SAESIS: Tomorrow’s Investment?

It seems like everyone is on the topic of privacy policy updates these days, but if you haven’t heard of SAESIS then it’s time to dust off the old lexicon and place a firm grip on your e-wallet. Let’s aptly expand the acronym of SAESIS to South Africa’s Endangered Species Investment Sector.

Although you may never have heard of any of the listed species, it is worth knowing that some may end up as dusty taxidermy mounted on the garage walls of spouses - specifically spouses who are not allowed to display the memory as a trophy worth recalling.

We’ll discuss three, but before we start, have you ever asked yourself:

"Why are my 20-something-year-old kids talking about becoming

Unicorns or Gazelles?!"

Maybe you overheard people walking past you at the coffee shop talking about unicorns and investment in the same sentence - convincing you that millennials have now, more than ever, lost the plot. My personal favourite introduction has been how a Bird can race to become the first scooter unicorn.Chances are that you’re not completely unfamiliar with the terminology, but neither are you phased enough to find out why these animals are a potentially significant contribution to our economy that requires your attention. Let’s start off by giving you succinct definitions of what unicorns and gazelles are; followed by an amalgamation of ideas shared amongst various industry personalities in the know.

The Gazelle

A high-growth company.It’s revenue increases by a minimum of 20% annually for 4 years or moreIt has a revenue base of at least $1 million.

The Unicorn

A start-up company.Its valuation has exceeded the value of $1 billion.

The Zebra

A company that values both profit and improving society in a capitalist jungle.

So how can these companies perform in SA?

A statement that is unavoidable across the South-African blogosphere is that our country requires more sustainable companies who are able to solve real problems. The impending reality is that our country’s startup sector is also currently facing a skills deficit - one which can only be solved by motivated individuals who seek to build and develop our sectors as opposed to hunting for sport or maintaining any sort of outdated tradition.

The argument for Gazelles has also been made in consideration of an environment within which we feel at home - enabling us to thrive. If we’re looking to breed Unicorns on the African continent, then we shouldn’t try and do so under an American blanket.

Unicorns are born out of valuations that are supported by an American economy - one that we South Africans should not be too interested in adopting considering its capacity to crash amidst a stampede.

Gazelles, on the other hand, rely on the more tangible indication of revenue. A year-on-year figure that we can chew, swallow and process well enough to consider its value amongst the rest of our local offering.

Finally, we have the Zebra - a charming attempt to persuade the masses that, even though there exists a multitude of ferocious predators, we should foster a new vision where the regional drinking hole can be shared in peace.

So if you’re wondering whether there is any positive sentiment, then yes. Yes, I see the benefit, but this is Africa where gazelles and zebras can easily fall prey to the roar of the general public or to the heat mirage that promises water.

Even worse - we too have rich poachers who are keen on buying out the opportunity to prevent these animals from roaming free. They’d much rather secure a trophy and share tales of the ‘kill’ that almost got the better of them.

Whether or not these animals end up being long forgotten over the next decade will depend on whether we have more investors supporting SAESIS. If the majority are in the camp that prefers to hunt for game, then it won’t be too difficult to see where sentiment is headed.

"Past performance speaks volumes in the jungle, but not so much in investment."

Are South African investors up to the challenge of creating a successful breeding environment for weird and wonderful companies? Only time will tell.

Kind Regards Johan Bronkhorst Co-Founder and Director at JA