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Two JSE-Listed Firms Unveil Two Separate Startup Funds Worth USD 32.7 Mn Within 72 Hours


March 9, 2020

It’s raining funds in South Africa! Within a 72-hour period, two Johannesburg Stock Exchange (JSE)-listed companies have announced two separate funds worth a combined USD 32.7 Mn (ZAR 520 Mn) targeted at startups.

The first splash came in on Friday, March 6, when JSE-listed technology investment group, AYO Technology Solutions, launched a USD 12.7 Mn (ZAR 200 Mn) annual fund to help African startups grow.

As was highlighted when word of the development first got out, AYO will fork out ZAR 200 Mn each year to help qualifying companies, organisations and entrepreneurs scale their businesses. 

It was also reported that half of the fund is to be allocated to South African companies of which 50 percent will be geared to specifically supporting black-owned startups. The other half will be apportioned to companies founded and operated on the wider African continent.

AYO will invest in organisations that are creating new technologies or using existing ones in novel ways to solve pressing business and everyday needs. Applications are welcome via the AYO website.

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Commenting on the development, AYO chairman, Advocate Wallace Mgoqi, said,

 “There are thousands of brilliant business ideas out there, but the sad reality is that few make it to the big time. The necessary funds to take these ideas from bud to blossom and then fruit, can often be in short supply. This is why AYO has committed to launching an annual fund aimed at supporting as many bright ideas and innovations as possible. With this, AYO can help turn ideas into action.”

Echoing those very last words, another JSE-listed company is looking to do its bit.

Today, March 9, got off to a start with the news that JSE-listed logistics company, Imperial Logistics, which is among the top global logistics players with some 27,000 employees in 30+ countries, has partnered with Newtown partners — the venture capital (VC) firm run by  Silicon Valley-based South African entrepreneur, Vinny Lingham — to launch a corporate VC fund.

This new fund will have an initial capitalisation of USD 20 Mn (about ZAR 320 Mn) and will invest in startups in the logistics industry.

In a statement released today, Newtown Partners said that the fund will “identify, invest in, and nurture disruptive, innovative tech startups that present high-growth potential in the global supply chain and logistics technology stack.”

Imperial CEO, Mohammed Akoojee, said in the statement that the company operates in an environment that is constantly exposed to disruptors and one where innovation is critical.

“Partnering with Newtown Partners on this innovation fund helps position us ahead of future competitors, enabling a strategic response to emerging technologies and business models,” he said.

As an early-stage VC firm, Newtown Partners will support Imperial’s strategic investment in the key areas set to disrupt its business in the next 5-10 years.

On their part, Newtown Partners said it would work closely with startups that the fund invests in. The VC also emphasized that the fund is operationally separate from Imperial, ensuring portfolio startups are not hamstrung by corporate red tape, while still being able to unlock the synergistic benefits of having Imperial as an investor and market access provider.

As one would expect for corporate venture capital, the fund is targeted at generating attractive financial returns coupled with a strategic underpinning relevant to the core business of Imperial, explained Newtown Partners.

With two JSE-listed companies announcing funds for startups within a few days of each other, corporate venture capital seems to be regaining its momentum in South Africa and the stage seems set for a startup funding rebound in an ecosystem where the volume and value of deals suffered an uncharacteristic decline in the previous year.

Featured Image Courtesy: AfrikanHeroes

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