PRIVATE EQUITY FUNDS
Yvonne Maitin is the CEO of One Africa Capital Partners and a Director at the Southern African Venture Capital & Private Equity Association (SAVCA). She maps out what entrepreneurs should do for a piece of the equity pie
The venture capital industry in southern Africa invested a total of R1,16 billion in 2017, exceeding the billion mark for the first time. Sectors that attracted the most investment included manufacturing, consumer products and services, as well as software. Of the total amount, angel investors invested about R73 million in 2017, compared with just R44 million in 2016. Maitin says there’s one chief quality that private equity fund managers look for in a business – a strong management team with relevant industry experience. Second on the list is a good product or service with a strong competitive advantage.
“There are also others: a large, addressable market for the company’s products or services and a scalable business model which will prove attractive to future investors on exit,” she adds. Diligence in record-keeping, operational management and cash flow management is also crucial.
Moreover, investors are seeking a “high-performance company culture” that cultivates elements like balance, innovation, creativity, reward, drive, resilience and creativity.
When it comes to start-ups, which often don’t have a track record, the engagement focuses on the actual entrepreneur and how bankable or commercial their product is.
“We look at both qualitative and quantitative measures, but if it’s a new entrepreneur, we have to do due diligence on the person themselves. This includes everything from reference checks to scrolling through their social media accounts. We stalk people!
“We look at their political exposure as well. What values do they hold and what drives them? We’re dealing with other people’s money, at the end of the day, so we have a duty to ensure we don’t lose that money,” says Maitin. –