Attracting local investors is crucial to the sustainability of a country’s local venture capital ecosystem, but encouraging institutions to overcome entrenched attitudes towards risk can be a challenge. “The venture capital funds that aren’t linked to an existing large corporate, these standalone venture capital funds, are terribly underfunded. “If we look at just what it costs to run a venture capital fund, you need at least ZAR500 million (US$27 million), ideally ZAR750 million (US$40 million) in funds under management to make it a sustainable business as a venture capital fund. I think there is a lack of understanding about what the true risks of venture capital are, and the tools and processes that we as venture capital investors put in place to reduce those risks. Traditional markets and big institutions are going to struggle to find returns, and so they’re going to have to look at alternatives like venture capital to get those returns.
