VC4Africa SME Performance Index 2013
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SME PERFORMANCE INDEX 2013
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WHY VC4AFRICA » Africa is a hot-‐bed for innova7on and a source of world changing solu7ons. To realize the poten7al of the con7nent’s most promising entrepreneurs resources need to be unlocked i.e. the required network, knowledge and capital. The VC4Africa community is a global peer-‐to-‐peer network where entrepreneurs and investors come together to build great African success stories.
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RESEARCH OBJECTIVES » Benchmark the progress of companies registered on VC4Africa; » As measured by the number of jobs created and growth in revenue over 7me; » Offer tangible evidence of SME Impact created by the entrepreneurs part of the VC4Africa community.
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DATA COLLECTION » Entrepreneurs with a venture profile published on VC4Africa were asked to par7cipate in an online survey; » The survey was sent to 800 entrepreneurs and 160 entrepreneurs responded, a 20% response rate; » Par7cipants in the survey received the ‘Jobs Creator’ badge to recognize their posi7ve contribu7on to society.
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A FEW FACTS » VC4Africa has processed 1600 venture applica7ons and 800 entrepreneurs have successfully published their venture online; » The ventures on VC4Africa are early stage and require investments less than USD $1 million; » The primary sectors include mobile, web, renewable energy, healthcare, educa7on and agriculture, amongst others;
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A FEW FACTS (cont) » Each venture is scalable, makes smart use of technology, or is disrup7ve in their applica7on of a business model; » Thirty percent of the registered ventures have an explicit social mission and could be qualified as a social enterprise; » Listed entrepreneurs have access to free online tools, mentorship opportuni7es, private deal rooms, and networking opportuni7es.
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JOBS CREATION
Total number of jobs realized per 2012 and the expected number of jobs created per the end of 2014.
449
2263
0
500
1000
1500
2000
2500
Realized (N=120) Expected (N=150)
Total Jobs Created
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JOBS CREATION (cont.)
Total number of jobs created per 2012 and as expected per end 2014, comparing average per startups vs. ventures seeking expansion capital.
2.66
14.09
6.08
18.03
0 2 4 6 8 10 12 14 16 18 20
Realized 2012 Expected per end of 2014
Average Number of Jobs Created per Venture
Startup
Expansion
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TEAM SIZE
The average and median number of people hired per venture.
0
2
4
6
8
10
Year 1 Year 2 Year 3
Median and Average Number of Employees per Venture
Expansion (Average)
Startups (Average)
Expansion (Median)
Startups (Median)
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REVENUE GROWTH
Generated revenue broken down by operaRng year, with clear growth trend from year 1 to year 3. Including forecasted growth for years 4 and 5.
0%
20%
40%
60%
80%
100%
Year 1 (N=69)
Year 2 (N=47)
Year 3 (N=28)
Year 4 (N=56)
Year 5 (N=32)
DistribuRon of Generated and Expected Revenue (in USD)
Over 50K
20K-‐50K
5K-‐20K
Less than 5K
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REVENUE GROWTH (cont.)
By the second year of operaRons, 64% of ventures have already started to generate revenue
40
56
23
15 16
0%
20%
40%
60%
80%
100%
N=150
DistribuRon of Ventures by First Year of Revenue
No revenue
Year 4
Year 3
Year 2
Year 1
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INVESTMENT
92 ventures that parRcipated in the survey were successful in securing nearly USD $12,000,000 in funding.
$
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
N=92
Total Invested Capital
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INVESTMENT (cont.)
Looking at the amount of total secured investments, close to 75% is commercially financed vs. 25% grant based funding.
73%
27%
Commercial vs. Grant Funding
Commercial
Grant
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61% of the companies received funding. Comparing the median value to the average, the laaer being significantly influenced by a few outliers.
INVESTMENT (cont.)
$20,000
$90,000 $80,189
$237,206
$0
$50,000
$100,000
$150,000
$200,000
$250,000
Startups (N=65) Expansion (N=27)
Invested Capital per Venture
Median value
Average value
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INVESTMENT (cont.)
Comparing funding sources for startups vs. expansion capital. Startups securing a higher % of grant funding at an early stage of development.
