Business

A US VC just opened a Cape Town office – but not to write cheques to South African startups

Business Insider SA
Vector dotted world map stock illustration
Vector dotted world map stock illustration

  • American venture capital firm Activant Capital has set up its first office outside the US and Europe, in Cape Town.
  • But it is not there for the local startup scene, and there are no current plans to make any local investments.
  • Cape Town has the people who can help it do high-level, global research to support its work elsewhere in the world, Activant says.
  • It is a nice coincidence that many German founder-types also like Cape Town.
  • For more stories go to www.BusinessInsider.co.za.

* This article has been updated below.

American venture capitalists Activant Capital has opened an office in Cape Town, spreading beyond the USA and Europe for the first time.

But it is not in South Africa for the fin-tech startup scene, Activant says, or to sniff out early-stage online companies to add to its roster.

In fact, it has no current plans to make any investments in South Africa, or on the continent. It is just in Cape Town because that is where it can find people who can help it with big-picture research, to support its "thesis-led" approach.

"The skills are here, there is a deep pool of talent," says local research director Robert Lamprecht of the choice of location. "There is no reason not to be here, the world is flattened."

Activant opened an office in Berlin, after establishing a European beachhead there in 2020. It has a long history in Europe, with business previously conducted remotely, or by jumping on a plane.

Sharing a timezone with Berlin gave South Africa a slight edge over other possible locations for the office, such as India, Lamprecht says. Having a language in common with the US likewise helped in the decision. Germany's love affair with Cape Town did not feature at the time, but was a happy coincidence; many of the German founders the firm works with tend to holiday in Cape Town, Lamprecht says. 

Activant's investments are focussed on supply-chain disruptors, such as American digital check-out company Bolt (not to be confused with the European e-hailing company that operates in SA), recently valued at $6 billion, and next-day-shipping fulfilment technology platform Deliverr, valued at $2 billion Series E funding.

Concerns about South Africa included the need for reliable electricity, and some worries about regulatory red-tape, which turned out to be unfounded, Lamprecht says, with the paperwork being "quite painless". One remaining challenge is working with people on the startup-heavy West Coast of the USA, which can mean the occasional meeting at 03:00 for the South Africans.

Lamprecht, and Activant's two other local employees, JJ Brink and Jonathan Vickery, are tasked with coming "in at a high level, a macro level, and take a view on where the world is moving," he says. While getting involved in specific tasks such as due diligence, "we are encourage to stare out the window and think about long-term stuff" too.

At this point, the South African office is expressly not in the business of writing cheques, and there is no strategy of moving towards local investments.

But the door is not entirely closed on local investments at some point. Activant has been known to pick up opportunistic investments, if rarely.

Update | After publication of this article, Activant stressed the possibility of future investments in South Africa.

"We’re big fans of South Africa’s thriving technology scene and see lots of potential here," said managing partner Steve Sarracino in a statement. "Activant invests globally, we now have an office in the region and are excited to meet and back South Africa’s technology companies as part of our global investment approach."

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