VC4Africa SME Performance Index 2013

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The VC4Africa organization reached out to entrepreneurs part of the community in the effort to benchmark their progress. …

The VC4Africa organization reached out to entrepreneurs part of the community in the effort to benchmark their progress.

Specifically, we were looking to see organizational advancement as measured by the number of jobs created and growth in revenue over time. By establishing such an index, the aim is to offer tangible evidence of SME Impact created by the entrepreneurs part of the VC4Africa community.

Entrepreneurs with a venture profile published on VC4Africa were asked to participate in an online survey. The survey was sent to 800 entrepreneurs and 160 entrepreneurs responded, a 20% response rate.

These are the results of the first VC4Africa SME Performance Index 2013.

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  • 1. SME  PERFORMANCE  INDEX   2013  
  • 2. WHY VC4AFRICA »  Africa  is  a  hot-­‐bed  for  innova7on  and  a  source  of  world   changing  solu7ons.  To  realize  the  poten7al  of  the  con7nent’s   most  promising  entrepreneurs  resources  need  to  be  unlocked   i.e.  the  required  network,  knowledge  and  capital.  The  VC4Africa   community  is  a  global  peer-­‐to-­‐peer  network  where   entrepreneurs  and  investors  come  together  to  build  great   African  success  stories.  
  • 3. RESEARCH OBJECTIVES »  Benchmark  the  progress  of  companies  registered  on   VC4Africa;     »  As  measured  by  the  number  of  jobs  created  and  growth   in  revenue  over  7me;     »  Offer  tangible  evidence  of  SME  Impact  created  by  the   entrepreneurs  part  of  the  VC4Africa  community.  
  • 4. DATA COLLECTION »  Entrepreneurs  with  a  venture  profile  published  on   VC4Africa  were  asked  to  par7cipate  in  an  online  survey;     »  The  survey  was  sent  to  800  entrepreneurs  and  160   entrepreneurs  responded,  a  20%  response  rate;     »  Par7cipants  in  the  survey  received  the  ‘Jobs  Creator’   badge  to  recognize  their  posi7ve  contribu7on  to  society.  
  • 5. A FEW FACTS »  VC4Africa  has  processed  1600  venture  applica7ons  and   800  entrepreneurs  have  successfully  published  their   venture  online;     »  The  ventures  on  VC4Africa  are  early  stage  and  require   investments  less  than  USD  $1  million;     »  The  primary  sectors  include  mobile,  web,  renewable   energy,  healthcare,  educa7on  and  agriculture,  amongst   others;  
  • 6. A FEW FACTS (cont) »  Each  venture  is  scalable,  makes  smart  use  of  technology,   or  is  disrup7ve  in  their  applica7on  of  a  business  model;     »  Thirty  percent  of  the  registered  ventures  have  an  explicit   social  mission  and  could  be  qualified  as  a  social  enterprise;     »  Listed  entrepreneurs  have  access  to  free  online  tools,   mentorship  opportuni7es,  private  deal  rooms,  and   networking  opportuni7es.      
  • 7. JOBS CREATION Total  number  of  jobs  realized  per  2012  and  the  expected  number  of  jobs   created  per  the  end  of  2014.     449   2263   0   500   1000   1500   2000   2500   Realized  (N=120)   Expected  (N=150)   Total  Jobs  Created  
  • 8. JOBS CREATION (cont.) Total  number  of  jobs  created  per  2012  and  as  expected  per  end  2014,   comparing  average  per  startups  vs.  ventures  seeking  expansion  capital.   2.66   14.09   6.08   18.03   0   2   4   6   8   10   12   14   16   18   20   Realized  2012   Expected  per  end  of  2014   Average  Number  of  Jobs  Created  per  Venture   Startup   Expansion  
