South Africa's largest tech company, Naspers, has announced that it will be closing down its South Africa-focused venture capital fund, Naspers Foundry. The fund had a capitalization of R1.4 billion (approximately $100 million), and was established in 2019 to support South African startups in their Series A and B stages that aligned with Naspers' focus on internet-based businesses, such as food, payments, and classifieds, and any digital venture that addresses a societal need.
According to local news source BusinessDay, Naspers Foundry only invested half of its funds before ceasing operations. Despite this setback, Naspers will maintain its investments in its nine portfolio companies, including Planet42, SweepSouth, Naked, Aerobotics, and WhereIsMyTransport, and align its approach with Prosus Ventures, which will now oversee Naspers' local investments. The firm will no longer have a dedicated team focused on South African startups.
The closure of Naspers Foundry is not entirely surprising, given the current state of the global investment environment. Venture capital has taken a hit globally, with many investors becoming more risk-averse due to the pandemic's economic impact. As such, many venture capital firms have scaled back or halted their investments, including those in emerging markets like South Africa.
However, the closure of Naspers Foundry is likely to have an impact on the African tech space, particularly on South African startups seeking venture capital funding. Naspers Foundry was a significant player in the local VC scene, providing funding and support to startups in the Series A and B stages. With its closure, local startups may find it more challenging to secure funding, especially given the current economic climate and risk-averse approach of many investors.
Despite this setback, some local investors have expressed optimism that stabilizing solutions will be put in place to help South African startups fill the void left by the venture capital firm. The country's startup and VC landscape has faced several diversity problems, with historically disadvantaged persons, including people of color and women, being excluded from the internet economy. The diversity problems highlight the need for solutions to fill the void left by Naspers Foundry, which has been a significant source of growth and development for South African startups.
Naspers spokesperson stated that the company's business needs to adapt to changes in the global and local investment environment. The firm has reviewed its early-stage investment strategy within South Africa to align it with its international approach and will continue to support the development of the country's early-stage tech sector.
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