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HBD extends early stage fund
Cape Town, February 13, 2008: HBD Venture Capital, the venture capital firm founded in 2000 by Mark Shuttleworth, announced today that it would continue its second venture capital fund for another year because there were “so many exceptional early stage businesses in South Africa".HBD has also strengthened its management team in order to fully explore new opportunities for investment.
HBD has made a spate of recent investments, including in African hospitality group moyo and SA Cab, the developers of sophisticated software to link private metered taxis in SA. A new R9-million investment was also revealed today, this time in the creator of highly sophisticated online restaurant ordering software, orderTalk. Since launching Fund2, which invests in early stage companies with exceptional growth potential and strong management teams, HBD has made a total of six investments.
HBD CEO Julia Long says that the company’s decision to shift focus from seed capital to early stage ventures had proved to be the right one. “We originally planned to run Fund2 for two years but 18 months in, we know that there are still many more early stage entrepreneurial businesses in SA with global potential, and so will be continuing for at least another year. We plan a minimum of three new investments this year.” Early stage businesses which already have some revenue and an existing client base are considered for investment by HBD.
“While we are still the only South African fund focussing exclusively on early stage businesses, our industry has recently been buoyed by new entrants earlier on in the funding cycle. This has produced more VC activity in the country and for some interesting co-investment possibilities. The availability of venture capital is in South Africa is increasing, although it still faces obstacles such as the high cost of telecommunications and South Africans opting for ‘safer’ permanent employment options rather than starting their own business,” she said.
In terms of profitably selling investments, Long was very positive, “Our first investment sale, Red Five Labs, took place last February and we are confident of another two sales in the short to medium term. Over the next several years Fund2 investments will grow and we feel sure that several of them will be sold off profitably in about five years time, whether through a listing, trade sale or sale to a private equity entity.”
Long said that Fund2 investments, EDH and Fundamo, had all shown good growth and were benefiting from HBD’s involvement, both financial and strategic. “We are also very pleased to have strengthened our management team with another investment manager, Hennie Louw, who has increased our capacity to identify the best early stage companies.”
Asked if she believed South Africa has the potential to produce the next Google, Long said, “I believe that this is possible, but entrepreneurs need to surround themselves with a passionate, highly motivated and driven team with exceptional skills and they should remember that being at the right place at the right time is a definite benefit. The internet breaks down the barrier of locality and brings everyone together. However, I do feel that having a physical presence at the hub of your industry allows for a far greater impact and change of success.”
Expanding on the latest investment, orderTalk, HBD investment manager Eben van Heerden, said that after rigorous research, orderTalk had emerged as an exceptional investment prospect which was highly scaleable and promised rapid growth. “orderTalk is a leading provider of outsourced online ordering solutions to the foodservice industry. It provides functionality to restaurant chains so that customers can order food directly from the chain’s website. It offers fully hosted and managed services so that the need for foodservice companies to invest in the costly development of software, purchasing of hardware or scaling up of IT departments is removed.”
“The software is the most sophisticated of its kind internationally and we have high hopes that the business will grow rapidly in SA and abroad,” said Van Heerden. Visit www.hbd.com. for more information.
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