The lack of funding for early stage startups is one of the major problems for entrepreneurs in emerging markets. There’s a limited number of local Angel Investors in South Africa and their growth has not been proportionate with the increasing number of startups in the local ecosystem. The Solution Space, along with the GSB Entrepreneurship Club, set out to understand whether GSB Alumni are interested in forming a dedicated GSB Angel Investor Network that provides funding to South African startups in the seed and startup phase.

1. Discovering GSB Alumni Interest
for Angel Investing & Startup Needs:
Research Results 2018
www.gsbsolutionspace.uct.ac.z.a

2. FORWARD
Business angels is an important source of capital to
young and entrepreneurial ventures. A business
angel can be defined as “a high net worth individual,
acting alone or in a formal or informal syndicate,
who invests his or her own money directly in an
unquoted business in which there is no family
connection and who, after making the investment,
generally takes an active involvement in the
business, for example, as an advisor or member of
the board of directors”.
Investing in early stage startups is a high risk
endeavor so due diligence is of outmost importance
if one want to be successful as an business angel. In
the early life of the venture business angels often
look at the team first, then the opportunity and the
plan for the venture. Therefore, staged investments
are common, as well as, syndicated investments in
order to mitigate risk across time.
Research in the area suggests that it is very difficult
to become a successful business angel. However,
there are some basic ground rules:
1. If you invest prepare to loose the money and be
prepared to invest more over time.
2. Exits are rare, dividends are rare, so give it plenty
of time.
3. Invest together with other investors to reduce
risk and to learn.
4. Be prepared to fight for your opinion with strong
minded entrepreneurs.
5. Use shareholders agreements and formal
structures from day one. Finally, only invest if you
are 100% confident in the team.
Associate Prof Mikael Samuelsson
UCT Graduate School of Business

3. SOLUTION SPACE INTRO
Founded in 2014 at the University of Cape Town Graduate School of Business in
partnership with MTN Group, the Solution Space is an ecosystem for early-stage startups
and a research and development platform for corporates. Our startups are innovation-
driven companies building viable and scalable businesses.
The Solution Space offers early-stage startups access to resources including co-working
space, practical learning clinics, mentors, weekly check-ins and staff advisors, and a
community of peers who learn and grow together.
The Solution Space Waterfront is situated within the heart of the UCT GSB Breakwater
Campus, and focused on technological innovation; while the Solution Space Philippi is
situated within the heart of a local community on the Cape Flats, and focused on social
impact.

4. GSB ENTREPRENEURSHIP CLUB
The UCT GSB Entrepreneurship Club provides support, encouragement and guidance to all
students and alumni interested in the field of entrepreneurship, and to those who intend to
own, currently own or have their own business.
The Entrepreneurship Club at the GSB has been consistently one of the most active
student-run clubs within the GSB community.
Current Chair for the 2018 Class includes Calvin Lane and Abdallah Dutton. The 2018 Club
has had 28 active members and has run a number of initiatives that include pitch sessions,
inviting guest speakers to talk to GSB students, conducting due-diligence on applications
to the Solution Space incubator and working on a Student Seed fund with the Bertha
Centre for Social Innovation and Entrepreneurship.

5. BACKGROUND
The lack of funding in the early-stages is one major problem for startups in emerging
markets because investment amounts are usually too low for institutional venture capital
and private equity investors. There are a limited number of local Angel investors in South
Africa and the growth in Angels has not kept up with the increasing number of startups in
the local ecosystem.
The purpose of the survey was to understand whether GSB Alumni are interested in
forming a dedicated GSB Angel Investor Network that provides funding to South African
startups in the seed and startup phases. Through the survey we hoped to explore the level
of interest as well as experience within the GSB Alumni community in this area before
going ahead with setting up such a network.
Concurrently, a survey was sent to all GSB students (targeted to those looking to launch a
new venture) and startups within the Solution Space incubator in order to revisit the needs
and preferences of early-stage startups.

6. METHODOLOGY
The Angel Investor survey was sent out to all GSB Alumni via a dedicated emailer in
October 2018, and a total of 48 Responses were received.
The Startup survey was sent out to Solution Space startups via email and each GSB
Programme (PGDip, MPhil, MCom, MBA, EMBA) via Programme Coordinators posting to
Vula in October 2018, and a total 51 Responses were received.
The GSB Entrepreneurship Club and the Solution Space collated the results from these
surveys which are captured as 2 Appendices in this document. Further evaluation and
analysis revealed a number of insights and recommendations which are summarised in this
document.
For the purpose of this report, Angel investing refers to high-net worth individuals
investing their own time, experience and money in new businesses. Angels are often
interested in more than just receiving a financial return, typically being motivated by
personal interest, the desire to give back, and the thrill of being involved with an
innovative company.

