We had the pleasure to travel to South Africa Cape Town courtesy of VC4A for the annual Africa Early Stage Investment Summit (AESIS), which was at the magnificent and breathtaking city of Cape Town (it was my first time so…). It’s an investor only event, which brings together key ecosystem stakeholders from across the continent and beyond, to exchange best practices, learn from peers and recent transactions, and do deals.
The summit covered close to everything you might think about regarding early stage investment, more so angel investing but if I could summarize my main key take homes, they’d be:
- It’s a numbers game – this might sound like a broken record but angel investing is really a numbers game. The most practical and probably most efficient way to de-risk it is by having more. Hearing experienced angel investors like Peter Cowley from EBAN, whose experience spans more than 15 years, emphasize on how important it is to invest in more opportunities, is worth of taking note of. Also, there’s a learning curve to it. It takes time before one becomes adept at spotting opportunities, etc. Sometimes it’s easier to just join a network.
- Exits – while being essentially mentor driven capital, the relationship (at least financially) with the entrepreneur is not life-long. I mean, all good things come to end right? To paraphrase Keet van Zyl, from Knife Capital, building a business with exit in mind is not the same thing as backing a “flippable” business idea where it’s about getting in, getting out, and moving on to the next idea before the bubble bursts. Being exit centric from the onset is determines the strategies that will help unlock value in the companies invested, and probably determine how the term sheet and governance structure will look like.
- Corporate Partnerships – part of the summit was an ecosystem tour to Stellenbosch University’s LaunchLab. It’s an incubation hub for start-ups and it was established to facilitate valuable connections between startups and corporates in South Africa. Whether it’s to validate their product or initial market research, these linkages prove to be invaluable and at times pivotal to the success of a start-up.