Join us in Cape Town to meet Africa’s early-stage investor community!
The “Women in Angel Investing” Session in CT was hosted by Innovation Summit, GoBeyond Investing and SABAN on May 18th.
Women Investor groups are becoming more economically active in SA. Awareness of Angel Investment class is key.
— SABANnetwork (@SABANnetwork) May 18, 2017
— SABANnetwork (@SABANnetwork) May 18, 2017
“A winner culture is important, but a failure culture is even more important. Most start ups don’t survive.” Peter Jungen #SABANBreakfast
— SABANnetwork (@SABANnetwork) March 24, 2017
— Abu Cassim (@ABCassim) March 24, 2017
SABAN hosted an Angel Investor Masterclass at Rise in Cape Town with Newtown Partners’ Llew Claasen and about 25 prospective or current Angel investors.
Here some insight snippets:
- Many startups fail because of the inability of the entrepreneur to execute on the opportunity”
- Angel Investors utilise their own experience and network to extend the start up entrepreneur’s opportunity and ability.
- Focus on an industry segment that is underserved by existing solutions. Start ups that do something a little bit better are a poor bet.
— SABANnetwork (@SABANnetwork) March 9, 2017
It’s a particularly busy time in the South African entrepreneur-investor world over the next week as Johannesburg hosts GEC 2017 – the Global Entrepreneurship Congress. SABAN is co-hosting cocktails for investors and agripreneurs on Wednesday 15th March, contact us if interested in attending.
This afternoon SABAN hosts its first angel investor training session in Cape Town, where Newtown Partners Managing Partner, Llew Claasen, will unpack key principles and share from his many investment experiences. More below.
Looking ahead: Towards the end of March, Peter Jungen will be in SA, with decades of experience and legend-status in Germany. Join him for lunch in JHB on the 24th or dinner in CPT on the 28th.
And then, hot-off-the-press, in May we will have two ‘Women in Angel Investing’ evenings, more details to follow, Save The Date: 16th May JHB, 18th May CPT.
Angel Investor Training | Cape Town
Taking place at Rise, created by Barclays at the Woodstock Exchange in Cape Town this afternoon, we look forward to kicking off Angel training in SA. If you could not make this session, but are interested in future training, please contact us so we can guage interest and plan future events.
The session will cover everything you need to know to get started as an angel investor in SA, including: the setup process, identifying good opportunities, due dilligence, negotiating transaction terms, valuations, deal syndications, balancing your portfolio, your involvement as an investor, second-round financing and exits. The session will also look at best practices for maximising your returns.
Email email@example.com for enquiries on last minute availability.
More details of the event are available at: http://qkt.io/tJx0sy
**Note: All proceeds go to SABAN. The South African Business Angel Network (SABAN) is a non-profit, industry association dedicated to growing angel investing in South Africa.
Peter Jungen Visits South Africa
Mr Peter Jungen, German Angel legend, is in town (ie. South Africa) for an Oppenheimer family moment late March and we will be hosting two informal meet-ups to hear his thoughts on the future of global angel investing. [100 word bio]
Check your diary: lunch in Johannesburg on Friday 24th March and dinner in Cape Town on Tuesday 28th March. Not to be missed.
Space is limited, if interested in joining contact Chris at firstname.lastname@example.org with a winsome reason to have a seat at the table.
SABAN News & Updates:
– Investor Cocktails in Johannesburg at GEC 2017 on 15th March [Enquire]
– National Treasury Announces Relaxations on IP Exchange Control [Read]
– Save the Date: Women in Angel Investing, 16 May (JHB) & 18 May (CPT)
– Raising awareness of Angel investing activity
– Capacity building / training
– Lobbying for regulatory improvements
– Seeding Angel Groups in major economic hubs
Sara Weinheimer, Founder of podcast series BroadMic looks at her top 5 lessons learned in years of angel investing. The article was published on linkedin.
When I first started out as an angel investor, I didn’t know any other women who were doing what I was doing. If you look at the data, my experience makes sense: In 2004, just 5% of angels were women; when I started out in 1997, there were probably even fewer.