7. #1 THERE IS STRONG INTEREST FROM POTENTIAL NEW ANGELS THAT HAVE
PREVIOUSLY STARTED A COMPANY.
• 69% of participants have never been Angel investors.
• 83% have previously founded or been a founding member of a company.
• 85% indicated interest in an Angel Investing Masterclass.
FINDING 1.
Previously a Founder
NO
69%
YES
31%
Previously an Angel
NO
17%
YES
83%
NO
15%
YES
85%
Angel Investor Masterclass Interest

8. #2 THERE IS A MISMATCH BETWEEN CAPITAL AVAILABLE FROM POTENTIAL ANGELS
AND STARTUP REQUIREMENTS.
• 54% of participants would be willing to invest R50 000 – 100 000 per company
• 52% of participants were willing to make 2-3 concurrent investments
• 73% of entrepreneurs are looking for R250 000 +
FINDING 2.
54%
13% 13%
21%
0 - R100k R101 -
R250k
R251 -
R500k
R500k+
Startup Capital Required
12%
15%
33%
40%
0 - R100K R101 -
R250K
R251 -
R500K
R500K +
Angel Investment Range

9. FINDING 3.
Preferred Relationship with InvestorPreferred Relationship with Investees
13
38
7
Board member
Advisor mentor
Passive
31
39
15
1
Board member
Advisor mentor
Passive
All
#3 ANGEL INVESTORS PROVIDE MENTOR-DRIVEN CAPITAL, WITH EXPECTATIONS
FOR A MORE HANDS-ON APPROACH.
• 55% of participants were willing to dedicate 0 – 10 hours per month to investees.
• 25% of participants were willing to dedicate 16 – 20 hours per month to investees.
• 83% of entrepreneurs indicated expectations of 0 – 10 hours per month from an Angel.

10. CONTINUED …
Entrepreneurs Expectation from InvestorHours Dedicated Per Month to Investee
0 - 5
HRS6 - 10 HRS
11 - 15
HRS
16 - 20 HRS
20
HRS + 0 - 5 HRS
6 - 10 HRS
11 - 15
HRS
16 - 20
HRS

11. FINDING 4.
Entrepreneur Payback PeriodAngel Time to Exit
1 - 3 YRS
44%
3 - 5 YRS
50%
>5 YRS
6%
< 1 YR
4%
1 - 3 YRS
56%
3 - 5 YRS
34%
> 5 YRS
6%
#4 ENTREPRENEURS ARE OPTIMISTIC IN EXPECTING THE PAYBACK PERIOD TO BE
SHORTER THAN ANGELS REQUIREMENTS.
• 50% of angels expect return on investment within 3 – 5 years, while other 44% expect
return within 1 – 3 years.
• 56% of entrepreneurs expect payback period within 3 – 5 years, while other 34% expect
return within 3 – 5 years.

12. #5 ANGELS AND ENTREPRENEURS BOTH PREFER TO REVIEW INVESTMENT TYPE
CASE BY CASE, HOWEVER, ANGELS PREFERENCE FOR CONVERTIBLE DEBT.
• 48% of entrepreneurs prefer to review investment type on case by case basis.
• 21% of angels prefer to review investment type on case by case basis.
• 21% of angels prefer convertible debt in comparison to 31% of entrepreneurs preferring
equity.
FINDING 5.
Angel Preferred Investment Type Entrepreneur Preferred Investment Type
31%
13%
15%
27%
48%
Equity
Debt
Convertible Debt
Combination
Case by Case
20%
18%
21%
19%
21%
Equity
Debt
Convertible Debt
Combination
Case by Case

13. FINDING 6.
Willing to Pay Fee for Angel NetworkExpectations from Angel Investor Network
71%
50%
25%
38%
71%
21%
67%
2%
2%
Deal flow
Education
Social
Joint due diligence
Shared expertise
Administrative support
Network
Syndication
Growing businesses
NO
50%
YES
50%
#6 AN ANGEL NETWORK SHOULD FOCUS ON FACILITATING DEAL FLOW AND
CREATING OPPORTUNITIES FOR ANGELS TO NETWORK AND SHARE EXPERTISE.
• Participants expect 3 main outcomes from an angel network: deal flow (71%), share
expertise (71%) and network (67%)
• Willingness to pay to participate in an exclusive network with an active deal book was
split 50/50.

14. CONCLUSION
The response to the survey indicates that there is a real interest amongst GSB Alumni to
learn more about Angel investing. Based on the diverse range of experiences of the
Alumni, an initial Angel Investor Masterclass would be best suited towards first-time
Angels (majority of the Alumni).
GSB Entrepreneurship Club in the following year could explore providing support to GSB
Alumni Angels that include deal-flow, due-diligence and organizing networking events that
facilitate informal learning and networking.
Recommended connecting potential Angels to existing networks such as South African
Business Angels Network (SABAN), African Business Angels Network (ABAN), VC4A and
other networks such as Jozi Angels (Johannesburg-based) and Dazzle Angels (female-
focused).
The GSB Entrepreneurship Club in partnership with the Solution Space and GSB Faculty
could also explore incorporating a due-diligence course as part of the curriculum.

