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Silvertree Capital: Transforming Start-Ups in Africa

21 January 2015

Introducing Silvertree Capital

It is the age of entrepreneurship, and being stationed in the third-world dynamics of Africa seems to make no difference at all. In fact, Silicon Valley-style entrepreneurship, i.e., small teams building businesses from scratch, securing investment over one or more rounds, and using the Internet or mobile technology to deliver services, is growing rapidly across Africa. Despite the fact that entrepreneurship is rife, however, there are still relatively few real success stories of start-ups that have grown large enough to substantially impact the continent’s economy. The reason? Lack of funding. This is mainly due to the fact that, while adopting America’s style of entrepreneurship in Africa has been somewhat of a success, the US model of venture capital still struggles, on this continent.

So, the real question is: how do you get capital into the hands of African start-ups?

The answer, according to Silvertree Capital, is to work from what they themselves have termed, the “Business Builder” model. This model involves supplementing existing start-up teams and shifting the focus of companies solely to execution. With this model, Silvertree Capital has made it their aim to build businesses in Africa. Although the investment size of the model is large ($100 – a few $m), the idea has been a proven success. This can be illustrated through Silvertree’s various portfolio companies, whom they have invested in, during just one year of operations. These include: CyberCellar (www.cybercellar.co.za); WineCo (www.wineco.co.za); Sprout (www.sprt.co.za); Click n Compare (www.clickncompare.co.za); PinPoll (www.pinpoll.com); HealthCart (www.healthcart.co.za); and Aythan (www.aythan.com) – based in Dubai.

 

Founders

From the MD

It goes without saying that Silvertree Capital would not be where it is today were it not for its founders. When asked about the current success of his business and the road he travelled to get here, Manuel Koser (Managing Director) had the following to say:

“I first got involved with Silvertree Capital when my previous business partner, Peter Allerstorfer, and I saw a business opportunity within Africa’s technological landscape, through our success in founding Zando. We decided to partner with Paul Cook, from McKinsey, and start a company with the aim of investing in profitable (or potentially profitable) technologically or financially-oriented businesses, in Africa. Due to the continent’s ever-growing population, increased Internet penetration, and reduced costs of data, we knew Africa was more than ready for the introduction of Internet-based start-ups. With funding being the only obstacle standing in the way of these ventures, we moved in swiftly to offer capital where there was none.

As an entrepreneur, one of the greatest challenges I have experienced has been trying to understand the different facets of the various markets we are involved in. Despite the trials, however, entrepreneurship is a rollercoaster ride. No day is the same and the best part is that you get to create. Whether it’s a new job, product or solution to a real-life problem, your creations make an impact.

As for the origin of/story behind our name; it is based on the Silvertree which is a remarkable evergreen tree that grows up to 5–7m tall. Scientifically known as the Leucadendron Argenteum, the Silvertree is an endangered species within the family Proteaceae. This gigantic silver Protea is naturally restricted to a minute area in and around the city of Cape Town, particularly the Lion’s Head area. This tree is known to be both fast-growing and enduring – two characteristics that define our company – which is why we named our business after this local tree. We also love to hike up Lion’s Head – who doesn’t?”

 

Silver Tree, Silver Leaf Tree, Witteboom, Silwerboom (Leucadendr

 

More on Silvertree

Silvertree’s businesses are organized into lead generation, and sales and lead generation; e-commerce (under our own brand as well as on behalf of estates); and advertising technologies. All verticals are post-revenue, whilst two are break-even. Altogether, they are growing rapidly (with a gross profit growth of 14% per month) and are ready for aggressive scaling. In just 12 months, two of Silvertree’s portfolio companies have turned profitable. With a senior, experienced Advisory Board from around the world, however, how could things go wrong? This board is made up of very successful individuals, some of whom run well-known media companies, as well as others who are involved in worldwide, corporate initiatives.

Under their guidance, the following took place within the ventures funded by Silvertree Capital in 2014:

  • CyberCellar sold 225 000 bottles of alcohol; enough liqueur to fill 622 bathtubs! Their biggest order was to the value of R225 000, the same price of a Ford Fiesta 1.0 Trend.
  • Throughout the year, Click n Compare’s Call Centre agents made a total of 62 260 calls, equating to 145 245 minutes spent on the phone.
  • PinPoll generated 2154 polls and 330 000 answers. The most popular poll was: “Should cannabis be legal everywhere,” of which 63% of participants answered ‘yes’.
  • In 2014, Sprout managed an ad spend of R10 000 000. Their highest-paying keyword was “family holidays in Thailand February” (R254.58), while the cheapest was “find a doctor South Africa” (R0.01). The funniest keyword, according to the staff at Sprout was “edible underwear”, valued at R0.08

These numbers set the standard for the transformation that is expected to take place within African start-ups in the year ahead. Thanks to companies like Silvertree Capital, entrepreneurship within Africa is slowly able to reach its full potential.

 

Written by Samantha Steyn (Silvertree Capital Publicist)