Traditional Capital Raising - South Africa

The Total Capital Raised in the Traditional Capital Raising market market in South Africa is projected to reach US$453.20m in 2024.
Venture Capital dominates the market with a projected market volume of US$451.80m in 2024.
In global comparison, most Capital Raised will be generated the United States (US$159.0bn in 2024).
In South Africa, the traditional capital raising market is witnessing a resurgence in interest from local investors seeking diversified investment opportunities.

Definition:

The Traditional Capital Raising market relates to venture investment in startups and emerging companies that are not yet generating positive or significant revenue but have high growth potential. The capital is mostly raised from venture financial institutions, and minorly from banks.

Structure:

The market consists of two segments:
- The Venture Capital market refers to private equity funding that is offered to startups and emerging companies.
- The Venture Debt market refers to the combination between equity and debt financing, which is used to finance the early stage and growth stage capital-backed companies.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Additional information:

Although the Traditional Capital Raising market is highly competitive in investment opportunities due to the rapidly high growth rate of startups and emerging companies, it has become more popular for these businesses who cannot get traditional loans from banks, to develop and grow their businesses or projects.
Key players in this market are companies such as Sequoia Capital and Hercules Capital.

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Venture Capital
Venture Debt

Traditional bank loans
Digital capital raising

The Traditional Capital Raising market in South Africa is experiencing notable growth and development.

Customer preferences: South African investors are increasingly turning to traditional capital raising methods to finance their business ventures. This preference is driven by a desire for stability and security, as traditional capital raising methods often involve established financial institutions and regulated processes. Additionally, investors in South Africa value the opportunity to have a direct stake in businesses, which traditional capital raising methods provide.

Trends in the market: One major trend in the Traditional Capital Raising market in South Africa is the rise of initial public offerings (IPOs). Companies are increasingly choosing to go public in order to raise capital and expand their operations. This trend is driven by a growing appetite for investment opportunities among South African investors, as well as the potential for significant returns. Another trend in the market is the increasing use of debt financing. South African companies are taking advantage of low interest rates to borrow funds for business expansion and investment. This trend is supported by the availability of credit from financial institutions and the relatively stable economic environment in South Africa.

Local special circumstances: The Traditional Capital Raising market in South Africa is also influenced by local special circumstances. One such circumstance is the presence of a well-developed financial sector, which provides a range of services to facilitate capital raising activities. This includes investment banks, stock exchanges, and regulatory bodies that ensure compliance with relevant laws and regulations. Another special circumstance is the country's diverse and dynamic economy. South Africa is home to a wide range of industries, including mining, manufacturing, finance, and technology. This diversity creates opportunities for businesses to raise capital through traditional methods, as investors seek to diversify their portfolios and support different sectors of the economy.

Underlying macroeconomic factors: The growth and development of the Traditional Capital Raising market in South Africa is underpinned by several macroeconomic factors. Firstly, the country has a stable political environment, which provides a favorable investment climate. This stability encourages both domestic and foreign investors to participate in capital raising activities. Secondly, South Africa has a well-regulated financial system, which instills confidence in investors. This regulatory framework ensures that capital raising activities are conducted in a transparent and fair manner, protecting the interests of both investors and businesses. Furthermore, the country's strong economic growth and increasing disposable income levels contribute to the growth of the Traditional Capital Raising market. As the economy expands, businesses require additional capital to finance their growth plans, creating opportunities for investors to participate in capital raising activities. In conclusion, the Traditional Capital Raising market in South Africa is experiencing growth and development driven by customer preferences for stability and security, the rise of IPOs, and the increasing use of debt financing. These trends are supported by the country's well-developed financial sector, diverse economy, stable political environment, and strong economic growth.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.