Convergence Partners has invested an undisclosed amount in 4Di Capital's Fund 1, boosting the venture capital (VC) firm's ability to back technology entrepreneurs.
The deal means Convergence Partners joins as an equal limited partner in 4Di alongside Reinet Fund and E Oppenheimer & Son.
It also means 4Di will run Integrat, Bloodhound Technologies and Skillpod Media - Convergence's current portfolio of technology venture investments.
The investment adds to 4Di's coffers in a similar fashion to the Oppenheimer family's cash injection in 2012.
Justin Stanford, 4Di Capital's founding partner and Silicon Cape Initiative co-founder, says 4Di and Convergence Partners "believe in the opportunity offered by the emerging South African technology start-up ecosystem".
"Leveraging the accomplished capabilities of such highly-regarded investors with our team's dynamic and unique approach is a powerful combination for unlocking South African entrepreneurial talent in an increasingly globally integrated technology marketplace," adds Stanford.
The deal comes at a challenging time to raise capital for VC firms locally and globally, says Stanford.
Andile Ngcaba, Convergence Partners chairman, notes the company took a close look at global VC trends before investing in 4Di. "We were thus looking for partners who have themselves started up successful early stage tech ventures and, importantly, who have built a strong bridge into the global VC market, particularly in the US.
"We believe this transaction aligns us with an experienced and passionate management team, as well as other investors who support South African technology innovation," adds Ngcaba.
Strategic relationship
Convergence Partners CEO Brandon Doyle says the investment is part of the company's aim to "nurture the VC sector in SA".
"Our relationship with 4Di will be a high-level strategic one dealing with sector trends rather than specific portfolio companies."
According to Doyle, young technology businesses such as 4Di are "at the cutting-edge of what's happening in the B2B [business-to-business] market, which is where we're focusing at the moment".
Convergence Partners has worked with its new equal partners Reinet and the Oppenheimer family before - a point which Doyle notes made the two "natural" allies in the 4Di investment.
"Reinet are our partners in Britehouse and Seacom, while we worked with the Oppenheimers on the New Dawn satellite," says Doyle.
He says the company has shifted its focus to ICT investments that accelerate digital access and development across Africa, and the 4Di partnership will channel efforts to ensure Convergence Partners' VC interests are managed by experts.
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