THE CHALLENGE: According to the World Economic Forum, Africa is increasingly taking its place on the global stage as a continent of growth and opportunity. A critical challenge is the need to create a significant number of jobs for the continent’s booming population and the need to build a cadre of home-grown business leaders able to access global markets and drive growth in a sustainable and inclusive manner. African entrepreneurship is therefore seen as central to Africa’s future prosperity. The biggest business opportunities in the coming decade will be created by Africans who start businesses, generate jobs and wealth and capture growth opportunities. A challenge facing entrepreneurs in South Africa is a lack of access to early-stage venture funding for diverse teams, more specifically black founders who account for 60% of South Africa’s tech entrepreneurs. Added to this is a lack of diversity in the South African venture capital industry. As a black entrepreneur herself, Xaba wanted to bridge the funding and support gap for early stage tech entrepreneurs through a venture capital fund.

THE PROCESS:  With a passion for entrepreneurship and a goal to support the underserved and underrepresented entrepreneurs in South Africa, Xaba co-founded the first black female founded venture capital fund in South Africa – Digital Africa Ventures (DAV). She believes this differentiating factor uniquely positions them to identity and successfully engage distinctive teams and walk the journey from cradle to grave in assisting these businesses to grow and scale. DAV’s area of focus is post revenue, early stage digital, tech and innovation start-ups with 50% black ownership. They offer business acceleration support and access to early stage capital for seed, pre-series A & series A start-ups up to R5m. DAV’s mandate is to invest half of its committed capital into black-founded businesses. Xaba believes the company is uniquely positioned to win in the industry. She and her team are all entrepreneurs, which is uncommon in the South African ecosystem, but enables them to relate to early-stage founders. Their experience in incubation and seed investments complements their ability to deploy capital. They also have access to a high-quality pipeline through their entrepreneurial networks, including the Allan Gray Orbis Foundation and Entrepreneurial Development in Higher Education as well as through the network of established funds invested in by their anchor investor, the SASME Fund. The SASME Fund is the largest venture capital fund of funds in South Africa and has deployed around R1.2bn in the venture capital ecosystem in South Africa.

THE RESULTS: Digital Africa Ventures has successfully launched and has raised committed capital from two partners namely, the SASME Fund and ZUR Capital. A key strategic partner is the SASME Fund who have invested in South Africa’s most prominent and successful venture capital funds and contribute directly to revenues through the management fee they pay for funds under management. In addition, considering the Fund’s size, SASME has also given DAV grant money to fund the expenses of the business. The SASME Fund has also been instrumental in introducing the team to potential funders who could also impact their current revenues through additional management fees. DAV is a proud member of the Digital Collective Africa initiative, a pro bono and Pan African initiative driven by Africa’s top VCs, incubators and accelerators, industry bodies, public institutions and entrepreneurs, with the purpose of creating resources to facilitate venture capital investment in early-stage African tech start-ups and standardizing the investment process.