New efforts to promote private equity in Zim

A new entity has been launched to foster the development and growth of private equity and venture capital (PEVC) in Zimbabwe, a move likely to boost the country’s entrepreneurial ecosystem and unlock new avenues for investment.

Mr John Vengesa, the founder and chief executive of the Zimbabwe Private Equity and Venture Capital (ZimPEVC) told The Herald Finance & Business that the initiative was meant to foster the development and growth of private equity and venture capital.

“We aim to promote connectivity and collaboration among stakeholders, working on both the supply and demand sides of the equation,” said Mr Vengesa.

“Private equity and venture capital have huge potential to transform businesses and support innovation through patient capital and operational improvements.”

Private equity and venture capital are two types of financing that play a crucial role in supporting business growth. While they share some similarities, they also have distinct characteristics.

Private equity invests in mature or established companies, often with a history of profitability.They are typically larger investments, aiming to improve the company’s performance and profitability, ultimately seeking an exit through selling the company or taking it public.

Private equity firms raise capital from institutional investors like pension funds, insurance companies, and high-net-worth individuals.

On the other hand, venture capital invests in early-stage companies with high growth potential.

The companies may not be profitable yet but have innovative ideas and disruptive technologies. Venture capital firms help startups develop their business models, secure further funding, and ultimately achieve a successful exit through acquisition by a larger company.

Venture capital firms raise capital from institutional investors as well as wealthy investors who invest in early-stage companies. Mr Vengesa said by developing capital markets and attracting foreign direct investment, the platform could provide additional investment options and boost economic growth.

Despite perceived risks, there were significant opportunities for investors to earn returns, “and we have seen local private firms stepping up to invest.”

“We believe in a partnerships-oriented approach, fostering collaboration among stakeholders and marketing the PEVC Zimbabwe opportunity locally and internationally.

“To achieve our goals, we host events and networking platforms, engage in policy advocacy with regulators, conduct research to guide investors, and offer education and training for entrepreneurs and investors.”

Mr Vengesa said the fund was looking to hold the Zimbabwe Private Equity and Venture Capital Conference which would bring together stakeholders to promote PEVC growth in Zimbabwe.

“By working together, we can transform Zimbabwe’s economy through private equity and venture capital investments, driving growth, innovation, and job creation,” he said. In 2021, the Government established the National Venture Capital Funds (NVCF) to assist start-ups and other small firms to access working capital and funding for technology improvement among others.

Global tech giants like Apple, Google, Microsoft, Yahoo, Facebook, Amazon, and Intel – all received crucial financial backing and guidance in their early stages from Venture Capital firms.

In 2023, Africa’s venture capital landscape navigated multiple challenges. Overall funding declined by 42 percent compared to 2022, in line with a global downturn, according to Magnitt, a Dubai-based data platform for investors.

Despite the decline in funding and deal flow, the continent’s share of funding with Emerging Venture Markets grew to 16 percent this year, up from 13 percent in 2022. Africa also witnessed numerous fund announcements throughout the year, with a focus on climate and healthcare innovations.

-newsday