Venture capital is the wrong funding for most South African businesses, and that is not a criticism of either side. A venture investor needs a small number of investments to grow enormously, because most will not. A profitable business growing steadily is a good business and a poor venture investment, and being told so is not a judgement on its quality.
If you are considering it, understand the model before spending months on it.
What venture investors actually need
A market large enough that the business could become very big, a product that grows without cost rising proportionally, and evidence that growth is already happening.
They also need an eventual exit, meaning an acquisition or sale, because that is how the money is returned. A business you intend to own and run for thirty years does not fit that, and there is nothing wrong with that.
Getting a meeting
Warm introductions work far better than cold approaches, and the most reliable route is through someone the investor already backed. Open office hours, demo days, accelerator programmes and industry events are the legitimate cold routes.
Before approaching anyone, check what they invest in: sector, stage and cheque size. Approaching an investor who does not fund your stage wastes the one introduction you had.
Understand what you are giving up
Equity is permanent. You are selling a share of everything the business ever earns, along with rights over decisions. Investors typically take board seats and veto rights over specified matters.
Read those terms as carefully as the valuation. Control provisions and rights on a future sale frequently matter more than the price.
The alternatives are usually better
Development finance, bank lending, supplier development programmes, customer prepayment and simply growing more slowly on your own revenue all leave you owning the business.
Programmes and funding for small enterprises are administered through the Small Enterprise Development and Finance Agency, and any entity you raise into needs current annual returns at the Companies and Intellectual Property Commission.
Frequently asked questions
Is venture capital right for my business?
For most businesses, no. Venture investors need a small number of investments to become very large, which suits few companies.
What do venture investors look for?
A very large potential market, growth that does not require proportional cost, existing traction, and a route to an eventual sale.
How do I get a meeting?
Warm introductions, ideally from a founder they already backed. Office hours, demo days and accelerators are the legitimate cold routes.
What am I giving up?
A permanent share of the business plus rights over decisions, usually including board representation and vetoes on specified matters.
What should I consider instead?
Development finance, bank lending, supplier development programmes, customer prepayment, or growing on your own revenue.
Originally published in January 2018. Updated September 2026 into guidance on whether and how to approach venture capital.