0%
20%
40%
60%
80%
100%
Startup (N=65) Expansion (N=27)
DistribuRon of Capital Source per Venture Category
Commercial
Grant
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INVESTMENT (cont.)
61% of the companies received funding. Comparing the median value to the average, the laaer being significantly influenced by a few outliers.
$27,500 $34,500
$119,150
$165,943
$0 $20,000 $40,000 $60,000 $80,000
$100,000 $120,000 $140,000 $160,000 $180,000
Urban (N=78) Rural (N=14)
Invested Capital per Venture
Median value
Average value
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SECTOR ANALYSIS
Breakdown capital invested per sector.
$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000
Technology (N=39) Internet (N=29)
Energy (N=9) Agriculture (N=7)
Retail (N=7) Banking and Finance (N=7)
Tourism and Hospitality (N=9) Manufacturing (N=3)
Educa7on (N=7) Services (N=7)
Real Estate (N=6) HR (N=2)
Healthcare (N=2) Cosme7cs (N=1)
Transporta7on (N=2) Other (N=13)
Total Invested Capital per Sector
ICT
Media Mobile
Technology
Ecommerce
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SECTOR ANALYSIS (cont.)
Breakdown capital invested per sector.
$0 $50,000 $100,000 $150,000 $200,000 $250,000
Energy (N=9) Agriculture (N=7)
Banking and Finance (N=7) Retail (N=7)
HR (N=2) Tourism and Hospitality (N=9)
Healthcare (N=2) Manufacturing (N=3) Technology (N=39)
Internet (N=29) Educa7on (N=7)
Other (N=13) Services (N=7)
Real Estate (N=6) Cosme7cs (N=1)
Transporta7on (N=2)
Total Invested Capital per Venture
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CONCLUSIONS » Combined, 92 ventures that par7cipated in the survey were successful in securing nearly USD $12,000,000 in funding. » By the second opera7ng year, 64% of the ventures had succeeded in genera7ng revenue; » 75% of the ventures that join VC4Africa are pre-‐revenue startups. 25% join as ventures seeking growth and expansion capital; » 83% of the ventures registered on VC4Africa have an urban focus vs. 17% that have a rural focus;
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CONCLUSIONS (cont.) » On average, startups registered with VC4Africa secured USD $80,000 in funding vs. expansion companies that secured USD $237,000; » Ventures with an urban focus secured less than ventures with a rural focus. Where the former secured USD $119,000 the laler secured nearly USD $166,000 on average; » There is about an 75/25 split for Commercial vs. Grant funding the companies have been able to secure to date;
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CONCLUSIONS (cont.) » Ventures are improving their revenue performance over 7me. For example 57.1% of the ventures registered in 2010 show less than USD $5K in revenue. 43.8% of those same ventures expect to generate more than USD $50K in 2013; » It is clear the companies are growing in size and adding full 7me posi7ons (FTE’s) year on year. By 2012 the companies registered on VC4Africa employed a combined 449 people. By 2013 the same companies expected to increase their combined staff to 2,263 FTEs;
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CONCLUSIONS (cont.)
» 2011 looked like a down year for most companies and there might be a correla7on to broader economic factors i.e. The global recession; » It might be true that companies secure a higher % of grant funding at the earlier stages of their development, but the evidence is not conclusive; » It will be interes7ng to see what trends emerge given larger data sets showing how company’s mature over longer periods of 7me.
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CLOSING REMARKS » The mean and average value of invested capital per venture differs considerably. This implies a significant impact due to a few outliers. Therefore these outcomes have to be treated carefully; » The top five investment sectors consists of: Technology & ICT, Internet & Mobile, Energy, Agriculture and Retail; » In the top five investment sectors the average investment per venture ranges between 100K and 250K, agriculture and energy being more capital intensive.
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CLOSING REMARKS (cont.) » This is the first 7me VC4Africa has endeavored to create such an index, an ac7vity we look to build on in the future; » We would like to thank the entrepreneurs that par7cipated in this study. They con7nue to inspire all of us at VC4Africa. » You can see which companies par7cipated in the index and interact with the par7cipants on VC4Africa.biz
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QuesRons? Please feel free to contact Ben White at [email protected] Special thanks to Thomas van Halen