Growth Equity Explained

Growth equity resides at the intersection of venture capital and private equity. It is most often a minority investment in high-growth companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business. Companies that seek growth capital will often do so in order to finance a transformational event in their lifecycle. These companies are likely to have existing revenue flow and a verifiable customer base matched by significant market potential but unable to generate sufficient cash to fund major expansions, acquisitions or other investments.

THE GROWTH EQUITY INVESTMENT CYCLE INCLUDES

  • Finding high-growth entrepreneurial companies to invest in that fits the investment mandate as set out by the funder;
  • Making these investments through conducting a thorough due diligence exercise, favourable negotiation and legal closure;
  • Aggressively growing these investments through active management and board participation over a three to five year period; and
  • Successfully exiting these investments via a realisation event such as an IPO or trade sale of the company, resulting in high returns for the funder.

Resources

Business Angel investments ranging between R1m and R10m.

www.angelhub.co.za

Other avenues of VC funding.

www.savca.co.za

Some useful information for entrepreneurs in the Silicon Cape.

www.siliconcape.com

Standard (US) investment documents

www.askthevc.com/wp/resources

Small Business Information Toolkit

southafrica.smetoolkit.org/sa/en

Umbono technology incubator + seed capital by Google

www.google.co.za/umbono

The Old Mutual Entrepreneurs' Guide for start-ups.

dogreatthings.co.za

Research & Development Support

www.tia.org.za