Silvertree Internet Holdings counts digital giants PriceCheck, UCOOK, Carzar and Faithful to Nature among its investments
Silvertree Internet Holdings (SIH), the investment growth partner behind some of South Africa’s most successful digital brands, counts majors such as PriceCheck.co.za, UCOOK.co.za, CarZar.co.za and Faithful-to-nature.co.za among its stable. Together, Silvertree’s brands rack up 6 million visitors monthly online; taken together, they make up one of South Africa’s largest internet groups.
‘In emerging markets like South Africa, VC often just doesn’t work yet,’ explains Manuel Koser, SIH co-founder and MD. ‘That’s why we’re not a VC. Nor are we a passive investment holding company. We’re an investment growth partner. Our approach is unique.’
Riding a growth rocket
In 2014, Silvertree began with a vision. Today, the team has created a business employing 300-plus people, with annual revenue north of 40 million USD, growing >100% CAGR historically.
To date, the business counts PriceCheck.co.za, Faithful-to-nature.co.za, Ker-DowneyAfrica.com, Sproutperformance.com, Compareguru.co.za, UCOOK.co.za, CyberCellar.com, Petheaven.co.za, Shoppingfeeder.com, humanvalue.co.za and Aumax.co among the host of successful businesses in which it has invested.
The company’s executive team is made up of founders and managing directors Manuel Koser, Peter Allerstorfer, Paul Cook, CFO Andrew Whale and Chairman Freddy Caspers.
Before forming SIH, Koser and Allerstorfer were responsible for bringing online clothing giant Zando to the local market, and co-founded Jumia, now Nigeria’s largest ecommerce website. Caspers’ holds 16 years experience which saw him serve on the Global Executive Board and as CEO at Reckitt Benckiser’s Emerging Markets Division. Under his stewardship, Caspers grew profits 16 times and created 20-billion US dollars in shareholder value. He also has global brand management experience on brands such as PepsiCo and Johnson & Johnson . Between them, the team have experience gained at McKinsey and Co., Boston Consulting Group, KPMG and EQT Private Equity, and count a Fulbright Scholar among their ranks.
On why venture capital often fails
‘In typical VC, there’s often no alignment of interest between investors and entrepreneurs,’ Koser explains. ‘At the same time, entrepreneurs can be pushed to take unsustainable risks. The investment manager at the head of a typical VC fund gets a salary and what’s known as “carry” – the upside of the business if you’re successful. For an investor like that there’s very rarely any real downside.’
Koser continues: ‘We work differently – and put our own capital at risk. This owner-operator model means there’s very real alignment of interest. More than this, we structure deals using patient capital – which makes a big difference from a timing perspective. Most VC funds have a time limit of 7 years, after which they look to sell. Silvertree doesn’t do this. In addition, we are able to provide seed, growth and buyout capital, which a normal VC fund does not do.’
Building businesses in SA
‘Why do you start a business?’ Koser asks. ‘Because you see a niche in the market. But next, you need to develop a product that is significantly better than the current alternatives – one that builds a brand.’ Any entrepreneur needs expert advice, Koser explains, ‘But in a nascent entrepreneurial environment like South Africa, most entrepreneurs are also first-time entrepreneurs. And there isn’t always ready access to the experts they need to talk to.’
Other stumbling blocks for entrepreneurs in SA stem from the fact that traditional VC firms often can’t provide substantial sums, as there are relatively few success stories of scale. ‘More than this, entrepreneurs need partners who can help reset their business as it scales,’ Koser emphasises. ‘Running a business with 1-30 employees is very different from forty-plus employees, and then one hundred-plus. The angel investor who supplies an entrepreneur with fifty thousand rand at day zero is likely not the right person to guide the company once it starts growing significantly. What’s needed is someone with more experience and a smarter network. We offer entrepreneurs a dedicated operational platform of 20-plus staff who provide support with anything from finance and legal topics to issues around growth and group contracts, across the lifecycle.’
In the four years since its inception, SIH has grown its shareholder value 13 times. By 2023, its annual revenue is forecast to exceed 300-million US dollars.
‘If you’re looking for the traditional approach, we’re not the guys to talk to,’ Koser concludes. ‘But if you’re looking for a partner who will help you grow your consumer facing business and who will provide you with the right stuff – talk to us.’