So it’s only natural that everything I learned about investing, I learned from the guys. Not that it occurred to me then that I was learning to invest in a particularly “male” way. It’s only now, after nearly twenty years in the business—the last ten of which I spent investing specifically in women-led startups—that I realize just how important some of those lessons that I learned early on were to my success.
It’s not that men have some sort of secret playbook for investing that they hide from women. But what they do have is a strong network of—mostly male—colleagues and friends who pass on knowledge to one another such that it becomes second nature. If they did have a playbook, however, here are the top five things it would probably include:
Lesson 1: Bet on the jockey, not the horse
I can’t stress this one enough. It’s true that there will be good investments and bad investments, but at the end of the day, what you are investing in is a person more than a product. And if you don’t believe in that person—his or her ideas, talent, and ethics—then it’s going to be a poor investment of your personal capital—no matter how sound the business fundamentals are.
When you’re an angel, it’s not just money that you’re putting on the line: It’s an investment of your time, energy, social and intellectual capital. You have to ask yourself: Am I willing to spend my nights and weekends giving this founder advice? Will I go to bat for them? Will I put my own reputation on the line by connecting them to my network? In short: you have to ask yourself whether you believe in them and trust them.
Lesson 2: Deal flow trumps due diligence
A mistake I see many women angel investors make is thinking that doing more due diligence will lead to a higher probability of success. Due diligence can be a time-consuming and costly process, and many entrepreneurs have been advised—correctly—that they should make the fundraising “campaign” as short as possible in order to get back to running their business. Be sensitive to their reality.
Yet, there is a basic assessment of a company’s prospects that every angel investor must make in order to get comfortable with writing the check. But doing more homework does not necessarily equate to a better outcome. Instead, focus your energy on deal flow, which “is everything,” as prominent VC investor Marc Andreessen once put it.
The best entrepreneurs don’t just walk through the door—you have to go out and find them. It’s a lot of work. It’s hard to do on your own, which is why joining investor networks—whether formal or informal—can make sense. Here’s where doing the homework is important: Look at how well these investor groups do their job of attracting the best entrepreneurs.
Lesson 3: Diversify, diversify, diversify
It’s also a waste of time to try to be a great early-stage stock picker. A much better strategy is to place smaller bets on a portfolio of 20-30 companies, as a large majority of startups simply won’t make it—for any number of reasons—and you need to prepare for that. Early-stage startups are a much more volatile asset class than your average stock or bond: More than half of them will fail to return your invested capital.
By spreading your risk, you increase your chances of finding big winners (think Uber) that will more than compensate for your losses. Research confirms this: diversification is the single factor with the highest correlation to successful returns in early stage investing. Furthermore, the biggest hits don’t look like big hits early on.
Diversification matters not just at the level of your portfolio, but also upstream, at the source of your deal flow. You don’t have to join just one investor network; in fact, I recommend participating in several groups that are complementary in terms of industry sector, investment size, stage, process and membership profile.
Lesson 4: Know what you don’t know
One way to minimize—but not eliminate, that’ll never happen—losses is by developing relationships with people who understand the space you’re investing in. And I don’t just mean the company or product, but the entire space, whether it’s food delivery, social media or artificial intelligence. You can’t become an expert in everything, but, in the same way that the President has his or her cabinet, so do you need a network of people you trust whom you can call upon to advise you about your potential investments.
These people shouldn’t all look the same, and they don’t all need to fit a certain mold, (e.g., be professors or industry lifers). They just need to be people who have their finger on the pulse of whatever space your startup is disrupting. If it’s social media, for example, then it may be someone who’s a lot younger than you—because they sure as hell better understand how Snapchat works, especially if you, like me, are still not entirely sure what the big deal is.
Lesson 5: Be in it for the long haul
If you’re looking for quick returns, you’re in the wrong business. You should assume that every investment you make won’t yield returns for at least five to seven years (usually closer to 10). Of course, there may be some quicker exits, but for the most part, you should operate under the assumption that when you write the check, you won’t see the money again for a long, long time.
Just as your investment in the company is long-term, so too is your investment in its founder. Like in any relationship, there will be bad times along with good times, and the only way it can work is if you are willing to stick by the founders and help them work through their issues in whatever way you can. That can be through proactively making introductions to clients, talent, or other investors; offering strategic advice; or just periodically checking in to see how they’re doing.
