

Endeavor South Africa works to scale and accelerate the growth of high-impact businesses by providing them with access to global funders, international markets and a network of successful local and global entrepreneurs for tailored one to one mentorship.

Endeavor’s Harvest Fund II – a rule based and first-of-its-kind fund in Africa – launched in 2021 with the backing of its Endeavor entrepreneurs, mentors and five institutional investors including Sphere Holdings, Fireball Capital, Allan Gray, the SA SME Fund and Untapped(US). Harvest Fund II raised R190m and has invested in 17 companies, making it the most active South African VC fund in 2021 and 2022. In 2022, these companies collectively raised R7bn, achieved a combined R5.7bn in revenue, growing at a CAGR of 123%, and employing 9,600 people. They have collectively created around 2,800 jobs a year, of which 75% were for black South Africans and 90% for youth.

Endeavor South Africa Managing Director Alison Collier says: “These 17 fintech, telecoms services, edtech, retail and consumer tech companies are powerful growth and employment engines and demonstrate that successful entrepreneurs don’t rely on a thriving economy or political stability to succeed. They understand that cycles come and go, and that often the best time to innovate and grow is when times are tough and opportunities are underpriced. 

“The performance and job creation figures reflect a venture capital sector that is resilient, vibrant and provides over-indexed growth results in South Africa.  No matter their resources, our entrepreneurs are rich in human capital. They are problem solvers and are driving innovation and raising private capital through the work that they do, and that’s what we are investing in.”

Entrepreneurs in Endeavor’s portfolio are solving real mass market problems

These high-impact entrepreneurs are solving real mass market problems such as financial inclusion, enabling broader access for goods and services and creating access to markets. 

“Many of our entrepreneurs are operating around traditional industries, where they are able to solve market-related challenges and make products accessible quicker, and often more cheaply than big companies can,” says Collier. 

For example, MFS Africa, has significantly reduced the cost of cross border payments and expanded its services to 42 African markets and linked these markets to the US, Europe and Asia. Similarly, TymeBank has grown to serve 7-million lower income banking customers and offers the lowest online transaction fees. One of Endeavor’s entrepreneurs, HelloPaisa through their HelloPay solution, provides payment mechanisms for township entrepreneurs and small businesses that previously did not have facilities for customers to make card payments or transfers. YeboFresh is reducing the cost of supplying fresh goods to township spazas and simultaneously providing them with working capital. Talk360 is reducing cost of calling internationally, offering a cost effective calling from mobile phones to fixed lines.

“The scope to increase these kinds of services is huge, both in South Africa and across the continent,” says Collier.

Rashi Gupta, Group COO at MFS Africa, a company that enables partners to scale their digital payments strategy by providing payments and collections interoperability at scale across Africa, with access to over 40+ countries in Africa and 400M+ mobile wallets, says:

“Endeavor brought us expertise in board setup, creating our employee incentive program, and setting up our initial HR strategy. Such support is invaluable to entrepreneurs as it requires a level of expertise that they typically don’t have internally given the stage of growth. In turn, the Endeavor ecosystem also provides us the opportunity to give back to the community by supporting early-stage companies through their journey.”

Nadir Khamissa, co-founder of HelloPaisa & HelloGroup, enables people in informal communities to accept electronic payments, store it in a digital bank account and make local and international payments. The company operates across Africa, UK and the Middle East

Khamissa says: “Endeavor has given us a vantage point into the startup ecosystem and possibilities across markets globally. They not only help spark ideas and forge partnerships but inspire us to reach for the stars. Alison and the team play a critical role in unlocking the entrepreneurial potential in South Africa.”

Jessica Boonstra, CEO and Founder of Yebo Fresh, an award-winning e-commerce platform on a mission to provide township entrepreneurs and community organisations with access to high quality goods and services through smart technology. It serves 7500+ independent businesses in more than 25 townships.  

Boonstra says: “Endeavor has provided us with exactly the right type of support at the right time by opening doors to valuable connections, being fantastic sparring partners throughout our fundraise process, and by providing in-depth insights into specific topics such as company structure or scaling up. Working with the Endeavor team and its rich network has been a true boost for our business, allowing us in turn to accelerate our reach, our tech, our team and our positive impact.   

Go1 is the world’s learning content expert, aggregating content from top providers to deliver high-quality education and training across a range of industries and topics. It became a unicorn in 2021, doubled its valuation to $2-billion in 2022 and acquired Germany company Blinkist in 2023.

Melvyn Lubega, its co-founder says: “Today, over 8-million learners from over 60 countries use Go1. Endeavor and its community have been partners and advisors to us since the start of our scale up journey in 2017 – when we only had a presence in 3 countries. Their expertise and capital have been invaluable as a company looking to have a global impact.”

Launch of Endeavor Harvest Fund III

Following on the success of Harvest Fund II and the strength of its portfolio and pipeline, Endeavor launched Harvest Fund III (R500m) in March this year to continue to invest in tech and tech-enabled companies from South Africa and the rest of the continent, that are intent on scaling globally. It is targeting 25 to 30 investments within an existing pipeline of 127 Endeavor companies.  

Harvest Fund III is on track for a first close of R150 million in September this year and has seen remarkable interest, not only from existing investors, but also from institutional investors, and in particular, pension funds.  

“It is encouraging to see a growing interest in venture capital as an asset class.  Recently there have been exciting developments in the sector, with two South African Fund of Funds launching and securing capital from the government and pension funds to invest into this high growth and job generating sector.    

“Investment in entrepreneurial high-impact businesses enables many of them to leapfrog and work around traditional routes to market, especially through digitisation and new technologies, which is a core focus of Endeavor’s Harvest Fund III.”