R1 BILLION FUND LAUNCHED TO INVEST IN ‘CLEANTECH’ COMPANIES AND PROJECTS IN SOUTHERN AFRICA

Inspired Evolution Investment Management is delighted to announce the launch of South Africa’s first ever clean technology (‘cleantech’) investment fund: The Evolution One Fund is a 10 year private equity fund targeted to grow to ZAR 1 billion by mid-July 2009. The fund has conducted its first close in July 2008 at ZAR 400 million raised from four core international investors: IFC (a member of the World Bank Group), Castleway Properties (advised by Consensus Business Group), the Swiss Investment fund for Emerging Markets (Sifem) and the Finnish Fund for Industrial Cooperation (Finnfund). The fund is currently being marketed to investors in southern and South Africa and plans to make its first investments in 2008.

Cleantech spans many industries: clean energy generation; water purification; waste management; and efficient production technology. Evolution One’s investment philosophy is based on the concept of additionality whereby accelerated development and use of cleantech products, services and processes not only provide superior performance at lower costs but also reduce environmental and climate change impacts, thereby promoting mutually reinforcing benefits for society.

Global investment activity in the sector is already significant, estimated to be US$ 148.4 billion in 2007 (source: New Energy Finance) and is forecast to exceed US$ 226 billion by 2016 from private equity and venture capital alone. High growth opportunities are emerging in the agribusiness, cleaner production, pollution control, waste management and transportation sectors, as well as the core areas of energy and water. However, to date, no fund has focused on the role of cleantech in Africa where environmental and social issues make it a vitally important driver of the economic development of the region.

The Evolution One Fund will make around 10 to 15 investments over a period of three to five years across the whole SADC region. The fund will focus on cleaner energy and the environment – aiming to generate an enhanced annual internal rate of return by focusing on the following eight sectors and sub-sectors:

• Cleaner energy generation and energy efficiency
• Cleaner production technologies and processes
• Air quality and emissions control
• Water quality and management
• Waste management
• Agribusiness and forestry
• Natural products, organics and natural health
• Sustainable buildings and environmental real estate

In all cases, particular attention will be paid to small, medium and micro-enterprises; broad-based black economic empowerment; and transformation benefits of underlying investment projects.

Dr Zuko Kubukeli, Executive Director of Inspired Evolution Investment Management said, “Cleantech provides cross-sector opportunities to make more sustainable investments without foregoing the traditional returns of private equity. Having raised ZAR 400 million from our core international investors, we are now targeting a second round of international and local investors. We are single-mindedly focusing on building strategic partnerships and on sourcing proprietary and appropriate technologies for application within the SADC region across a variety of investment projects.”

Mr Vincent Tchenguiz, Chairman of Consensus Business Group who are the advisor to one of the cornerstone investors and a founding partner in Inspired Evolution Investment Management said: “Consensus Business Group has had a strategic focus on the global environmental sector for a number of years. We have developed innovative business models to deliver strong financial returns and to add strategic value to our investee companies. We look forward to working with Evolution One Fund – we are confident that our long-term, wide ranging experience in the sector will serve to benefit the Fund.”

Ms Haydee Celaya, IFC Director for Private Equity and Investment Funds, said, “IFC’s investment in Evolution One Fund is in line with the World Bank’s overall strategy to support projects investing in technologies to combat climate change. This investment demonstrates IFC’s commitment to be a pioneer and a leader in the clean energy and climate change sectors in southern Africa.”

Further information is available on www.inspiredevolution.co.za.

Chemistry and innovation

For those with a little interest in commercial science / biotechnology investments, you might be interesting in this workshop here.

Food and Pharma sector investments

For investors looking at the South African Food or Pharmaceutical industries as places to make investments they may be interested in the following:

SA listed pharmaceuticals assessed

SA listed Food & Chemical companies assessed

Plug your Venture Capital requirements

The thinking behind the SA VC Strategist blog is to try and establish something of a South African Venture Capital community for venture capitalists / investors to meet with potential business plans.

Personally I think it is one of the reasons that the internet is such a powerful tool. People looking for funds can throw a business idea out there and venture capitalists or investors can assess the options available to them.

With a bit of luck some deal flow can be generated if a decent venture capital community can be established. My personal opinion is that start-up / venture capital goes WAY beyond just askng for a hand out. I think the management skills needed to get the business off the ground are even more important than the money, which is why I think we'd like to focus on with this blog.

But for the mean time - COMMUNITY BUILDING IS THE NAME OF THE GAME...