Continuing to move forward in this space is a lofty, but worthy goal. When there are more female angels, more women-led companies get funded (about 20% today vs. 3% in 2004). The same is true in venture capital: the gender gap in startup success disappears when women fund women. When more of these companies get funded, everyone wins: the economy, thanks to the jobs that are created; and the consumer, who gets better products, thanks to the unique insights that women bring to innovation.
So let’s take this mythical “secret playbook” and make it our own. Network, share deal flow, find the best entrepreneurs, cultivate their trust, write checks, diversify…rinse and repeat!
There is light ahead on the tough, dark road faced by local entrepreneurs, with the launch of the South African Business Angel Network (SABAN), a professional association for the early stage investor community reports Linda Doke for itweb.co.za
In South Africa, more money is chasing fewer deals.
– Mvi Hlophe SABAN co-founder
SABAN is part of the African Business Angel Network (ABAN), a pan-African non-profit organisation founded to encourage and support the development of early stage investor networks across Africa.
Following the Johannesburg debut in August, SABAN launched in Cape Town last week.
SABAN co-founder Chris Campbell said the organisation aims to provide a link between the local entrepreneurial ecosystem and investors, and grow a body of investors that can benefit from the strength of networking and collaboration.
Campbell is an SA-based entrepreneur who decided to replicate the work of EBAN (European Business Angel Network) in South Africa.
“The association will be set up as a trust, registered as a non-profit organisation. It will be an industry body which aims to galvanise and grow angel investment in South Africa. The keyword is collaboration – the creation of an angel investment ecosystem relies on successful networking,” he said.
Angel investors vs venture capitalists
Speaking at the Cape Town launch event, World Business Angel Investment Forum chairman Baybars Altuntas said business angels use private money to invest, while venture capitalists use the funds of the organisation they represent.
“There is strength to be gained in working together, particularly through a collaboration of minds and experience. It is highly risky to invest in a start-up as an individual. Through collaboration, angel investors reduce that risk,” said Altuntas.
“Knowledge, mentorship and networks differentiate business angels from other investors – they contribute their know-how, provide mentorship, and share their own networks to give the start-up the injection it needs. Angel investors are not just providing money, they supply smart finance.”
Altuntas referred to business angels as the leaders of the world’s early-stage investment market.
“In 2015 alone, about 300 000 angel investors in the US invested more than $25 billion in start-ups and SMEs. In Europe, it was €6 billion for that same period. It is estimated that the global market worth of angel investment already exceeds US$50 billion annually,” said Altuntas.
Connecting talent and money
Private equity investor Mvi Hlophe said increasingly in South Africa, more money is chasing fewer deals.
“South Africa doesn’t have the pipeline of quality entrepreneurs being funded at the seed capital stage. Angel investment bridges that funding gap,” said Hlophe.
Entrepreneur and SABAN advisor Vuyisa Qabaka believes that while the supportive environment for entrepreneurs in South Africa is gradually growing, the country needs more risk-takers to put money together towards talent.
“Talent should never have to look for money. Talented people with great ideas should be able to have a few conversations with the right people, in order for money to come to that talent. In South Africa, the access between entrepreneur and investor has been limited. Through SABAN, that gap will be bridged,” said Qabaka.
South African business woman and angel investor Audrey Mothupi sees the greatest potential for angel investment in South Africa in the financial technology space.
“What has been missing in our country’s entrepreneurial ecosystem has not been the creative ideas, energy or passion, but collective engagement. If SABAN can create the networking links across South Africa, we can partner and engage the African and European business angel networks to share ideas and ways to create even more opportunities for investment and for the creation of wealth for all,” said Mothupi.
SABAN is supported by the following partners and event sponsors: Newtown Partners, SA Innovation Summit, The Peninsula Hotel, OutsourcedCFO, African Business Angel Network, Entrepreneur Traction, StartUp Grind, Allan Gray Orbis Foundation, Silicon Cape and SiMODiSA. The SABAN founding committee consists of Mvi Hlophe, Bodo Sieber and Chris Campbell.