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Send  Share  RSS  Twitter  27 Mar 2009

VENTURES: HBD To Invest Up To R50m

 



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Mark Shuttleworth’s Cape Town venture capital company, Here Be Dragons (HBD), is looking to make at least one more investment of between R10-million and R25-million in local, early stage businesses this year. The focus will be companies with innovative ideas with the potential to expand internationally.

“HBD believes that although tough economic times can make or break young companies, such times present interesting opportunities to invest in companies with sound and tested business ideas,” says CEO, Julia Fourie.

“If we can partner with quality companies through tough times, there should be substantial rewards to be reaped in later years. As HBD takes a three to five year outlook on the business potential of an investment, we not only focus on this year’s problems but also next year’s opportunities”.

In operation since 2000, HBD has partnered with a number of companies with high growth potential wishing to expand their businesses substantially, both nationally and internationally. Successful case studies to date include expansion of the popular African, food, retail, music and culture business, moyo, as well as local software development company, EDH, which pioneered 3D radar tracking devices including those used to measure the speed of tennis serves at Wimbledon, as well as similar applications for cricket, golf and military use.

Fourie strongly believes that there are many talented South African businesses with the potential to make it on a global stage but fail due to lack of guidance, funding and expert knowledge.

“These companies often try to grow too quickly or to go the road alone,” she says. “Success takes courage, and in partnering with our investment companies, we offer not only capital but expert advice and mentorship too.

“Key to successful partnership is finding the right fit between HBD and the investment company, as sharing the same goals and ideals maximises the chance of success. It is important that applicants do their homework, assessing the goals and philosophies of the investment partner against their own. Applicants should have a solid understanding of their business needs, and must be able to present a sound business plan taking into account the relevant economic outlook.”

The new investments will form part of HBD’s existing Fund2, and will be the last investments for this particular fund.

“The nature of venture capital is to invest in early stage businesses, assisting them to grow and become more profitable, with a view to selling the investment to another partner within a three to five year period,” points out Fourie.

Funds generated by the sale of investments can then in turn be utilised to invest in new companies, and so the cycle continues.

From its earlier Fund1, HBD has only one investment left. In terms of Fund2, the past year HBD’s focus was on growing and consolidating the investments which has now created the opportunity to focus on further new investments.

“Applicants will undergo rigorous screening and must meet some strict criteria before meeting HBD. Most importantly, investments will only be made in local businesses with tried and tested ideas. The company must have been generating revenue for the past six months, and show potential to expand exponentially.”

HBD has not been specific about the sectors in which they intend investing, saying that the focus is rather on the growth stage and potential to expand internationally. There are however a few sectors which are excluded including financial services, project based works such as 2010 initiatives, tobacco and other morally objectionable industries, as well as very risky industries such as agriculture which is weather dependent.


 
 
 
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