The Southern African Venture Capital and Private Equity Association (SAVCA) impact study has been published. This is the third iteration of the report, with the previous two versions published in 2013 and 2009. This year, SAVCA commissioned Intellidex to undertake the research. Based on an in-depth study of 75 portfolio (investee) companies, the study showcases the significant role that both venture capital (VC) and private equity (PE) play in bolstering economic activity, transformation and job creation.
The private equity industry has grown substantially since the early 2000s, with the value of PE deals ramping up nearly fivefold since the first study was done in 2009 to reach R35.4bn in 2018. By comparison, the value of venture capital transactions totalled R5.3bn from 755 deals between 2009 and 2018, with an average of 129 deals a year observed since 2014. In addition to a high-level overview of these industries, the report features numerous quantitative measures in PE and VC activity, including details around financial and business performance, the impact of investment on BEE and the measurable effect of investment on innovation. To provide added context to these components, numerous case studies featuring nine of the portfolio companies that were surveyed are included.
The findings of the study emphasise the crucial role that PE and VC play in facilitating the successful growth of businesses, not only through the provision of capital but also through offering operational support and establishing strong relationships with the investees. In the end, these partnerships promote improved outcomes in various components of the business, including more robust innovation capacity, superior financial performance, better governance, improved transformation outcomes and job creation.
At a time when the South African economy is generally struggling to stay afloat, it is encouraging to see that the South African VC and PE industries are flourishing – both in terms of their ability to generate financial returns and through having a real economic impact. Such a potent mix of both financial returns and economic impact can make significant inroads into solving many of South Africa’s social and developmental problems, with private capital the key catalyst.
