Investment Types

 

Kgatelopele  is geared to providing early stage or start-up capital for  enterprises and were typically used to fund companies, who have strong business cases but need the essential start-up capital. In SA the business case for some of the start-ups is different and where venture capital is required there are additional pre-requisites to make it attractive for venture capital institutions to get involved. Looked at globally, VC investments in an enterprise are usually between $500,000 and $5 million, and the investor is likely to expect an annual return of 20% to 50%, whilst in SA there is a demand for even smaller amounts of start-up capital
Private Equity forms a larger component of the funding in SA, and a range of institutions are providing to this sector to assist with expansion capital as well as to provide BEE companies with managed and leveraged buy outs.

 

Funding Approach:

• Equity investment
• Substantial minority/equity stake
• No “Takeover Management Mentality,” but rather has a “Company First Philosophy”
• Board Position – desired but not mandatory (Passive vs. Active Investor)
• Exit is very important (within 3 - 5 years)
• Early Stage, Expansion Stage, Later Stage

 

9 Pronged Investment Evaluation Process

• Step 1: Proposal
• Step 2: Analysis
• Step 3: Meeting
• Step 4: Queries & Response
• Step 5: Validation of Concept and Business Plan
• Step 6: Due Diligence
• Step 7: Negotiation of Terms
• Step 8: Agreement
• Step 9: Release of Funds