OPINION: Spreading the wings of angel investing in SA
Institutional and traditional investors are also more risk averse and prefer to deal with fledgling companies at a much later and safer stage of their business growth.
This is where the concept of angel investing comes into its own. It’s supported many start-ups to bootstrap and get their business to a level where they can access larger funding pools in the market.
Angel investment has been around for hundreds of years, even though the terminology only really became known in the 1970s and it’s basically capital support given by a “wealthy” individual to a start-up to help them launch when other potential funders shy away.
Many deem angel investing as something reserved for the wealthy, yet the reverse is the case. Angel investing even translates into assisting a friend and paying for their education, for example, because perhaps their parents could not afford support, or their profile does not make them bank loan worthy. Who knows, perhaps the investee may go on to be a huge business success.
We all do angel investing in one way or another without really realising it. So how do we garner more support and promote the concept -even to employees, chief executives and retired successful business people who have the capital, no matter how small, to invest in start-ups?
Many start-ups that are poised for success require as little as R50000 to R3 million at their early stage.
Imagine if you invested R1m in Uber at its seed stage or in Facebook or another unicorn? Closer to home, imagine if you invested in South African start-ups Yoco, Sweep South or Jumo - or in Nigerian start-ups Andela, Kobo360 and Jumia?
The fact remains that these businesses have all withstood the test of time and have scaled to create much-needed jobs, provided greater benefit to the economy of their countries and changed how the world thinks and does things. Recently we published a deal book for some of our promising, potentially unicorn start-ups, which we shared with some investor partners.
Back to angel investing. We have now partnered with Jozi Angels to launch the Angels in Residence programme at 22 on Sloane, which will potentially kick off in early September and run every quarter for potential angel investors. The programme will help companies and their staff become more entrepreneurial, understand the dynamics and the opportunities in the start-up world and even familiarise themselves with some disruptions in their industry.
Jozi Angels led by Abu Cassim is a Joburg-based network of angel investors that invests in early stage start-ups. It provides capital, knowledge and business linkages; typically in exchange for equity. It also offers an entrepreneurial immersion programme that transports your employees into the energetic and exciting start-up world.
What's more, it creates like-minded leaders, drawing on the work of today's best innovators, resulting in a more productive and passionate workforce that is better equipped to identify opportunities in today's innovation economy.
The programme includes a two-day sprint where your employees do deep-dives to learn more about entrepreneurship and start-up principles, including lean start-up methodologies and design thinking. They'll then work alongside start-ups to implement learning and get hands-on experience with specially designed challenges.
Unique to Jozi Angels’ offering is the period after the sprint. During this phase the programme will train your employees to become angel investors, sharing best practices and allocating a network member to mentor them as they integrate into the space.
Being an angel investor allows your employees to have regular touch points with entrepreneurs, giving them further practical experience in the field and reference points to truly understand what entrepreneurship entails. Training will be tailored to your business sector to ensure there is alignment with their journey and your future.
This programme targets middle and senior managers within various organisations. Those that can drive change and create impact. Sprints of up to 20 people can be accommodated at our 22 on Sloane start-up campus from September 2019.
Today, I vehemently believe that as a continent we must work together to build and sustain a strong angel investor community for the benefit of all our aspirant and early stage entrepreneurs.
Tom Davies, the president of the African Business Angels Network (Aban), which is a partner to the Global Entrepreneurship Network (GEN), has been leading the acceleration of angel investing in Africa. We should also refrain from leaving angel investing to the super-rich and rather, even with what little we have in comparison, angel invest in African start-ups.
In conclusion - a little motivating food for thought. Peter Thiel was one of the first investors in Facebook with $50000, which later turned into $1 billion. Lance Armstrong invested $100000 in Uber in 2009. Today, Uber could be worth more than $120bn. I need not say more.
Kizito Okechukwu is the co-chairperson of the Global Entrepreneurship Network (GEN) Africa; 22 on Sloane is Africa’s largest start-up campus.