The most active venture capital firm in South Africa.
Harvest Fund II is a founder-aligned, rules-based, co-investing fund, into a vetted pipeline of medium-sized, high-growth Southern Africa founded Endeavor Entrepreneurs which are enrolled in its global program. The co-investment and rules-based nature of Fund II, makes it an extremely efficient fund and the first-of-its-kind in Africa.
Endeavor South Africa has raised double its initial target for Harvest Fund II with R190m raised in the fund’s final close. The fund has already invested in 10 companies in the past year, the first being Flexclub and the most recent being Sequoia backed Clickatell, making it the most active VC in South Africa over the past year.
“What also differentiates our Fund is the spectrum of stages it invests in which range from pre-Series A to Series D mimicking the companies Endeavor works with in its portfolio of high-growth entrepreneurs.” explains Antonia Bothner, Harvest Fundraising lead.
Fund II follows the terms of the lead investor, enabling Endeavor to actively assist entrepreneurs to raise capital through access to Endeavor’s investor network and supporting them in negotiating terms before joining the round.
“When we were designing Fund II, we wanted to stay aligned with Endeavor’s overall mission, but also carve out a business model that would create a sustainable revenue stream to support the work Endeavor South Africa does,” explains Bothner. “We were fortunate to win a catalytic grant from USAID which enabled us to assemble a dedicated team and reduce fees for investors by waiving the standard 1% success fee.’
A unique approach in that 20% of Fund II’s carry will be reinvested back into Endeavor South Africa’s non-profit activities in growing the tech ecosystem. This will contribute to South Africa’s economic growth by fuelling a positive cycle of support for the next generation of entrepreneurs. Endeavor’s high growth model has successfully been rolled out in 40 countries worldwide.
“It is an important milestone for Endeavor South Africa, who together with the support of our board, partners, mentors and entrepreneurs, is the first country office to launch a local fund that complements our Global Endeavor Catalyst funds.” says Herman Bosman Endeavor South Africa Chairman. “Capital remains an essential enabler for our local high-growth entrepreneurial ecosystem. This is a first for Africa and for Endeavor and something we are proud of.”
“We are excited to gain exposure to some of SA’s fastest growing companies and are well aligned with Endeavor’s mission of driving economic growth through entrepreneurship in South Africa and Africa,” says Matthew Pratt, Investment Manager of Norsad Capital. “As an investor, Norsad’s purpose is to ‘build a better Africa’ by supporting partner companies that deliver substantial social and environmental impact.”
“SA SME Fund is passionate about nurturing our country’s vast entrepreneurial spirit by providing much-needed capital and thereby driving job creation and economic growth. Where there are existing structures that are efficient and expected to deliver strong, we will support these.” says Ketso Gordhan, CEO of SA SME Fund.
“At Fireball Capital, we believe venture capital is growing exponentially across the globe as technology leaders are revolutionising the way we work, live and interact. Endeavor and Harvest Fund II are aligned with our goal of building and providing global networks to enable local businesses to scale internationally and we’re delighted to be backing Fund II, a majority female-led team. Venture Capital is the most impactful asset class as the monies are going into the real economy, solving important problems, and creating new jobs and GDP growth.” says Fireball Capital’s CEO and Head of Direct Investments, Paula Mokwena.
The latest three investments include TymeBank, a digital bank offering low-cost banking; Synatic, a modern data automation platform; and Clickatell, a global mobile messaging API.
Harvest Fund II expects to be fully invested by the end of 2022, with deals to continue at a similar pace.
“The growth sector in Southern Africa is still nascent and the opportunities are still plentiful and growing. The beauty of the way our Harvest Fund II is structured and positioned is that there is ample room for both growth and impact,” says Bothner.
The rich investment landscape comes as no surprise, as Partech Africa recorded that in 2021, 640 African tech start-ups raised a total of $5.2-billion across 681 equity rounds, meaning a 3.6x year-on-year growth and making the African tech venture capital the world’s fastest-growing ecosystem globally.
“Given this, we are looking forward to the multitude of returns both the existing fund and Harvest Fund III will bring to our local entrepreneurial ecosystem – entrepreneurs and VCs – and most importantly the broader South African economy.” DM
Endeavor is a global non-profit organization with HQ in New York with offices in 40 markets with more than 2800 entrepreneurs, +5000 pro-bono mentors and +500 investors in its global network. Endeavor’s model is aimed at identifying and accelerating the growth of the most innovative and scalable entrepreneurs in emerging markets as these high-growth businesses are the key drivers of job creation, revenue growth and hence economic growth and overall prosperity. Herman Bosman is the Chair of Endeavor South Africa and Alison Collier is the Managing Director.