By Paula Mokwena, CEO & Head of Direct Investments, Fireball Capital
South Africa is home to innovative technology companies that have developed solutions that are solving real global challenges. The country is well-established as one of the continent’s “big four” startup ecosystems, and leads the way for exits, with more than one-third of the acquisitions that have taken place across the African tech space since 20151. The tech sector is actively addressing a myriad of challenges, ranging from unemployment, all the way to education, health, and financial inclusion.
South Africa has one of the most unequal school systems in the world, with 85% 2 of students attending poorly funded, and dysfunctional schools. This was further exacerbated by the Covid-19 pandemic, which saw schools adopting online learning systems. A lesson that South Africa and many other countries took from the pandemic is the role technology plays in co-creating a digital learning environment3. This also led to the proliferation of EdTech solutions provided by companies such as Syafunda, a South African eLearning startup which provides an online platform for creating a digital portfolio for students, and uLesson, a Nigerian startup that provides pre-recorded lessons for students that lack access to technology and data.
Healthcare accessibility remains poor in rural areas and there are challenges in retaining physicians in the public system4. The highly unequal two-tier healthcare system leaves approximately 75%5 of the population, who can’t afford the exorbitant cost of private healthcare, in the hands of underfunded healthcare facilities. While these challenges pose a threat to the country’s socio-economic development, they also create the perfect environment for innovative tech solutions, such as the use of drones to deliver health supplies to remote areas that lack infrastructure. HearX Group is another prime example of a startup that has developed innovative HealthTech solutions including a suite of clinical hearing health solutions consisting of eight products, some of which are designed to allow someone without a medical background to conduct an ear test remotely and then send the results to a medical professional for diagnosis.
These innovative companies also contribute to the development and growth of the real economy, leading to improvements in measurable macroeconomic metrics such job creation, economic growth and the rate of innovation. In addition to this, there is anecdotal evidence that suggests that a vibrant venture capital ecosystem promotes a culture of entrepreneurship, and facilitates knowledge and skills transfer as companies expand into other markets and gain access to global talent, partners and investors. For consumers, intuitive, easy-to-use tech solutions is not only fixing their pain points but also democratizing access to information, products and services.
As impactful as these tech solutions are to real challenges, very little investment support is directed at them. Fireball Capital seeks to support the South African venture capital ecosystem and inject smart capital into innovative, high-growth companies that have developed solutions that are helping to solve the world’s biggest problems.
When venture capital is not just directed towards investments that yield a commercial return, but also takes into consideration the environmental, social and corporate governance (ESG) aspects, it has a much greater impact on the country’s communities. Fireball Capital has embedded ESG considerations into its investment framework because when investors successfully manage ESG issues, they can reduce investment risk, improve long-term return on investments and set companies up for sustainable growth in the long term. ESG-underpinned tech solutions drive a lasting positive impact on society. For example, Ozow, has increased the rate of financial inclusion for people who have been previously underbanked and underserved by traditional payment rails.
The private sector cannot be excluded from this ecosystem, as it provides access to markets for small businesses, in addition to critical funding. A model example of a corporate that is providing market access is Tiger Brands, which has committed R100 million to its own corporate venture fund to invest in entrepreneurs with businesses that align to consumer-relevant growth platforms such as health and nutrition.
Therefore, the recipe for creating a sustainable positive impact on local communities begins with supporting local entrepreneurs that have created globally relevant and scalable technology-based solutions that solve real-world challenges and adopting an ESG lens to venture capital investing. By investing in innovative tech-enabled companies, not only do we empower entrepreneurs, who in turn create sustainable jobs, but we also contribute towards economic growth and help to solve society’s biggest challenges.
About Fireball Capital
We at Fireball Capital have operated as local entrepreneurs and through our diverse experiences understand the uniquely South African challenges facing management teams. Our significant global Venture Capital experience coupled with our local knowledge has given birth to a customised and relevant problem-solving toolkit. At the core of our value proposition is providing our clients with single-point access to the leading Venture Capital funds and entrepreneurs in the South African and African technology ecosystems. We do this in a relationship-centric manner – through our networks built and nurtured over decades to ensure South African institutional investors get direct exposure to the powerful growth vectors stemming from the fourth industrial revolution. We ensure strong and clear alignment of all stakeholders’ interests and invest alongside competent and experienced technology managers and tech entrepreneurs that have some demonstrable edge.