So for that reason, I'm inviting South Africans who believe they have a good business idea but need some Venture / Start up capital to have a plug for business in the comment section of this blog and maybe tell our readers a bit about your idea, the kind of capital you are trying to look at and what skills you have / need and what kind of money you are looking for.

We don't want your whole business plan!

I read somewhere that if you can't sell your business in 200 words or less then your business plan isn't all that important. Maybe that should be the challenge!

Post your business ideas below and lets see what we can build up as we go along...

Tech startups / VC - commercial viability

Article supplied by ManufacturingHub.co.za.

Every now and then, one of the technology bloggers or publications will run

with something along the lines of:

"South Africa's most promising technology start-ups"
"South Africa's best Web 2.0 offerings"
"South Africa's best web start-ups"

and then they will go on to mention the usual suspects such as Afrigator,

Amatomu, Muti, Zoopy, Blueworld, iBlog, Mxit etc etc.

But what I worry about is what makes these tech start-ups the "most promising" or the "best" from a commercial perspective.

NOTE I SAID COMMERCIAL PERSPECTIVE.

Many of these are really great web tools and I use all of them regularly, but for something to be "most promising" or "the best", you need to have a commercial aspect to it as well don't you agree?

I can come up with many brilliant concepts but if I can't make a return off it, then is it all that promising?

I've spoken to a couple of different people involved in these and other start-ups and I've been to a couple of venture capital / MBA / 'ideas' forums almost all of them agree that while the concepts are useful - the owners have no idea how to monetise what they've got.

Amazon.com
I have been wracking my brains trying to remember where I read an article about online reseller Amazon.com.

The author's concluded that Amazon was USEFUL to him as a consumer because he got goods nice and cheap but as an INVESTMENT, he would never touch the company, because it would battle to be profitable.

My feeling is that tech in South Africa has grown up. Legislation is easing, there is plenty of venture capital money from both media, communications and private investors to be thrown around - in general the industry is growing up.

But part of this growing up process is going to be a demand to differentiate between cool concepts and viable business models. This I think is where venture capitalists have a big role to play making 'hands on' type investments.

There is a lot of talk about "social networks" having the potential to make money because they attract niche markets to their sites and try to develop return traffic which must 'surely' have some way to be monetised.

A lot of these social networks / social tools are bleeding money and using the excuse that once they reach a "critical mass" they will be able to start making money - but the question has to be asked - will they EVER make money.
Will somebody start to pay for something if they have been used to getting it for free?

USEFULNESS vs. COMMERCIAL VALUE

We have some really good tech concepts and businesses in this country - but if we can't differentiate between something that is useful and something that is commercially viable how can the country build solid investment in its venture capital market?

OR... (And I don't have the answer so I am throwing this question out there)

Do you take the view that something like Muti or Afrigator for instance is an ENABLER and by owning the ENABLER you give your chance to break into the commercial market as well?

Absa Capital buys 10% of Dark Fibre Africa

Saw this notice from ABSA Capital / I-Net and thought it might be of interest to local venture capital industry participants

Johannesburg, Sep 10 (I-Net Bridge) - Absa Capital, the investment banking division of Absa Bank Ltd, has bought 10% of Dark Fibre Africa (DFA), a local telecoms infrastructure provider, it announced on Wednesday.

Based in Centurion, DFA, installs carrier neutral broadband ducting infrastructure, and sells and maintains discrete fibre pairs, or cables, to individual telecommunications operators.

The acquisition follows last month's high court decision involving the Independent Communications Authority of South Africa (Icasa) and telecoms firm Altech (ALT) that Altech has the right to self provide its own network under its Value Added Network Service licence.

The move is expected to open floodgates of VANS licensees seeking to build their own networks, but Absa Capital's Infrastructure Equity Investment official Sollie Nortjé said many of the 300 or so VANS licensees did not have the financial muscle to roll out large networks.

He said it would make strategic and "financial sense" for VANS licensees to use DFA's network, because it would reduce the cost of building duplicate networks without affecting their competitive positions. Unlike Telkom, MTN, Vodacom and Cell C, DFA does not compete with operators - it only builds network capacity designed to be shared by operators, said Nortjé.

Nortjé's comments comes as Absa Capital announces a 10% acquisition in DFA and, along with Absa Corporate and Business Bank, finalises agreements to provide a mezzanine facility of 250 million rand and a senior debt
facility of up 700 million rand as a first round of funding to DFA.

DFA is spending 2 billion rand in the next 12 months on to deploy broadband infrastructure across South African cities, which could be leased by multiple operators.

Other major shareholders in DFA are VenFin and Community Investment Ventures.