With an unemployment rate of 27.1% at the end of last year, South Africa has much to gain from the venture capital (VC) industry, which not only encourages business development, but enables entrepreneurs to expand their businesses, driving employment opportunities.
This is according to Tanya van Lill, CEO of the South African Venture Capital Association (SAVCA), who presented a case study session on the topic at the first ever joint SAVCA Private Equity and Venture Capital in Southern Africa Conference, held in Stellenbosch at the end of February.
“While small businesses are vital job creators, many require growth capital to do this effectively. And because young companies generally don’t have access to more traditional sources of funding, investments by VC firms become an essential form of financing,” van Lill explained.
She referred to SAVCA’s 2018 Venture Capital Survey, which revealed that 97.1% of VC-backed businesses would have ceased to exist or developed slower, were it not for the VC investment. “The same study found that, for 77% of companies which have received investment from a VC firm, it has increased the business’ capability in terms of increasing the number of full-time positions.”
One of the case studies that van Lill explored was that of the successful tech startup, SweepSouth. An on-demand online platform for booking home cleaning services, SweepSouth has more than 11 000 cleaners registered on its platform.