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Venture Capital Investing in South Africa

General

More and more venture capitalists are turning their attention to South Africa, drawn by the country’s strong economic growth and sophisticated business environment. By some estimates, South Africa now receives more venture capital investment than any other African country.

One of the pioneers of venture capital in South Africa is Justin Stanford, founder of Acorn Angels. Stanford began investing in South African companies in the early 2000s, and has since made more than 30 investments in a wide range of businesses, from software and medical devices to renewable energy.

Stanford is bullish on South Africa’s prospects, and is convinced that the country is poised for significant economic growth in the years ahead. “I believe South Africa is on the cusp of an economic renaissance,” he says.

Indeed, South Africa’s economy has been growing at a healthy clip in recent years, expanding by an average of 3.5% per year between 2004 and 2013. This is significantly faster than the 2.3% annual growth rate recorded for the years 1994 to 2004.

What’s more, South Africa is home to a large and sophisticated pool of entrepreneurs and businesspeople. “The country has a lot of experienced entrepreneurs and executives who have run big businesses,” Stanford notes.

This deep pool of managerial talent is one of the key factors that has attracted so much venture capital to South Africa in recent years.Another is the country’s world-class infrastructure, which includes a developed financial system and good transport and communications networks.

Of course, no country is without its challenges, and South Africa is no exception. The country continues to grapple with high levels of unemployment, poverty and inequality. And, like many emerging markets, it faces the risk of sudden political or economic shocks.

But despite these challenges, South Africa’s strong fundamentals are attracting increasing amounts of venture capital. And as the country’s economy continues to grow, that investment is likely to keep flowing in.

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