South Africa`s first Information Technology (IT) focused venture capital company, Archway Venture Partners, has invested in six IT companies in its first six months of operation.
The enterprises were selected from over 110 potential investment opportunities. Of these, 32 are currently under consideration by the R150-million private equity trust created through a synergistic partnership by Dimension Data, Genbel Securities (Gensec) and Standard Corporate and Merchant Bank (SCMB).
According to Paul Coningsby, operations manager at Archway Venture Partners, the company`s aim is to invest in emerging unlisted companies in the IT arena which are looking to grow organically or through acquisitions.
"Most of the investments to date have been into young but relatively well-established companies. We`re also considering risk and seed-capital ventures associated with varying aspects of IT, particularly data communications, Internet services, electronic commerce, software and special services," he adds.
"In addition to the potential investment`s strength of technical leadership and innovation and the growth potential of the market in which it operates, our selection criteria place emphasis on the company`s management style and management team`s expertise. Indeed, a dynamic and experienced management, which has significant equity invested in the enterprise and which is supported by a talented and committed employee base is the most important consideration in Archway`s selection process."
Archway is geared to provide venture capital allocations ranging from R1- to R15-million. In addition, the participating business ventures receive a host of other value-added benefits such as commercial input from people who understand the dynamics of the IT industry, business development opportunities, and access to technologies and technical resources.
Among Archway`s most recent investments include capital injections into companies involved in Internet-based services, point of sale software systems, and IP telephony.
For example, Archway has taken an equity stake in MST Online - the on-line Internet investment brokerage.
Launched in 1996, MST Online is SA`s leading provider of on-line investing services, processing deals worth more than R350-million on behalf of its more than 3 500 Internet clients
"There is tremendous potential in this e-commerce niche and Archway`s investment will help MST Online to expand its clientele database, establish strategic partnerships and modernise its trading and information systems," Coningsby adds.
Archway has also invested in iPfax Communications, a Pretoria-based company which provides low cost, long distance fax, data and value added communication services using Internet Technology.
This company was launched in 1997 and already counts several of SA`s blue chip companies among its clients. Archway`s investment will enable the company to establish additional branches and achieve critical mass.
Archway`s biggest investment to date has been in Prism Payment Technologies, an electronic payment systems company which was recently commissioned by Shoprite Checkers to implement a complete transaction handling solution for its chain of retail stores country-wide.
In addition to the physical payments arena, Prism is also involved in Internet-based payment systems and leading edge smart-card technology relating to smart card.
"Each investment application received by Archway is thoroughly investigated but the momentum we have built up should result in the announcement of several new investments by the end of this year," Coningsby concludes.
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