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

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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. –

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