Episode 22: New business and innovation in South Africa

Synopsis

Summit TV speaks to Brett Commaille and Joe Keiser from InVenFin about how they’re planning to fund new businesses that capitalise on our unique ability to innovate in South Africa.

Transcript

Summit TV speaks to Brett Commaille and Joe Keiser from InVenFin about how they’re planning to fund new businesses that capitalise on our unique ability to innovate in South Africa.

Stephan Lamprecht: Venfin is the investor behind Vodacom, eTV and various growth businesses. The latest development is the launch of InVenFin to focus on earlier stage investments in the innovation domain. The Summit TV Intellectual Property show is the first to discuss this exciting development - with me in the studio is Brett Commaille and Joe Keiser from the new fund. Brett, what is the main reason why Venfin decided to invest in this sector?

Brett Commaille: Venfin has traditionally played in this sector - but obviously their investments are larger and more significant. So as much as this sector interests them it tends to get lost in the larger Venfin company. They feel it requires specific expertise and skills so they assembled the appropriate people to get involved and actually formed InVenFin. It’s also a recognition that there is a space in this venture capital market that’s a fairly broad one that really needs to be served. There are very few players who are actually involved in this market but there seems to be a great need…

Stephan Lamprecht: The niche that you want to focus on is not so much a technology niche as it is the early stage of development - it’s more focusing on the start-up company…

Brett Commaille: Absolutely. It’s really around intellectual property looking for those unique and original ideas that have the potential to be taken internationally, specifically South African intellectual property that can be launched onto the international stage. So it does not focus on a specific category - technology and that - but rather looking at all of those sectors at that specific stage of business and idea within that.

Stephan Lamprecht: That’s wonderful news, I think we had the discussion earlier saying that in a South African context there are people with funding - but often when they get an idea, or a very early stage proposal then they reject it - the question then would be where do these people go and who helps them? Who takes it further? That’s more or less where you intend to play…

Brett Commaille: Very much so. We have a very hands-on approach. Should we find that the idea warrants further investigation - and really meets our criteria around being protectable and defendable intellectual property - we will then take that through the processes along with the entrepreneur or the inventor to get it to the best potential realisation or to get it commercialised or corporatised. So we’re not leaving the inventor alone saying “here’s your money - we will see you in six months.” Generally as you said that’s when things go wrong…

Stephan Lamprecht: They never come back.

Brett Commaille: It’s about applying a skill set. If you look at our board of directors they’re a group of people who have a lot of experience - years of experience in industrialisation, in commercialisation, in branding and design - so it’s those core skills that we believe are necessary to actually give this thing its best chance.

Stephan Lamprecht: Joe, your point of view is the South African venture capital industry has been going sideways for quite some time - often the reason stated by prospective investors for not investing in this sector and this niche is specifically a lack of deal flow - what is Venfin’s view on the deal flow issue?

Joe Kieser: In a sense the challenge here would be for us to create a suitable drag net. We are of the firm belief that the talent exists in the South African economy - and there’s a clear history and examples of that. I think for InVenFin the challenge would be to create the drag net, and then to apply the correct skills to unlock that value - and to really secure the intellectual property in a meaningful way that we can commercialise it.

Stephan Lamprecht: The other reason mentioned by a lot of people is the lack of exit opportunities - but being within the Venfin stable you’re in a very good position…

Joe Kieser: The difficulty of intellectual property is so much of it is still-borne. The commercialisation of good ideas - and to unlock the value - is something that we within the group can entertain. We probably will be seen if we’re successful as an incubator to Venfin. I think we certainly also look to partner with international companies and to take the commercialisation or the corporatisation of the intellectual property internationally.

Stephan Lamprecht: Brett, from your point of view this is called “the IP fund” if you want to put it that way. How significant is that intellectual property in the investment? If I approach you do I have to have a pre-registered and protected form of intellectual property?

Brett Commaille: Rather than saying protected it needs to be protectable. It needs to be an idea that’s original - that hasn’t already been published - that has that ability to be protected, that we can verify it. Ideally one can set it up in such a way that you actually create barriers to entry. So not something that is comparable - or that once you take it home to the market it can be eclipsed by the competition within the next few months or weeks…

Stephan Lamprecht: You’ve been operating already for some time - you’re not starting today. You’ve been going for about six months…

Brett Commaille: We officially launched on 1 February in terms of getting everything set up - and already then starting to see our first deal flow - but also setting our internal structures up appropriately.

Stephan Lamprecht: If I’m a prospective inventor and I’ve got an idea - I believe that InVenFin should be backing me - how do I go about it and what should I do?

Brett Commaille: The best thing to do is go to our website www.invenfin.com. There we talk about the criteria - the key things that we are looking for such as unique intellectual property, scalability, international potential. When you go there you will see those criteria - if you’re not sure about what intellectual property is there’s a little section to explain what that is and just give you a rough idea. Then there are also two places where you can actually submit an idea - if you really have a thorough and comprehensive business plan you can submit it through that. There’s a variety of questions to assist you and make sure that you’ve answered all the necessary things. But if you’re at an earlier stage and you really not 100% sure about all the answers - but you’ve got some of the core issues sorted out - there’s a shorter five question facility that you can actually use to submit your application through to us and it will then go into our evaluation process.

Stephan Lamprecht: Joe, from your point of view given this new introduction into the venture capital market and talking about this overall innovation space in South Africa - where do you see it going in the next 5 or 10 years? What’s the situation going to look like?

Joe Kieser: I certainly hope that the potential to unlock the value in IP particularly in the South African innovative psyche will allow us to be recognized as a fund that can actually deliver results in a very difficult space. We’ve seen great successes in this particular field in the US and particularly in Germany. We also know that those funds are actually shopping in our waters - so I think for us to have the ambition to realise that within three years is not unrealistic. Time will tell.