Location Location Location: Western Cape Startups Get Most Venture Capital
Software-based tech startups in South Africa — especially the ones in the Western Cape province — have been getting the bulk of venture capital funding the last four years or so, according to survey respondents, Lungelo Shezi reports in htxt.
That’s where funders have been spending most of their venture capital, respondents said in the South African Venture Capital and Private Equity Association’s 2015 Venture Capital Industry Survey.
The survey polled funders in South Africa from January 2011 to July 2015, conducting interviews, using questionnaires and studying transactions as part of a series of surveys.
The majority of angel transactions recorded in the survey were supplied by angel investors based in the Western Cape, htxt reported.
Between 2011 and 2015, 21 public and private venture capital fund managers and angel investors were involved in 168 new deals worth $66.12 million. The number of deals increased from 11 in 2012 to 43 in 2015.
Private venture capital funders overtook government funding and now stand as the primary source for venture capital funding, accounting for 81 percent of deals recorded in the survey period, htxt reported.
Western Cape startups received the most funding with 75 percent of funded startups having headquarters in the province, followed by Gauteng (20 percent) and KwaZulu-Natal (3 percent).
There are several possible explanations for this concentration of funding in the Western Cape, according to htxt.
“This partly is a reflection of the number of entrepreneurs, angel investors and independent fund managers having set up in the Western Cape, which is contributing to a preference for, and availability of, suitable deals from Western Cape-based businesses,” the survey said.
“An additional contributor could be that angel investors based in the Western Cape are more forthcoming with data. The majority of angel transactions recorded in this survey were supplied by angel investors based in the Western Cape compared to their peers based elsewhere in South Africa,” the survey said.