Angel investing in South Africa has, for a long time, been shrouded in mystery and viewed as a private club for the über-wealthy. The perception around angel investing is that there is a lack of accessibility to local private investors and an inability of these wealthy investors to fund new businesses.
In other parts of the world, however, angel investing is viewed as a pivotal cog in the entrepreneurial value chain and as a sound financing alternative for startups. In a developing economy, such as South Africa, the need to invest in entrepreneurial activities is critical to stimulating growth. Therefore, the requirement for alternative finance or investment mechanisms is crucial.
FNB, Angelhub partner
In a move that will hopefully stimulate and encourage angel investing, FNB Private Clients has partnered with AngelHub to support South African entrepreneurship and innovation. AngelHub is a business angel investment group that pools funding, expertise, and networks from a diverse range of Angel Investors, for investments into high-growth South African ventures, with the aim of accelerating growth and creating value by aggregating knowledge and resources.
“Encouraging South African entrepreneurship and innovation should have the dual benefit of generating both economic value and job creation,” says Brett Commaille, from AngelHub. “Through our partnership with FNB Private Clients we hope to reach a larger audience of potential angel investors who will invest in high growth business ventures that suit their individual investment requirements.”
What’s on offer to entrepreneurs?
AngelHub provides the opportunity for Angel investors to meet pre-screened businesses who can demonstrate that their idea has earnings growth potential and that they are willing to take advice, and grow their idea into a sustainable business. In addition to periodic “deal pitching” sessions, AngelHub hosts a monthly networking platform by entrepreneurs, for entrepreneurs. These events are targeted at getting founders (and prospective founders) of interesting high-growth ventures together for meaningful conversations on shared experiences.
What is an Angel Investor?
According to Angelhub.co.za, an angel is a high net-worth individual who invests his or her own money in start-up companies in exchange for an equity share of the businesses. Important things to know about angels include:
- Many angels are former entrepreneurs themselves
- They make investments in order to gain a return on their money, to participate in the entrepreneurial process, and often to give back to their communities by catalysing economic growth.
- Angels make a return on their investment when the entrepreneur successfully grows the business and exits it, generally through a sale, later stage investment or merger
- Angel investment is a key driver of economic growth, and an essential part of creating new businesses.
- Angels tend to invest in companies that are located near them regionally (or to co-invest in a wider geography if a local investor they know and trust is involved)