The Great South African Venture Capital Conspiracy
A shocking new report from the Southern African Venture Capital and Private Equity Association (SAVCA) reveals that South African venture capital (VC) fund managers have been secretly funneling millions of rand into the pockets of privileged start-ups, while leaving the majority of entrepreneurs to struggle in obscurity.
The SAVCA VC Industry Survey 2024, released last week in Cape Town, exposes the startling fact that ICT-focused start-ups have received the lion’s share of VC deals in 2023, with over R3.28 billion invested in just 94 companies. Meanwhile, small business owners and entrepreneurs from other sectors are left to fight over crumbs.
The report’s findings are a slap in the face to the notion that venture capital is a viable solution to South Africa’s economic woes. Instead, it reveals a system rigged against the average South African, where a handful of privileged start-ups are coddled and pampered while the majority are left to fend for themselves.
And what’s even more outrageous is that the majority of these deals are going to companies with already-established connections and resources, leaving the "little guy" to pick up the scraps. The average deal size for angel investors, for example, was a paltry R6.15 million, while independent funds were handing out whopping R7.47 million deals.
But don’t just take our word for it. SAVCA CEO Tshepiso Kobile’s comments at the launch event only served to further stoke the flames of controversy. "We’re proud to be supporting the entrepreneurs who are driving innovation and growth in our economy," she said, no doubt with a straight face. Meanwhile, the rest of the country is left wondering what happened to the "democratization of finance" they’ve been promised.
The truth is, South Africa’s venture capital industry is broken. It’s a system that rewards the well-connected and the privileged, while leaving the majority of entrepreneurs to struggle in the shadows. It’s time for a revolution – a revolution that puts the power back in the hands of the people, not the fat cats.
