Endeavor South Africa, a community of high-impact entrepreneurs, has raised R130 million in its Harvest Fund II since its first closing in late February, more than doubling the fund’s size.
According to the corporation, the fund is on course to be fully invested by 2022, a year ahead of schedule, and has already invested in six technological startups, with four more in the pipeline.
“South Africa is fast emerging as a wonderful platform for high-tech entrepreneurs to experiment and test out their ideas, particularly given its varied cross-section of customers, distribution and product, as well as its sophisticated regulatory, financial and telecommunication services backbone. Harvest Fund II is capitalising on this development and investing in the companies that are seeing early successes,” says Herman Bosman, Endeavor SA chairman.
Here Is What You Need To Know
- Harvest Fund II is a rules-based fund with founder alignment that invests in a verified pipeline of medium-sized, high-growth Endeavor Entrepreneurs.
- According to the company, Harvest Fund II follows the terms of lead investors, assisting entrepreneurs in negotiating terms before joining the investment round on terms set by the lead investor, allowing Harvest Fund II to quickly deploy capital into its network of Endeavor Entrepreneurs while also crowding in additional capital.
- It also mentions that 20% of the fund’s carry (profit) will be re-invested in Endeavor SA’s non-profit initiatives, so kicking off a virtuous cycle of support for the next generation of high-impact entrepreneurs.
- According to the firm, the whole cohort of 29 Endeavor SA Entrepreneurs has generated an additional 5 800 employment, a 20 percent average increase each year, as well as R3.8 billion in incremental revenue and annual growth ranging from 20 percent to 150 percent over the last four years.
- Harvest Fund II was able to attract additional investors, accelerate timeframes, and lower costs for investors by leveraging funding from the US Agency for International Development (USAID).
“Private investment helps local businesses grow, creates jobs and generates inclusive economic growth. The US government sees the potential of innovative approaches like Endeavor’s to visibly catalyse investment and sustainable growth at scale in Southern Africa — a region of great opportunity for entrepreneurs and investors alike,” says Andy Karas, USAID/Southern Africa Mission director.
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“Support from USAID enabled us to assemble a dedicated team to focus on the capital raise, accelerating investment timelines and ultimately raise the fund with a direct impact on the ecosystem,” says Antonia Bothner, Harvest fundraising lead.
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“What’s been even more encouraging to see is the successful alumni entrepreneurs at Endeavor not only coming into the fund as anchor investors, but also investing directly into the rounds of entrepreneurs on the programme — demonstrating the virtuous cycle at work.”
- Allan & Gill Gray Philanthropy Africa, Jim Chu, US investor and founder of Untapped Global, and a third financial institution that invests in Sub-Saharan Africa have joined Harvest Fund II as limited partners.
“Africa is home to the next billion consumers and South Africa is at a unique vantage point to be part of that,” says Chu. “We’re thrilled to be an investor in the Harvest Fund, given the commercial returns and the impact these high-growth entrepreneurs have in the local ecosystem.”
- The fund recently made investments in Go1, a global edtech training platform; Ozow, a fintech payments firm managed by Tencent Cloud; MFS Africa, a pan-African remittances company; and Mobiz, a marketing cloud platform, ahead of its US expansion.
- Sendmarc, a cyber security company, and Flexclub, a subscription-based mobility platform, were previously announced as investments, as was Kindred Ventures, based in the United States.
“Harvest was a natural fit for us as we see a strong alignment of missions when it comes to creating employment and youth opportunities via high-impact entrepreneurship,” says Rob Dower, executive director at Allan & Gill Gray Foundation.
- According to Endevor, Harvest Fund II plans to raise a third fund by the end of 2022 and will be ready to cast a larger net for fundraising.
- According to venture capital firm Partech Partners, African tech start-ups were financed roughly six times faster than the global average between 2015 and 2020, and venture capital investments in Africa are likely to hit an all-time high in 2021.
- Endeavor SA’s portfolio of 29 Endeavor Entrepreneurs raised over R2 billion in finance from investors in 2020, a threefold increase over the previous year, with R6 billion expected in 2021, according to the company.
“The same strong demographic trends that saw China, Brazil and India advance, are now projected for Africa in the next decade. This, coupled with increased mobile penetration, data and digital solutions, means there is an outsized opportunity [for tech companies] to grow and in a leap-frog fashion,” says Bothner.
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“We’re starting to see signs of more traditional players paying increasing attention to South African and African tech-based opportunities, and we’re cautiously optimistic about both the impact and the returns.”
Endeavor South Africa fund Endeavor South Africa fund
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write