This past week we had a chance to catch up with Laurie Olivier, Senior Partner at South African based 4Di Capital. We spoke about their exit on Motribe and the expansion of their current fund. We are also pleased to welcome 4Di Capital as a member of the investor network on VC4Africa.
Why was 4Di Capital started?
‘The traditional innovation hubs in the developed economies are not well placed from a user and market access point of view to optimally observe, understand and exploit these alternate opportunities. This leaves an underserved opportunity for the fast growing number of versatile and skilled South Africans who as an entrepreneurial class have already earned a reputation globally. They are highly capable of bringing new technologies to market.
In particular, South Africa enjoys a global competitive edge in the mobile sector, with some of the best talent and skills available, and progressive and highly regarded network operators. This strength is due to a very high penetration of connected mobile devices when compared to personal computers. As a result of the costs, we continue to see a slow rollout of local broadband infrastructure. With the mobile technology now globally seen as the key driver for innovation for the next decade, following the semiconductor, computer and internet cycles since the 1960s, South Africa is well positioned to generate some of the world’s leading new companies in this space.’
What is the red line across the portfolio?
‘4Di is specializing in the technology sector. It targets investment opportunities with high growth potential in the seed and early-stages in the relatively underserviced mobile, enterprise software and web start-up markets in Southern Africa. We look for founder teams with hungry passion, commitment, domain expertise and deep insights into the large market problems they wish to solve with their technology solutions.’
Motribe is an excellent success story, one of only a growing handful, what was the most challenging aspect in growing this business?
‘The mobile web and social media environment is a fast evolving one, with many possibilities. Being agile and effectual in targeting the right market need (and application) in this rapidly changing environment is not a straight forward process. There are also many competitors that make it even harder. This represented Motribe’s key challenge.’
Why did you invest in Motribe and why was it an interesting acquisition target for Mxit?
‘Due to the fast moving nature of the market, we have deliberately invested in the entrepreneurs, Nic Haralambous and Vince Maher, and not in their product or specific technology. Their skills and market knowledge make them naturals to navigate this marketplace with great success and efficiency. This is the reason we believe Mxit wanted to buy Motribe – i.e. to gain the experience and knowledge of the team. They also realize that in this fast changing market it is not the product that matters most, but the people behind it. It is actually because the Motribe team has shown its ability to overcome so many challenges, that it has become an attractive M&A opportunity for Mxit.’
Can you tell us about the exit, what this means for the team at Motribe and the South African startup scene?
‘This is the first exit of a new generation of Silicon Cape startups, involving young entrepreneurs taking advantage of a more integrated global technology market environment and lower startup costs. It is great to have this success example out there as the inspiration for other entrepreneurs to take advantage of this changing landscape.’
In this example, and the others in the 4Di Capital portfolio, what is the contribution you make?
‘Nurture capital is the term that best describes 4Di Capital’s contribution to Motribe. We understand that in the early days of any business, support, mentoring and access to networks is just as important as seed capital. So it is a balance of structuring the right incentives for the entrepreneurs to target the right priorities, being there when they need advice and support, and to help them… especially with the tons of red tape to get a startup out of the harbor. Unlike the average VC firm, ours does not follow the convention of one partner taking the lead on a specific portfolio company. Each member of our team has a different area of excellence, and each adds value according to his experience/strength to every portfolio company.’
How do you see the startup/investment landscape changing and what are the 3 main trends you see now?
‘Recent shifts in technology and the global venture capital arena have created opportunities for entrepreneurs in emerging markets to take advantage of an increasingly integrated global technology landscape. There is lower cost of market entry, barriers to entry that have dropped significantly, and now technological talent anywhere in the world has the potential to flourish if provided with the right enabling environment, capital and support. Key trends that we are taking advantage of include the lower cost of market entry, emergence of smaller VC firms that are more suitably positioned to take advantage of the lowering cost of market entry, easier access to global markets, the fast growth of VC and technology startups in the emerging markets, and the more international investment orientation of leading VC’s all over the globe.’
Is there a sweet spot for building African based ventures with global potential?
‘I believe that some of the comments about the South African technology market and the changing global VC landscape mentioned above are also relevant for the African market as a whole. Within this changing landscape we regard mobile and media driven opportunities to be areas of particular interest in Africa.’
How did you gain the support of the Oppenheimer family and what does this mean moving forward?
‘The VC world is all about relationships. My relationships with the Oppenheimer family was established during my career at Anglo American. The key motivation for the Oppenheimers to invest is their belief, and in particular that of Rachel Slack, a Director of E. Oppenheimer & Son, that South Africa has exceptional entrepreneurial talent and a desire to leverage their resources to support young, high-impact entrepreneurs wishing to develop and launch their new innovations onto the global stage.’
Do you see opportunities beyond South Africa, and do you have interest in the region?
‘We have recently launched a new fund, thus logically we would like to first establish a track record by focusing on opportunities closer to our doorstep. However, we do believe that many of the learnings in South Africa would also be relevant elsewhere in Africa and we would like to take advantage of that in a next fund. Perhaps we might do one or two investments from our current fund alongside some other African VC’s in order to enhance our understanding of the African technology and startup market environment.’
What is your message to other Angels and VCs looking to engage the African space?
‘The type of startup opportunities as described above that will do well in Africa is especially suitable for the hands-on and smaller investment funding that are best provided by Angels and “Micro VC’s.”
What is your message to the entrepreneurs out there working so hard to build the next wave of promising companies?
‘I think that the Internet has resulted in many African entrepreneurs to be fully aware of the changing global landscape and the many startup opportunities available to them. The key is not only the technology and commercialization side of the equation, but to establish relationships with potential investors. This will not happen if you are not “out there.” So keep moving around in the market place – whether cyber or physical – and grow relationships with folks that might be helpful to you getting funded.’
Can you give us some background on the 4Di team:
‘Four 4Di Capital partners including our two founder partners, Justin Stanford and Erik van Vlaanderen, reside in South Africa. I manage the 4Di office based in Atlanta USA, and in particular focus on due diligence and the development of international market and funding opportunities our portfolio of investments. I have many years of global and transatlantic VC experience. Justin and Erik are serial entrepreneurs with a very successful technology track record, and have a long operational working relationship with our other two partners, Anton van Vlaanderen and Doug Cherry. Thus altogether our team draws on decades of global venture capital proficiency and proven start-up operational experience – which combined with our global office footprint provides us with a unique transatlantic ability to add value to African startups with global growth potential.’
You can follow Laurie on VC4Africa. We look forward to working together with the 4Di Capital team and are pleased to welcome them to the VC4A community.