Naspers Foundry’s Shutdown: A Blow to South Africa’s Startup Ecosystem
Africa’s most valuable tech company by market capitalization, Naspers, has made the decision to wind down its R1.4 billion ($100 million) South Africa-focused venture capital fund, Naspers Foundry. According to a report by BusinessDay, the firm will maintain its investments in its nine portfolio companies, including Planet42, SweepSouth, Naked, Aerobotics, and WhereIsMyTransport.
Naspers’ Shift Towards Global Approach
The global investment environment has undergone significant changes, and Naspers is adapting its strategy to align with its international approach. Prosus Ventures now carries the mandate of maintaining Naspers’ local investments, and the company will no longer have a dedicated team focused on South African startups.
A Message from Naspers Spokesperson
"The global investment environment, as well as the local SA one, has changed, and we have made clear the need for our business to adapt. In line with changes across the wider business, we have reviewed our early-stage investment strategy within SA to bring it in line with our international approach," said a Naspers spokesperson.
Naspers will continue to support the development of South Africa’s early-stage tech sector, assessing the market and new opportunities in a way that is consistent with its other global markets. The company remains committed to investing in promising startups that align with its focus areas, such as food, payments, or classifieds.
Challenges Faced by Naspers Foundry
While it’s easy to blame the global downturn for Naspers Foundry’s shutdown, the firm faced significant challenges, including a lack of diversity. A report released last July revealed that institutions, including Naspers Foundry, excluded historically disadvantaged persons (HDPs) from the country’s internet economy.
Of the R700 million disbursed funds to 23 founders, only 13% were people of color, and 8% were women. The South Africa Competition Commission’s aggression towards Naspers’ investments also hindered the firm’s ability to make deals. Some investors have expressed displeasure with the outcome, but others believe that stabilizing solutions are being put in place to fill in the void left by Naspers Foundry.
Impact on South African Startups
The shutdown of Naspers Foundry may create a funding gap for Black-owned startups in South Africa’s booming digital economy. While some investors see this as an opportunity, others worry that it will exclude underrepresented groups from accessing capital and resources.
The Future of Venture Capital in South Africa
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As the startup ecosystem in South Africa continues to grow, the need for venture capital remains a pressing issue. Naspers’ decision to wind down its local fund highlights the challenges faced by VC firms in navigating the complex regulatory environment in South Africa.
However, this move also presents an opportunity for other investors and venture capital firms to fill the gap left by Naspers Foundry. With the right approach and strategy, it’s possible to create a more inclusive and diverse startup ecosystem that benefits all stakeholders involved.
Naspers’ decision to wind down its South Africa-focused venture capital fund sends shockwaves through the startup ecosystem in Africa’s most valuable tech company by market capitalization. While the global downturn may have played a role, the firm faced significant challenges, including a lack of diversity and regulatory hurdles.
As Naspers shifts towards a more global approach, it’s essential for other investors and VC firms to step up and fill the gap left by Naspers Foundry. With a focus on inclusivity, diversity, and innovation, it’s possible to create a thriving startup ecosystem that benefits all stakeholders involved.
