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Landmark 2021 for IDF Capital and what lies ahead for 2022
2021 marked the second year of a strained trading environment due to the impact of the Covid-19 pandemic. Despite the pandemic effects, the finance and investment landscape has seen an influx of investments as reported by SAVCA’s Venture Capital Industry Survey. The year 2020 saw a 13% increase in investments, from R1.23bn in 2019 to R1.39bn in 2020. A similar trend was expected in 2021. The past year was special for IDF Capital, stretching the company to adopt new routines and improve our processes and ways of working. We continued to drive investments into several notable companies with commitments exceeding R140m (up from R116m in 2020). To date, we have deployed more than R700m into the economy enabling the growth and scaling of entrepreneurial businesses. These investments would not have been possible without the support of our key investors including Telkom, AECI, Gibela, Shell, IDC, Liquid Telecom, SASRIA, and sefa. IDF pays particular attention to the entrepreneurs behind the businesses. The quality teams that run each of the investee companies are commended for their great resilience and drive. Special gratitude must also be given to IDF’s entire team for living up to IDF’s values of Excellence, Respect, Diligence, and Integrity.
2021 Sector Highlights and Transactions
The changes and challenges to the macro landscape had presented the following opportunities for investment. Some of the highlight sectors and transactions closed over the past year include:
Technology
Technology, Media, and Telecoms: South Africa has one of the largest information and communications technology (ICT) markets in Africa and is an increasingly important contributor to the economy, contributing around 8% to South Africa’s GDP.
The country has clear constraints within the sector including high data costs, low tax incentives (Section 12J being killed), tech skills gaps, digital inequality and exclusion in remote areas, and increasing cyberattacks.
During the pandemic, technology and internet connectivity have helped to sustain business continuity, keep children in education and ensure online access to essential goods and services.
The covid-19 lockdown increased the adoption of online business processes, remote working, e-learning, e-commerce, e-banking, epayment services, e-insurance, telemedicine, and virtual events.
This resulted in a higher demand for technologies and IT services that support these activities, some of which are here to stay. The lockdowns propelled e-commerce forward by at least five years according to some sources.
Further, the value of e-commerce transactions in South Africa is expected to surge c.150% to R225bn by 2025 in response to the shift in consumer behaviour brought about by the Pandemic, with 37% of consumers already having increased their online shopping activity.