15. Appendices 1: Angel Investor Survey
Responses 2018

16. RESPONDENT PROFILE
Previously an Angel Investor If yes, number of years experience?
Previously Founded a Company
NO
69%
YES
31%
NO
17%
YES
83%
19%
6%
4%
17%
21%
63%
31%
31%
25%
6%
Health care
Environment
Biotech
Telecommunications
Energy
Business financial
Ecommerce
Software
Manufacturing
Media
Industry Professional Experience
0 - 5 YRS
6 - 10 YRS
11 - 15 YRS
16
YRS
+

17. 1 - 3 YRS
44%
3 - 5 YRS
50%
>5 YRS
6%
<R100k
25%
R101 -
R500k
43%
<R1m
18%
R1m+
14%
INVESTMENT PREFERENCES
Angel Investment Range Number of Concurrent Startup Investments
Angel Investment Total Time to Exit
10%
29%
23%
13%
13%
13%
1
2
3
4
5
5+54%
13% 13%
21%
0 - R100k R101 -
R250k
R251 -
R500k
R500k+

18. RELATIONSHIP PREFERENCES
Preferred Relationship with Investees Hours Dedicated Per Month to Investee
65%
81%
31%
2%
Board member
Advisor mentor
Passive
All
0 - 5
HRS6 - 10 HRS
11 - 15
HRS
16 - 20 HRS
20
HRS +
20%
18%
21%
19%
21%
Equity
Debt
Convertible Debt
Combination
Case by Case
Preferred Investment Type

19. NO
15%
YES
85%
ANGEL NETWORK INTERESTS
Angel Investor Masterclass Interest Expectations from Angel Investor Network
Willing to Pay Fee for Angel Network If yes, how much per year?
71%
50%
25%
38%
71%
21%
67%
2%
2%
Deal flow
Education
Social
Joint due diligence
Shared expertise
Administrative support
Network
Syndication
Growing businesses
NO
50%
YES
50%
42%
13%
13%
21%
13%
> R1,000
= R2,500
> R10,000
Depends
% Based

20. ALUMNI PROFILE
MBA
EMBA
PMD
MCOM
GSB Programme GSB Years
1981 -
1990
1991 -
2000
2001 - 2010
2011 onwards

21. Appendices 2: Startup Survey
Responses 2018

22. 1 YRS
27%
2 YRS
27%
3 YRS
23%
4 YRS
2%
5 YRS
5%
5 YRS+
16%
NO
12%
YES
88%
RESPONDENT PROFILE
Previously an Entrepreneur If yes, how long?
Current Business Location (City) Number of People on Team
Johannesburg
Cape Town Other 16%
18%
26%
8%
32%
1
2
3
4
5+

23. RESPONDENT PROFILE
Number of Females in Team? Industry
Projected Cashflows Identified Risks to the Business
1
23
45+ 7%
9%
3%
5%
16%
17%
21%
5%
14%
3%
Health care
Environment
Energy
Business financial
Ecommerce
Software
Manufacturing
Media
Social Enterprise
FMCG
>R150k
48%
>R500k
28%
<R1m
12%
>R1m
12%
29%
14%
5%
7%
7%
7%
7%
5%
0%
12%
5%
2%
Market
Competitor
Talent
Customer
Cash Flow
Legislation
Capital
Low Growth
Scaling Strategy
Currency
Non Delivery
Infrastructure

24. INVESTMENT PREFERENCES
Capital Required Preferred Investment Type
Payback Period
12%
15%
33%
40%
0 - R100K R101 -
R250K
R251 -
R500K
R500K +
31%
13%
15%
27%
48%
Equity
Debt
Convertible Debt
Combination
Case by Case
< 1 YR
4%
1 - 3 YRS
56%
3 - 5 YRS
34%
> 5 YRS
6%

25. RELATIONSHIP
Preferred Relationship with Investor Preferred Hours Per Month from Investor
25%
73%
13%
Board member
Advisor mentor
Passive
0 - 5 HRS
6 - 10 HRS
11 - 15
HRS
16 - 20
HRS

26. ACKNOWLEDGEMENTS
AUTHORS
Sarah-Anne Alman, Abdallah Dutton, Calvin Lane, Aisha Middleton-Jackson, Simba
Mswaka, Regis Mukumbuzi, Joel Van Der Schyff, Moritz von Hesberg, Tsepo Ngwenyama,
Shiela Yabo
CONTACT
Solution Space
University of Cape Town
Graduate School of Business
9 Portwsood Road, Green Point, 8001 Cape Town, South Africa
solutionspacewaterfront@gsb.uct.ac.za
+27 21 406 1430
PUBLISHED 2018
This work is licensed under a Creative Commons Attribution 4.0 International License
www.gsb.uct.ac.za/solutionspace

27. ECOSYSTEM PARTNERS
CORPORATE PARTNER

28. Fuelling the future of possibilities together.