HBD eyes more investments

Venture capital company Here Be Dragons (HBD) aims to find more technological companies in which to invest.

While the company is not limiting its search to the technology arena, CEO Julia Fourie says this is a focus area for funding. She says HBD is seeking at least one more technology company into which it can invest between R10 million and R25 million.

HBD makes investments for a minimum of R10 million and a maximum of R25 million, and takes a stake in the company. Those businesses that qualify for investment from the HBD second fund must have at least six months' worth of sales history.

HBD, started by IT whizz-kid Mark Shuttleworth in 2000, has already invested between R60 million and R80 million of the funding available in the second fund. Companies such as local software development company EDH, mobile payment provider Fundamo and pay-per-click company Clicks2Customers have benefited from financing.

Fourie says the balance of the R150 million fund, started in 2006, must be spent by February, as the second fund has a three-year investment cycle.

HBD's first fund ran from 2000 to 2006 and offered seed capital to a range of start-up companies. Nine investments were made from this R70 million fund.

The venture capital company does not invest in mature markets or technologies, but looks for firms that would be able to continue growing after five years.

“HBD believes that, although tough economic times can make or break young companies, such times present interesting opportunities to invest in companies with sound and tested business ideas,” says Fourie.

Clean business

Julia Fourie

Among its criteria, HBD seeks to invest in companies that can be grown quickly at minimal cost, which will give it quick returns, Fourie adds. Venture capital firms generally invest for between three and five years before exiting a company, usually selling the stake to other investors.

Fourie points out that SA does not have technology hubs where ICT companies congregate, as is the case in the US. So it is difficult to find candidates in which to invest. As a result, HBD attends open days at universities to find students with early stage companies.

“You find the most amazing businesses down the street in a corner of the cul-de-sac,” she notes.

Related stories:

• R25m up for grabs in VC funds
• Venture funding will be scarce

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