South African based early-stage venture capital firm, 4Di Capital, is gearing up to launch its third venture fund in the near future to invest in seed to Series A stages across startups in the continent.
4Di Capital is a technology venture capital fund manager that focuses on the first-stage investment in ventures based in Southern and Eastern Africa states, and is located in Cape Town. Co-founded by a team of managing directors with direct first-hand entrepreneurial experience, 4Di is relatively one of the oldest and most recognized brands within the local venture capital environment, having been established in 2009.
This firm has invested in some such as Snapt, LifeQ, Sensor Networks, Aerobotics, Lumkani, Zoona, InvestSure, and Tagmarshal in South Africa and also expanding into East Africa, investing in Kenyan firms such as Wasoko and flare.
4Di has had only one angel fund since its start in 2011 and came up with the first venture fund only in 2016. Its 2nd VC fund was established in 2019 and was supported by the SA SME Fund.
“We’ve been investing out of that fund since that time – part South Africa, part rest of Africa – and really honing our focus on being the early-stage entrepreneurial guys,” Justin Stanford, 4Di’s co-founding general partner said.
“We are there to probably be your first institutional check, or be a part of that, possibly leading the round, but very much being in the founder’s corner and always being there as someone to lean on, someone to advise, someone to act as a tiebreaker or a marriage counsellor. Whatever is needed.”
The second venture fund that has been initiated is almost nearing its cycle now and has made 10 investments. He said the company may yet make one or two more.
“Then we’ll shortly be looking at the possibility of perhaps raising our next venture fund in due course,” he said.
4Di which usually consists of their LPs as family offices, corporates, and a few institutions such as the SA SME Fund would be raising a fund at what seems to be a ‘funding winter’ globally. However, Stanford countered that it was easier to go out to the market for capital now than it was a year or so ago.
“There are a lot of signs that the market is starting to open up again. We’re not expecting it to be easy, and we’re not putting pressure on ourselves to get immediate results. We are quite aware that there might still be a warming-up period to come, so we’re allowing ourselves plenty of time,” he explained.
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“We’re going to just put a toe out there, and just see and get a sense of what the appetite is like. We are going to be doing a bit more overseas fundraising, as it seems, the African model is now becoming a bit more accepted, and a bit more something that overseas investors are interested in, whereas in the past it was more local sources that we would tap.”
Stanford said that 4Di’s already established track record within the African venture capital market may be beneficial for prospective LPs.
“The 2016 and 2019 funds are both showing really great progress, great results, and great numbers. By being able to show a track record with some great companies that have done well should be quite helpful.”
