Naspers hunts for tech start-ups with remaining R1bn war chest
Naspers, through its early-stage tech investment vehicle Naspers Foundry, still has a R1 billion kitty that it is looking to invest in South African tech start-ups.
This financial year, Naspers Foundry wants to pump about R300 million into the burgeoning businesses, with the company set to announce a new investment deal before December.
This was revealed by Fabian Whate, head of Naspers Foundry, in a video interview with ITWeb last week.
Established in 1915, Naspers has transformed itself to become a global consumer internet company and one of the largest technology investors in the world. In SA, Naspers is one of the foremost investors in the technology sector and has committed to building its internet and e-commerce companies in the country.
These include Takealot, Mr D Food, Superbalist, OLX, Autotrader, Property24 and PayU.
Naspers Foundry is a R1.4 billion early-stage business funding vehicle dedicated to growing South Africa-focused technology companies.
According to Whate, so far the funding vehicle has invested R400 million in seven tech start-up companies.
Whate noted Naspers Foundry still has R1 billion to invest in early-stage start-up companies. “If you look at we have done this financial year, we have invested about R150 million in the first half of the year.”
He said this financial year, the company has set aside roughly R300 million to invest in the tech start-ups.
“We talk to hundreds of founders in any given year and we’ve had a lot of exciting conversations and that’s why we have a very full deal pipeline. We will announce at least one more deal before the end of the calendar year. It’s hard to say what it will be but it will happen.”
Whate chronicled that the first investment was in 2019 when Naspers Foundry invested R30 million in SweepSouth, an online home and business cleaning services platform that connects clients with cleaners.
“Our second investment was in a business called Aerobotics, an agritech business that utilises drones and artificial intelligence in order to provide yield data to commercial farmers as well as agri-insurers. We invested R100 million into that business in May 2020.”
In September 2020, Naspers Foundry closed a transaction in Food Supply Network on undisclosed terms. The independent B2B marketplace integrates ordering systems of manufacturers, distributors and buyers (restaurants, hotels and retailers) of food products.
In November 2020, Naspers Foundry invested R45 million in online learning platform The Student Hub. The company helps overcome the constraints of limited physical infrastructure and related resources by partnering with government-accredited Technical and Vocational Education and Training (TVET) colleges to help them deliver their courses online.
“The Student Hub is an edtech business that also digitalises the TVET college curriculum,” Whate added.
“Our fifth investment was this year into a business called WhereIsMyTransport. That was a R42 million investment.”
The company maps formal and informal public transport networks and uses this data and technology to improve the public transport experience for millions of consumers in high-growth megacities globally.
“WhereIsMyTransport is focused on mapping emerging markets, and where they are mostly competitive is in mapping informal public transportation within megacities, which is quite important given the decentralised nature of, for example in South Africa, taxi minibuses. That information is valuable to both large enterprises that make use of mobility data such as an obvious one like Google, for instance.
“It’s also valuable to consumers who use a combination of informal and formal public transportation systems.”
Whate adds: “Our sixth investment was an insurtech investment in a business called Ctrl where we put in about R34 million. What Ctrl does is it enables large consumer-facing businesses to become insurance distributors and thereby generate incremental revenue by leveraging your existing consumer business.”
The Ctrl platform also enables brokers to provide insurance advice digitally and allows underserved consumers to easily compare multiple quotes, obtain advice, accept cover and manage their policies.
This was Naspers Foundry’s first foray into the insurtech space.
In August, Naspers announced a R120 million ($8.3 million) investment in another insurtech Naked Insurance, with the balance of the round funded by existing investors. The investment was Naspers Foundry’s second insurtech deal.
“Naked Insurance provides insurance via mobile or web for short-term insurance,” said Whate. “For example, you can sign up an insurance product with Naked Insurance in 90 seconds; you can also change your address in real-time. It may sound simple but this is something that is really difficult to achieve. The other thing is you can also pause your insurance, for example, for a day.
According to Whate, three factors are taken into account by Naspers Foundry when supporting start-up companies.
The first one is high potential, he stressed. “We would like to back and support tech success stories in South Africa and use those success stories to build the business ecosystem. That’s our core purpose.
“Secondly, from a sector perspective, we’ve been really broad but really the core theme is addressing big societal needs and that is a theme that cuts across the whole group, and those sectors include fintech, edtech, foodtech, agritech and healthtech.
“The third piece, which is important, is life stage. We are looking to back early-stage businesses. So we invest at Series A, where you find companies like SweepSouth.”