South Africa’s business mogul Andile Ngcaba, the chairman and the majority shareholder of the ICT (Information Communications and Technologies) specialist investor Convergence Partners, travels the globe in hot pursuit of the best startups to invest in as part of his company’s growth plans. By Gugu Lourie
Convergence’s goal is to invest in high-growth ICT platforms with global ambitions, Ngcaba laid out the investment firm’s ambitions during an interview with Techfinancials, which took place at Sci-Bono Discovery Centre in Johannesburg’s Newtown area.
To be able to achieve its objective, Convergence will have to scout for new startups.
There are many startups emerging from the African continent focusing on ICT platforms that Convergence could bet on, but many may not survive long enough to transform the technology world.
But Ngcaba is a tech trooper with close to 40 years experience and he is backing Convergence to find and invest in new, exciting startups in Africa.
This year Convergence celebrates 10 years in business.
The success of the company can be attributed to the steady hands of Ngcaba, and the dependable founding partner and CEO Brandon Doyle – who avoids the spotlight. The company has clearly benefited from the prudent and thoughtful number cruncher, Stefan Ferreira, the chief financial officer and founding partner of Convergence.
Ngcaba is evidently a keen tech startups hunter. Apart from seeking growth for Convergence, he also wants to help these startups to transform Africa to be the place to do business. His intervention will help them to export their technology solutions globally.
“You can see our track record. But the question today, as we celebrate our 10 years, where are we going next?” asks Ngcaba.
“We are getting into what is called ICT platforms now. As you can see, (tech) platform is becoming something that we are looking at very closely.”
Convergence is not bluffing and in recent weeks it really showed the market how serious it is about its strategy. The firm pumped millions into a South African-based tech platform startup that is already playing in a global space.
Convergence spent $1 million (R15 million) on a tech platform operator Snapt, which has 10,000 customers in 50 countries.
After opening its US office in Atlanta, Snapt is targeting to capture 1 percent share of the $6.5 billion application delivery software market within the next three years. Cape Town-based Snapt is a global provider of high-end virtualized and cloud-based load balancing, web acceleration and security software. For more read: Businessman Andile Ngcaba’s firm Convergence pumps millions into SA’s start-up Snapt
“In (ICT) platforms, you are able to put in a lot of services that provide services to different types of industries,” Ngcaba explained.
Technology platform is a group of technologies that are used as a base upon which other applications, processes or technologies are developed.
“We are really saying the next growth is in a platform layer and that’s where Convergence is going to play a meaningful role in the industry,” said Ngcaba.
In July 2015, Convergence raised $200 million (about R3 billion) fund, which it has been using to bet on new ICT platforms and other tech firms.
The firm became an anchor investors in 4Di Capital Early Stage Technology Fund 1, which targets startup investment opportunities in the mobile, enterprise software and web sectors.
4Di Capital manages Convergence’s early-stage portfolio in Integrat, Bloodhound and Skillpod, which the investment firm exited.
Ngcaba said Convergence was thrilled with its investment in 4Di Capital.
“We are excited with the leadership of 4Di and the type of things they do,” he said.
Furthermore, 4Di received a R256 million in initial commitments for a new technology venture capital fund. The major investor in the fund is Exponential Ventures, the externally focused innovation unit of JSE listed insurance group MMI Holdings. For more read: 4Di announces first close of R256m for new technology venture capital fund
4Di is also invested in South Africa’s health informatics firm LifeQ, which recently teamed up with Nasdaq-listed Analog Devices to improve effectiveness of body monitoring devices in health management.
LifeQ has set out to catalyse a change in how we understand and optimise our health.
Championed by computational systems biologists, LifeQ sees the human body as the ultimate sensor.
Ngcaba said the “good thing about ICT platform type technologies is that you can scale them up globally. You can build a company in Cape Town and scale it up to many countries as possible”.
The investment firm also invested R255 million into buying a strategic, minority stake in Venture Gardens, a Nigerian diversified fintech entity that provide innovative, data-driven, end-to-end technology platforms addressing reconciliation and payment processing inefficiencies across multiple industry verticals.
“The injection of substantial new equity capital into Venture Gardens Nigeria will enable the company to accelerate its growth plans domestically in Nigeria, and across the West African region,” Doyle said in August when the deal was announced.
Convergence, whose first big tech investment was a 15.1% stake in the country’s fixed-line telephone firm Telkom, in recent years has also invested in the first ever African private sector communications satellite New Dawn, first independent and open access national fibre network in South Africa FibreCo, first independent-led undersea system for Africa Seacom. It also invested in Gemalto SA, inQuba, etc.
These and other assets are propelling Convergence into the league of big tech investors and is likely to compete for investments in Africa’s new startups with Naspers Ventures, owned by global group Naspers, which is also targeting emerging markets new startups and has also set up an office in Silicon Valley.
Convergence has exited its investment in South Africa’s Telkom, Vodacom, SkillPod Media,
Nedbank, New Dawn Satellite, Integrat, Britehouse Holdings, Inala Technologies and a managed technology firm Bloodhound.
The investment firm is also invested in e4, Comsol Wireless Solutions, IS Mozambique, Skyband Malawi, VBN Botswana, etc.
“Convergence is 10 years old now, and as we celebrate our 10 years we are really proud of what we have done. You can see our track record,” said Ngcaba.
Convergence’s rapid growth in assets is a tribute to Ngcaba, who in 2003 left the government department of communications where he was director general to become the executive chairman of tech firm Dimension Data Middle East and Africa.
He has overseen remarkable growth of the once JSE-listed biggest tech firm into new markets as well as new investments.
Ngcaba has grown through the ranks from being a Phillips technician to become a business manager.
He is now an industry stalwart who is not only concerned about pursuing big deals but also mentoring, empowering and training young South Africans into acquiring ICT skills.
Ngcaba – who grew up in Duncan Village in East London and came to Soweto in the late seventies as a migrant labour – wields vast economic clout in the technology sector and through FibreCo is training fibre technicians for the local market as part of his desire for innovation in ICT sector on the African continent. For more read: SA’s FibreCo upskill unemployed youth to be fire technicians
He’s a workaholic. He juggles dozens of projects and regards them as his passion not work.
He travels all over the world as a Dimension Data, Convergence, FibreCo and Wi-Fi Forum SA chairman, and sits on the Panel on Global Internet Cooperation and Governance Mechanisms.
Ngcaba has also written extensively about the ICT industry and run his own blog – andile.co.za.
That said, Ngcaba has slowly built Convergence to become a ‘mysterious investment empire’ building startups.
Meanwhile, the firm is still on the hunt for investment deals. It wants to invest more into ICT platforms with ambitions to grow globally.
What will Ngcaba and his partners will do with Convergence over the long-term is still up in the air.
Whether it will consider a JSE or Nasdaq listing, is anyone’s guess. For now, the firm is quietly changing the face of the tech industry in Africa.