More than 100 years ago, a group of Afrikaner men met in Stellenbosch to form a publishing entity that would support their cause. After many years of operating as a publishing company it transitioned into being a technology company. Throughout the process of operating as a publishing company it committed many sins for which it later apologised. As part of an apology process the company committed to do good and correct some wrongs of the past.
When Phuti Mahanyele, the CEO of the company, announced during the Presidential Investment Summit, a technology fund (Naspers Foundry) she was partly paying for sins of the past. She was also paying for a new sin that the company had committed (more on that later). This week the company announced that Foundry would close down and will no longer fund startups going forward. As the fund closes down it’s important to reflect on its achievements,failures, missed opportunities.
When Foundry was formed the fund was welcomed as something that would make a major impact in the tech startup sector. It’s important to recognise the fact that at the time of its founding, venture capital funds were at an infancy stage in South Africa and they were very few (they still are).
Naspers Foundry launched in 2019 to back South African startups in Series A and B stages that aligned with the internet businesses on which Naspers focuses such as food, payments or classifieds — and any other digital venture that addresses a societal need.
The fund invested in Where’sMyTransport, SweepSouth, Naked, Aerobotics and other leading technology startups in South Africa.
WhereIsMyTransport is a technology company and central source of mobility and location data for emerging markets. The company maintains data assets—Transit Data, Real-Time Alerts, Origin-Destination Data, and Point of Interest (POI) Data—in emerging markets. Data collected by the company is used to improve the public transport experience for consumer product users.
SweepSouth is South Africa’s end-to-end booking platform for home cleaning services. The online platform and mobile app allows customers to book ad hoc cleaning services. The platform connects registered domestic workers to potential employers.
Naked Insurance is an insurance technology (insurtech) platform, which uses artificial intelligence (AI) to offer cover for cars, homes and other valuables.
Aerobotics provides aerial imagery from drones and satellites, and blends them with machine learning algorithms to provide early problem detection services to tree and wine farmers and optimise crop performance.
All of the supported technology startups are great companies with a potential to succeed going forward. There’s however an outcry that the fund failed the diversity test in terms of people who were funded. This is an old challenge that persists in South Africa. It was also interesting to note that none of the founders were from historically disadvantaged academic institutions. When this factor is considered one has to ask, in what sense has Naspers Foundry washed the sins of the past through investing in this manner? How is it possible that this tech fund could not find founders from previously disadvantaged communities?
By not funding companies that are established by founders from previously disadvantaged communities Naspers Foundry has missed an opportunity to make a real impact in the local tech sector. The practice of ignoring founders from communities that are experiencing major challenges in society leads to a situation where tech solutions are not addressing major issues experienced locally. Until such time that South Africa supports young tech founders across society we will never see unique and locally developed solutions that emerge out of necessity.
Naspers Foundry was unique in the sense that it was a corporate venture fund as opposed to VC funds by wealthy individuals who tend to fund within their networks.
Naspers Foundry had no school networks, same background baggage like most VC’s in South Africa. The fund was unique in that it had access to global markets that could have elevated local founders who really needed such empowerment.
Now that Naspers Foundry is no more, what can be done about the gap that will be left by the fund. There’s a need for local VC’s to reflect seriously about the bias problem. There’s a need for a fund that will look at ideas on their merit. Such a fund should consider untapped potential that exists amongst those who have a lived experience of challenges in society. Individuals who feel the housing, food, employment and crime challenge are probably the ones who will come up with solutions that may just alleviate these issues. Currently we have people who try to develop solutions for challenges they don’t even understand. Based on their technical skills they receive funding across the board and they produce tech products that have an appearance of a solution. This, is one of the reasons why there’s so much tech and yet the challenges are still with us.
The next fund should enable founders to submit their ideas online throughout the year and allow funders to see their pitches. This would take care of the challenge of access to Venture capitalists. Online a founder would be a click away from a funder.
Such a fund would go a long way in taking care of a challenge faced by some founders who are ignored by funders.