Secha Capital Makes Two New Investments via its Operator-Investor Model: Getting Our Countries’ Best and Brightest to Work with and Grow SMEs!
What do a head of lettuce and a battery have in common?
At first glance, nothing. But when that lettuce head is hydroponically grown by Cultura Fresh and the battery stores energy and is manufactured by iG3N, it represents the first two investments out of Secha Capital’s new fund!
And while these are two very different sectors, the theses have a lot of similarities too:
Both are environmentally-positive and profitable key enablers. They meet large, existing demand with…
Global energy generation is becoming more decentralised and powered by renewables and therefore it requires a reliable, secure method to store and then dispatch electricity when it is needed. In South Africa, the grid is becoming increasingly unstable and costs continue to rise. Businesses and consumers need a cost-efficient way to store and use their own energy — especially during power outages.
As a storage solution, batteries have a number of advantages — they are low cost, mobile, modular and highly dispatchable. …
Agriculture cannot be done the traditional way any more: As the effects of climate change increasingly alter our daily lives, we need to re-think what we can change in order to create a sustainable future.
Traditional agriculture is a major contributor to excess water consumption, land degradation and food waste. A growing global population coupled with declining arable land requires alternative methods to traditional land farming in order to ensure food security. In parallel, the modern consumer demands environmentally friendly produce as part of a nutritious diet.
Local hydroponic technology is the solution. Hydroponics is a soil-less method of growing…
The goal of impact investing’s blended capital approach is meant to democratise investment capital, to tear down barriers and unlock and crowd-on additional capital.
A recent Economist article noted that “blended finance is struggling to take off” and it is Secha’s fear that the focus on scalability rather than replicability makes these transactions more complex, more expensive and adds friction to the new flow of capital.
We contend that human capital is the “blended capital” we need. It is a replicable local resource with a huge multiplier effect.
Human capital is everything most blended capital is not. It is local. It is agile. It is patient. And it has massive multiplier effects.
So let’s borrow from nature, not finance and follow the path of “biomimicry”, not (per the economist) “financial wizardry”.
Republished with permission from the Intentional Endowment Network — https://bit.ly/SechaCapitalwithBainandIEN
Secha Capital, a Southern Africa impact investing fund, was started five years ago by two former Bain consultants. Our former colleagues recently published the “Bain Mid-Year Private Equity Report” and we contend that the conclusions are insightful — but that they do not go far enough!
We encourage our industry to re-think the way we evaluate fund managers. In each section below, we excerpt the Bain report and share our views across the “Five Ps” of People, Philosophy, Process, Portfolio, and Performance.
I left a career in law and went to INSEAD in order to (per my MBA essay): “Expose myself to a network of people as well as ideas, technologies.”
I left INSEAD inspired to be the socially responsible leader it encourages its alumni to be and come back to South Africa to “use my new skills to boost the economy as well as elicit social change to address economic inequality.”
Having a vision is one thing, but figuring out how to bring a vision to life is where the real fun lies. I needed to find a way to blend…
I remember the moment in my first-year lecture class when I learned about the Sustainable Development Goals: 17 goals, 169 targets, 200 indicators. There was so many, they were so ambitious; it felt too big, too…daunting. It felt way beyond the scope of my university, my class and me that day and felt more like the responsibility of the government or large organizations.
While I was intimidated, what I was not was going to give up. After all, as Maya Angelou said, “Nothing will work unless you do.” I had a desire to be part of something bigger than myself…
We started 2019 with four operating companies, ~50 employees across the portfolio and two full-time team members. During the year we made two investments, hired two full-time employees, on-boarded a new Secha Fellow and launched a new OpCo subsidiary.
We enter 2020 with seven operating companies, ~150 employees across the portfolio and five Secha team members!
January: Yusuf Shaikh (from the Boston Consulting Group) joined Secha at the start of the year. Yusuf has become our in-house expert in performance marketing (paid social, SEM, programmatic affiliate), offline marketing (TV, radio, direct mail), SEO, mobile growth and partnerships (e.g. …
After six investments, 70 jobs created and with each operating company growing both revenue and margin, we believe that we have enough “dots” to make a “line” and thus the confidence to make certain assertions. Our most controversial to date:
Growing SMES actually is rocket science!
As we raise our second fund, this statement, at first, does not exactly endear us to new investors, but it is fundamental to what we believe and what we do.
So, why do we say that SME growth actually is rocket science?
Founders expend most of their energy and resources getting to lift-off. Getting…
Secha Capital invests in established African SMEs in the Consumer Goods and Agribusiness sectors.
We refer to ourselves as an “impact investing (micro) private equity” firm, but people mistakenly assume that we are a venture capital firm. Their first reaction is often: Why don’t you invest in technology, the future — blockchain, AI, IOT, FinTech, HealthTech, PropTech? There is certainly a mountain of capital going into these sectors. And some of the successes in tech are used as analogues for the next great unicorn — “The Uber of…”, “The M-Pesa of…”, “The Amazon of…”. Surely no one wants to miss…
Investing patient capital in established South African SMEs in the missing middle. Address the management gap by joining the team.