  • 9. TEAM SIZE The  average  and  median  number  of  people  hired  per  venture.     0   2   4   6   8   10   Year  1   Year  2   Year  3   Median  and  Average  Number  of  Employees  per   Venture     Expansion  (Average)   Startups  (Average)   Expansion  (Median)   Startups  (Median)  
  • 10. REVENUE GROWTH Generated  revenue  broken  down  by  operaRng  year,  with  clear  growth  trend   from  year  1  to  year  3.  Including  forecasted  growth  for  years  4  and  5.   0%   20%   40%   60%   80%   100%   Year  1   (N=69)   Year  2   (N=47)   Year  3   (N=28)   Year  4   (N=56)   Year  5   (N=32)   DistribuRon  of  Generated  and  Expected  Revenue  (in  USD)     Over  50K   20K-­‐50K   5K-­‐20K   Less  than  5K  
  • 11. REVENUE GROWTH (cont.) By  the  second  year  of  operaRons,  64%  of  ventures  have  already  started  to   generate  revenue   40   56   23   15   16   0%   20%   40%   60%   80%   100%   N=150   DistribuRon  of  Ventures  by  First  Year  of  Revenue   No    revenue   Year  4   Year  3   Year  2   Year  1  
  • 12. INVESTMENT 92  ventures  that  parRcipated  in  the  survey  were  successful  in  securing   nearly  USD  $12,000,000  in  funding.   $   $2,000,000   $4,000,000   $6,000,000   $8,000,000   $10,000,000   $12,000,000   $14,000,000   N=92   Total  Invested  Capital  
  • 13. INVESTMENT (cont.) Looking  at  the  amount  of  total  secured  investments,  close  to  75%  is   commercially  financed  vs.  25%  grant  based  funding.     73%   27%   Commercial  vs.  Grant  Funding     Commercial   Grant  
  • 14. 61%  of  the  companies  received  funding.  Comparing  the  median  value  to  the   average,  the  laaer  being  significantly  influenced  by  a  few  outliers.   INVESTMENT (cont.) $20,000   $90,000   $80,189   $237,206   $0   $50,000   $100,000   $150,000   $200,000   $250,000   Startups  (N=65)   Expansion  (N=27)   Invested  Capital  per  Venture   Median  value   Average  value  
  • 15. INVESTMENT (cont.) Comparing  funding  sources  for  startups  vs.  expansion  capital.  Startups   securing  a  higher  %  of  grant  funding  at  an  early  stage  of  development.     0%   20%   40%   60%   80%   100%   Startup  (N=65)   Expansion  (N=27)   DistribuRon  of  Capital  Source  per  Venture  Category   Commercial   Grant  
  • 16. INVESTMENT (cont.) 61%  of  the  companies  received  funding.  Comparing  the  median  value  to  the   average,  the  laaer  being  significantly  influenced  by  a  few  outliers.   $27,500   $34,500   $119,150   $165,943   $0   $20,000   $40,000   $60,000   $80,000   $100,000   $120,000   $140,000   $160,000   $180,000   Urban  (N=78)   Rural  (N=14)   Invested  Capital  per  Venture     Median  value   Average  value  
  • 17. SECTOR ANALYSIS Breakdown  capital  invested  per  sector.     $0   $500,000   $1,000,000   $1,500,000   $2,000,000   $2,500,000   $3,000,000   Technology  (N=39)   Internet  (N=29)   Energy  (N=9)   Agriculture  (N=7)   Retail  (N=7)   Banking  and  Finance  (N=7)   Tourism  and  Hospitality  (N=9)   Manufacturing  (N=3)   Educa7on  (N=7)   Services  (N=7)   Real  Estate  (N=6)   HR  (N=2)   Healthcare  (N=2)   Cosme7cs  (N=1)   Transporta7on  (N=2)   Other  (N=13)   Total  Invested  Capital  per  Sector   ICT   Media   Mobile   Technology   Ecommerce  
