South African early-stage VC firm 4Di Capital is planning to raise its third venture fund in “due course” to make seed to Series A investments in startups across the continent.
4Di Capital is an early-stage technology venture capital fund manager based in Cape Town, South Africa, which specialises in the Southern and Eastern Africa region. Led by a team of entrepreneurs with personal experience of building companies, 4Di is one of the most established and regarded brands in the local venture capital market, having been formed in 2009.
The firm has invested in the likes of Snapt, LifeQ, Sensor Networks, Aerobotics, Lumkani, Zoona, InvestSure and Tagmarshal in South Africa, and also moved into East Africa with investments in Kenyan companies Wasoko and Flare.
4Di raised its first angel fund in 2011, before launching its first venture fund in 2016. Its second venture fund, launched in 2019, was anchored by the SA SME Fund.
“We’ve been investing out of that fund since that time – part South Africa, part rest of Africa – and really honing our focus on being the early-stage entrepreneurial guys,” Justin Stanford, 4Di’s co-founding general partner, told Disrupt Podcast.
“We are there to probably be your first institutional check, or be a part of that, possibly leading the round, but very much being in the founder’s corner and always being there as someone to lean on, someone to advise, someone to act as a tiebreaker or a marriage counselor. Whatever is needed.”
The second venture fund is almost coming to an end now, having made 10 investments. Stanford said it may yet make one or two more.
“Then we’ll shortly be looking at the possibility of perhaps raising our next venture fund in due course,” he said.
4Di, which typically lists amongst its LPs family offices, corporates, and institutions like the SA SME Fund, would be raising a fund at a challenging time, given the global “funding winter”, but Stanford says going into the market for capital is easier now compared to a year or so ago.
“There are a lot of signs that the market is starting to open up again. We’re not expecting it to be easy, and we’re not putting pressure on ourselves to get immediate results. We are quite aware that there might still be a warming-up period to come, so we’re allowing ourselves plenty of time,” he said.
“We’re going to just put a toe out there, and just see and get a sense of what the appetite is like. We are going to be doing a bit more overseas fundraising, as it seems the African model is now becoming a bit more accepted, and a bit more something that overseas investors are interested in, whereas in the past it was more local sources that we would tap.”
Stanford said 4Di’s proven reputation within the African venture capital space should appeal to potential LPs.
“The 2016 and 2019 funds are both showing really great progress, great results, and great numbers. By being able to show a track record with some great companies that have done well should be quite helpful.”
