Venture capital firm Endeavor SA has raised R190m, closing the first part of its fund earmarked for investment in local technology businesses.
The firm said it had exceeded its initial target of R150m, meaning the funding round was oversubscribed, indicating investor confidence. Overall, Endeavor SA is looking to raise R500m for its Harvest Fund III. The most recent capital raise is a milestone on the path to reaching that goal.
Major investors in the round included Standard Bank, Allan Gray and the SA SME Fund.
According to the company, the fund aims “to catalyse growth in high-potential tech-related companies across the African continent”. Endeavor SA is a part of US-based venture firm Endeavor Catalyst.
The SA unit has vetted a pipeline of 135 selected start-ups in Africa that the capital is exclusively earmarked for. This will comprise 20-25 companies in Southern Africa, accounting for 85% of the value, and five companies in other African regions.
“We have a deep understanding of the 135 businesses in our pipeline and are confident in their growth potential, as they have been selected through Endeavor’s rigorous two-stage international selection process, which spans 1-2 years,” Endeavor SA MD Alison Collier said.
“We engage with them continuously and will assess their capital needs to guide the fund’s investments.”
The fund targets a 25% return with deal sizes of R15m for Endeavor companies and R7.5m for early-stage companies.
“Harvest Fund III is a commercial-first venture capital fund with a mission-driven approach, reinvesting 100% of the carry back into each African ecosystem that it invests in,” Endeavor said.
The first close for the fund coincides with the final investment of Harvest Fund II, a R190m vehicle, which made 19 investments in 17 companies.
These companies in enterprise tech, fintech, retail tech and education tech delivered 58% annual revenue growth, reaching a total revenue of R7.7bn up to December 2023. They created more than 9,200 jobs in 2023, growing the employment base by 35% annually.
Notable investments include unicorns — start-ups worth over $1bn — including Go1 and TymeBank, as well as companies that have seen high growth such as Clickatell, Sendmarc and payment providers Onafriq, formerly MFS Africa, iiDENTIFii and Ozow.
“In Harvest Fund III, we are doubling down on a strategy that is working, investing in Endeavor’s existing portfolio of high-growth entrepreneurs who run market-leading founder-led companies with exceptionally strong local and global growth, scalable IP, robust returns, and a pay-it-forward mindset,” Endeavor SA’s capital markets lead Antonia Bothner said.
While venture capital funding in Africa represents only 0.2% of global funding, at least 11 African unicorns have emerged in the past six years. Venture capitalists such as Endeavor expect that the number will soon multiply.
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