  • 18. SECTOR ANALYSIS (cont.) Breakdown  capital  invested  per  sector.     $0   $50,000   $100,000   $150,000   $200,000   $250,000   Energy  (N=9)   Agriculture  (N=7)   Banking  and  Finance  (N=7)   Retail  (N=7)   HR  (N=2)   Tourism  and  Hospitality  (N=9)   Healthcare  (N=2)   Manufacturing  (N=3)   Technology  (N=39)   Internet  (N=29)   Educa7on  (N=7)   Other  (N=13)   Services  (N=7)   Real  Estate  (N=6)   Cosme7cs  (N=1)   Transporta7on  (N=2)   Total  Invested  Capital  per  Venture  
  • 19. CONCLUSIONS »  Combined,  92  ventures  that  par7cipated  in  the  survey   were  successful  in  securing  nearly  USD  $12,000,000  in   funding.     »  By  the  second  opera7ng  year,  64%  of  the  ventures  had   succeeded  in  genera7ng  revenue;     »  75%  of  the  ventures  that  join  VC4Africa  are  pre-­‐revenue   startups.  25%  join  as  ventures  seeking  growth  and   expansion  capital;     »  83%  of  the  ventures  registered  on  VC4Africa  have  an   urban  focus  vs.  17%  that  have  a  rural  focus;  
  • 20. CONCLUSIONS (cont.) »  On  average,  startups  registered  with  VC4Africa  secured   USD  $80,000  in  funding  vs.  expansion  companies  that   secured  USD  $237,000;     »  Ventures  with  an  urban  focus  secured  less  than  ventures   with  a  rural  focus.  Where  the  former  secured  USD  $119,000   the  laler  secured  nearly  USD  $166,000  on  average;     »  There  is  about  an  75/25  split  for  Commercial  vs.  Grant   funding  the  companies  have  been  able  to  secure  to  date;    
  • 21. CONCLUSIONS (cont.) »  Ventures  are  improving  their  revenue  performance  over   7me.  For  example  57.1%  of  the  ventures  registered  in  2010   show  less  than  USD  $5K  in  revenue.  43.8%  of  those  same   ventures  expect  to  generate  more  than  USD  $50K  in  2013;     »  It  is  clear  the  companies  are  growing  in  size  and  adding   full  7me  posi7ons  (FTE’s)  year  on  year.  By  2012  the   companies  registered  on  VC4Africa  employed  a  combined   449  people.  By  2013  the  same  companies  expected  to   increase  their  combined  staff  to  2,263  FTEs;  
  • 22. CONCLUSIONS (cont.) »  2011  looked  like  a  down  year  for  most  companies  and   there  might  be  a  correla7on  to  broader  economic  factors   i.e.  The  global  recession;     »  It  might  be  true  that  companies  secure  a  higher  %  of   grant  funding  at  the  earlier  stages  of  their  development,   but  the  evidence  is  not  conclusive;     »  It  will  be  interes7ng  to  see  what  trends  emerge  given   larger  data  sets  showing  how  company’s  mature  over   longer  periods  of  7me.    
  • 23. CLOSING REMARKS »  The  mean  and  average  value  of  invested  capital  per  venture   differs  considerably.  This  implies  a  significant  impact  due  to  a   few  outliers.  Therefore  these  outcomes  have  to  be  treated   carefully;     »  The  top  five  investment  sectors  consists  of:  Technology  &   ICT,  Internet  &  Mobile,    Energy,  Agriculture  and  Retail;       »  In  the  top  five  investment  sectors  the  average  investment   per  venture  ranges  between  100K  and  250K,  agriculture  and   energy  being  more  capital  intensive.    
  • 24. CLOSING REMARKS (cont.) »  This  is  the  first  7me  VC4Africa  has  endeavored  to  create   such  an  index,  an  ac7vity  we  look  to  build  on  in  the  future;     »  We  would  like  to  thank  the  entrepreneurs  that   par7cipated  in  this  study.  They  con7nue  to  inspire  all  of  us   at  VC4Africa.       »  You  can  see  which  companies  par7cipated  in  the  index   and  interact  with  the  par7cipants  on  VC4Africa.biz  
  • 25. QuesRons?     Please  feel  free  to  contact  Ben  White  at  Ben@vc4africa.biz     Special  thanks  to  Thomas  van  Halen