Two JSE-listed companies, Dimension Data Holdings (Didata) and Genbel Securities Limited (Gensec) via its Gensec NSA Fund, have joined forces to launch South Africa`s first venture capital company, VENTRUST, geared specifically at the country`s burgeoning Information Technology (IT) industry. Didata, the SA-based multinational IT integration company, and Gensec - a leading investment banking group - have committed R100-million to a new private equity trust, VENTRUST which will be administered by VENCO. VENTRUST will provide venture capital, as well as strategic support - including financial, technical, resource and management assistance - to fledgling local IT companies and IT entrepreneurs wanting to grow their companies but needing funding and other resources. VENTRUST will take a minority share holding in participating companies, with the capital made available at crucial growth stages over a period of a few years as it grows towards a listing on the JSE. Alternatively, it could be incorporated into the Dimension Data group or become a strong, independent company in its own right. According to Richard Came, Didata marketing director, venture capital and technology go hand in hand, with most budding entrepreneurs in areas like Silicon Valley seeking the support of venture capitalists. "Many of the challenges faced by entrepreneurs when starting up a new IT busienss are effectively addressed by venture capital funding. Over and above committed financial support, entrepreneurs 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," he explains. "The IT industry in the United States currently attracts the largest proportion of investment capital in that country, while the global IT industry is dominated by US-based organisations. It`s estimated that more than 70% of IT companies in the US today were venture-backed at some stage of their development. These include household names such as Intel, Microsoft, Compaq, Cisco Systems, Apple Computer, Oracle, Sun Microsystems and Netscape. "The pooling of Gensec`s financial expertise and Didata`s IT know-how and resources make this collaboration ideal as our joint expertise will enable us to assess applicants from both a financial and IT perspective," he adds. Leonard Fine, CEO of the Gensec NSA Equity Fund says: "We will provide select companies with funding; strategic and management support at a practical level; add value at boardroom level; and facilitate local and international connections." Companies will be selected for participation in the venture capital scheme based on their involvement in unique, leading edge or emergent IT technologies; their proven track record; and their strong innovative management team. Didata will add value to participating companies though its position as an industry leader, technical skills and expertise as well as its experience in growing small, entrepreneurial IT ventures into profitable, leading edge business units under the group`s corporate banner. Gensec, with its outstanding track record in the financial arena, has long been involved in the equity funding of leading-edge IT companies in South Africa. The company recognised the growth potential of the local IT industry as far back as the late 1980`s and initiated a programme to provide finance to companies other - more conservative groups - tended to consider "too risky". "The IT industry in SA is flourishing with unlimited growth potential. VENCO and VENTRUST will enable Didata and Gensec to continue to make a contribution in this arena," Fine concludes.
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