AngelHub: Investors come together to foster startup growth

You may believe tech creates jobs, you may believe it destroys jobs.

Whatever the case, we know that in the tech world we are seeing entrepreneurial activity like never before. It’s not surprising that there is so much written about venture capital and startups in the tech world, and that there are so many incubators popping up

Enter AngelHub.

Launched in September of last year, AngelHub connects early stage investors with capital seekers. The funds, expertise and networks of its group of angel investors and founders, aim to create an environment that is conducive to sustainable entrepreneurial success.

Although there are over 730 angel groups worldwide (mostly in the US and Europe), the majority of South African angel investments are ad hoc and dependent on personal networks. While over R100m has been invested in South African angel deals over the past 10 years, typically there are only 7 to 8 reported such deals each year.

South African Angel investors differ from traditional VCs in three key ways. Angel investors invest smaller amounts — between R100K and R5m — of their own funds in seed round funding, whereas VCs typically target larger investment amounts from various sources, at a later stage of a startup’s life.

AngelHub’s collective approach is attractive to both angel investors and capital seekers.

In exchange for equity, startups get access to AngelHub’s pool of investor funds but more importantly, they become part of a larger network that allows them to benefit from a valuable portfolio of services, which include legal, accounting and business strategy aspects. These additional services give startups a better chance at success.

AngelHub favours startups in the tech industry that will scale quickly and new ventures can expect to receive anything ranging from R1m to R10m from AngelHub’s group of investors. To date AngelHub has already facilitated three investments, one of which was in SMEasy, a cloud-hosted business and financial management system for SMEs, done in conjunction with VC firm 4Di Capital. AngelHub just concluded an investment in the winner of the Tech4Africa Ignite Startup Competition 2011, Real Time Wine, a startup that aims to enhance the wine consumer experience via social wine reviews on a mobile application.

For angel investors, AngelHub mitigates the higher risk involved in early stage investments by utilising the expertise of its members and founders. AngelHub sources and vets new ventures for its investors which help ensure an eventual investment exit of 5 to 10 times the initial investment, 3 to 7 years later. AngelHub also facilitates the forming of partnerships — for collective investment opportunities — and provides a managed solution for angels in the process of investing in startups without the necessary resources available to efficiently close and manage the deal. To date AngelHub has managed to secure 15 angel investors local and abroad and hopes to double the number by the end of 2012.

AngelHub only accepts select and active investors, therefore — on a similar model to leading international angel groups — investors looking to join AngelHub, should be prepared to pay an annual fee of R10K and make a minimum total investment of R300K per annum across AngelHub’s venture portfolio. Institutions can also sign up, but their minimum target investment is fixed at R1m per annum.

AngelHub’s CEO is merchant banker turned VC and former CEO of Invenfin, Brett Commaille. Other key members of AngelHub’s screening committee include investment expert and co-founder of PoweredbyVC — the company that manages Mark Shuttleworth’s VC fund HBD — Keet van Zyl, CEO and co-founder of PoweredbyVC, Eben van Heerden, successful entrepreneur and investor Andrea Bӧhmert, founding CEO of Realmdigital, Wesley Lynch and Craig Mullett, an experienced US Angel Investor and President of the Branison Group.

AngelHub is similar to VC4Africa, but differentiates itself by providing a more integrated and focused service over the life cycle of a startup’s growth path.

If you’re an entrepreneur looking for seed funding you can apply online through AngelHub’s international angel group software platform Gust and be sure to keep a lookout for AngelHub’s monthly networking event; The Founders Dinner. The focus of the events is to bring founders and prospective founders of high-growth ventures together to talk and share experiences.