First close for Endeavor South Africa’s Harvest Fund III
Major investors in the fund include Standard Bank, Allan Gray, and the SA SME Fund.
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Endeavor South Africa’s Harvest Fund III has secured first close commitments of R190 million (c. $10.8 million).
The fund, which has a target of R500 million (c. $28.4 million), will invest in tech-related companies across the African continent.
Major investors in the fund include Standard Bank, Allan Gray, and the SA SME Fund. The first close coincides with the final investment of the R190 million Harvest Fund II, which has made 19 investments in 17 companies.
"In Harvest Fund III, we are doubling down on a strategy that is working, investing in Endeavor's existing portfolio of high-growth entrepreneurs who run market-leading founder-led companies with exceptionally strong local and global growth, scalable IP, robust returns, and a pay-it-forward mindset," says Antonia Bothner, Endeavor SA capital markets lead.
The fund plans to invest exclusively in a vetted pipeline of 135 selected Endeavor companies in Africa. This will comprise 20 to 25 companies in Southern Africa, accounting for 85% of the value, and five companies in other African regions. The fund targets a 25% return or a three to four multiple on invested capital (MOIC), with deal sizes of R15 million (c. $853,000) for Endeavor companies and R7.5 million (c. $427,000) for early-stage Endeavor companies.
Endeavor South Africa managing director Alison Collier notes, “We have a deep understanding of the 135 businesses in our pipeline and are confident in their growth potential, as they have been selected through Endeavor's rigorous two-stage international selection process, which spans one to two years. We engage with them continuously and will assess their capital needs to guide the fund’s investments.”
Anwar Harris, head of investments at Standard Bank Corporate and Investment Banking, says: “Our decision to invest is strongly influenced by the extent and quality of Endeavor’s network and strong selection process of its portfolio companies, which minimises risks and provides substantial reassurance to investors.”
Ketso Gordhan, CEO of the SA SME Fund, which invested in both Harvest Fund II and III, says Endeavor’s support of potential target investments is a significant factor in providing investors with a sense of security in their investment, as well as meaningful impact. “Additionally, we see a complete alignment with our ethos and strategy in promoting entrepreneurship and growth,” he says.
The fund also received catalytic support from Prosper Africa, under its Catalytic Investment Facility, to enable the team to scale their raise. “The announcement of the first close of the fund is a fantastic milestone in a challenging fundraising environment, and reaffirms our belief that investors are recognising the high-growth potential of African startups,” says British A. Robinson, coordinator for Prosper Africa.
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