Story audio is generated using AI<\/p>\n
A group of local start-up investors have joined forces to make the case that venture capital funding has become a viable form of making good returns, evidenced by money made through exiting those investments. <\/p>\n
Local venture capital investment is experiencing a big shift from purely raising capital to realising exits for investors through public listings of companies or acquisitions, which creates essential liquidity for the market, fuelling a pipeline of innovation and investment.<\/p>\n
For those in the ecosystem, the market is witnessing a structural shift rather than a temporary trend.<\/p>\n
According to separate studies by the SA SME fund Endeavor South Africa and the South African Venture Capital and Private Equity Association (Savca), South Africa\u2019s venture capital ecosystem is moving beyond isolated success stories towards a more mature investment market capable of attracting greater institutional capital.<\/p>\n
The \u201cSouth African Venture Capital: Exit & Performance Analysis<\/a>\u201d looked at 226 realised exits reported by local venture capital fund managers in 2009-26, finding that \u201crealised cash returns substantially exceeded invested capital, with capital-weighted realised returns ranging from 2.01 times to 2.45 times invested capital across the scenarios analysed\u201d.<\/p>\n Another study, the \u201cExit Case Studies Analysis\u201d \u2014 looking at 18 South African venture capital-backed exits across 21 investment rounds in 2014-26 \u2014 finds the exits delivered a median gross internal rate of return of 54%, a median gross money-on-invested-capital of 3.5 times, and a median valuation at exit of about R1.6bn.<\/p>\n Beyond investor returns, the broader market that these companies operate in has seen revenue growth by 256% and employment growing by 49% since 2021. Collectively, the exited companies created more than 4,000 direct jobs, averaging about 230 South African jobs per company, highlighting the broader economic impact of South Africa\u2019s high-growth scale-ups.<\/p>\n The group said the findings challenge the long-held perception that South Africa can produce promising young companies but struggles to produce sufficient venture-scale exits. <\/p>\n \u201cWhile the market remains relatively young by global standards, the data points to a clear shift: exits are increasing in size, pathways are diversifying, and several landmark transactions have taken place in the past two years,\u201d said the group.<\/p>\n Overall, the findings identify four main exit routes now active in the South African venture capital ecosystem: international mergers & acquisitions, domestic mergers & acquisitions, secondary transactions and, more recently, IPOs. <\/p>\n Recent examples include Mastercard\u2019s pending acquisition of BVNK, RapidDeploy<\/a>\u2019s buyout by Motorola Solutions, iKhokha\u2019s acquisition by Nedbank, Adumo being acquired by Lesaka, Ticketmaster\u2019s takeover of Quicket, and Optasia<\/a>\u2019s recent JSE listing. <\/p>\n