Edge Growth Fund Expands

Edge Growth invests in high growth small enterprises, and is capitalised using corporate companies’ enterprise and supplier development spend under the BEE codes. Edge Growth looks for entrepreneurs who have the ability to manage complicated tasks and still stay focused, have deep industry experience and have a strong work ethic.

Edge Growth now offers two funding; Vumela’s first fund which closed in 2010, raised R102-million from First Rand and made eight deals, including one with messaging platform Everlytic. Vumela’s second fund had deployed R180-million as of November last year, in 10 deals, (three to black-owned firms) including one in SweepSouth, a platform that provides on demand domestic workers, job matching platform Giraffe and Selpal, which has developed an integrated system that connects informal retailers such as spaza shops with suppliers, wholesalers and brands.

The Asisa fund had deployed R68-million by March last year in 21 deals, 16 of which were in black-owned firms. The deals include those made in health-tech startup Recomed, debt counsellors Meerkat and private equity firm Bopa Moruo.

Ventureburn spoke to Johnston recently about what makes an entrepreneur investable, the importance of having a business that is able to scale is and why it is so difficult for startups in South Africa to raise funding from venture capital (VC) firms. Some of the main characteristics of a high quality early-stage entrepreneur, in addition to them having identified a large problem in a growing market that their company is solving in an efficient, innovative and defendable way.

Investable startups have identified a large problem that their company is solving in an efficient, innovative and defendable way.

This implies that there is a large and growing market for the product or service with a differentiated value proposition and that the business model is scalable in a cost-efficient manner.
The company needs to have a committed and complimentary founding team with a well-defined execution strategy.
At the stage of asking for third-party investment, it should have demonstrable customer adoption and some revenue traction.
As an investor, it is very important to understand the exit opportunities for the business and its potential to deliver on the financial forecasts.

Once you are recognized as an investable business, the time frame for Edge Growth to close a deal is as follows. The average deal takes between four to six months to close although often it works best to develop a relationship with investors before approaching them for funding. In some cases, we became interested in very early stage businesses 12 to 18 months prior to funding which helped build trust in the team as we saw them deliver on their strategic milestones.

At DTC we understand the complexities of the various funding agencies and the unique application criteria for each. We have assisted thousands of entrepreneurs through the application process to access funding for businesses, and we can assist you with the same.