Telkom is looking to integrate more of the technology backed businesses that it supports through its venture capital arm into its supply chain and ecosystem, rather than simply funding their operations.
Established companies have in recent years set up divisions or funds to find and invest in start-ups. The aim is to keep abreast of advances in technology and add to the parent’s capability while participating in the potential upside of a successful new business.
For example, Futuregrowth’s High Growth Development Equity Fund committed R500m-R1bn in 2022 to invest in early-stage start-ups over the next decade.
Until recently, the biggest example of a local corporate backed venture capital fund was Naspers’s now defunct Foundry unit, which had funds of R1.4bn.
In 2015, Telkom’s enterprise and supplier development programme, FutureMakers, launched Future Fund in partnership IDF Capital, ploughing R250m into start-up efforts. The fund is now winding up, and Telkom partnered with Aions last year to create a R58m “venture builder” focused on technology-focused start-ups and small businesses.
Telkom has a R150m committed for this latest project over five years.
Besides simply investing in new businesses, the group is hoping to bring more of the technology solutions it supports into its operations and supply chain.
Tshepo Phetla, head of business development at Telkom conceded the group could have done better at such integration. That aspect of its business was not “where we want it to be, but there’s certainly been an uptake of some of those solutions coming from the start-ups”, Phetla told Business Day
“We’ve even seen partnerships being struck with some of our graduation start-ups. For example, we have a B2B [business-to-business] IoT [internet of things] business Advannotech, which is managing utilities for large corporates. We have taken that solution in-house and we are making it available to our customers, he said.
“So, there are different models. We always look for those opportunities,” he said, adding that the company also offers its start-ups exposure to clients and supply chain partners.
Through the Future Fund, Telkom has invested in a number of businesses that have performed well. That Aisha Pandor’s cleaning services business, SweepSouth.
“It’s just amazing to see them [start-ups] take off and become the go to place for services,” Phetla said.
Santam, SA’s largest short-term insurer, recently acquired Kandua, a marketplace for home services, similar to SweepSouth. Telkom has invested in Kandua through the Future Fund and there are plans to merge Kandua with Santam’s home service offering, Home+.
Phetla also pointed to delivery services platform Droppa as another success story to emanate from Future Fund.
“We invested quite a lot there and they’ve paid off a large portion of their debt financing that came from the fund. They are now pretty much a major player in the logistics space; not only providing the platform, but also extending to other logistics services. They’ve struck some solid partnerships with the likes of SkyNet.”
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