- Country: South Africa
- Industry: Technologies
- Stage: Initial growth (first revenues)
- Years in operations: 1, Employees: 6
- Investment size: $620,000 / min. $300,000
- ROI: 63% in 5 years
- Type of investment: Debt, Equity
Seed capital investment for a technology company that provides ICT products/services to Telcos and GSM companies in South Africa and Southern Africa.
The company started operating about a year ago, which is negatively affected by the ability to have adequate capital so that as it wins contracts it could commence with infrastructural development initiatives before progress payments may be forthcoming.
This has been a negative factor in its operations as securing contracts is not a challenge as it has networks and quality program to meet customer needs/demands. It had lost face due to situations wherein the customer would require prototypes or a certain percentage of the solution whilst no payments/revenue has been earned and thus finding it difficult and the reason for this strategic investment required.
The target market is ICT service providers focusing on Telcos, GSM operators in SA, Southern Africa and East Africa as the next destination.
The company requires the money initiation of projects and enhanced marketing to provide sustainable solutions to its clients in South Africa, expansion into Southern Africa. A 15% shareholding with 63% ROI, 30% EBITDA from an investment of $620,000.
Approach is target thise companies and package integrated, one stop solutions for them where necessary collaborating with strategic partnership.
Aggressive, focused and innovative marketing together with talented management/leadership would ensure achievement of these objectives.
63% ROI, 30% EBITDA with a 15% shareholding offered with investor expected to divest in 4/5 years. Finance loan provider expected to charge 5.5/6% interest rate with the payback period of 4 years maximum
The Management/Leadership knowledge and experience in the market has allowed it strong networks based on its performance, ability to build strategic partnerships, enhanced turnaround times and providing an integrated, one stop ICT solutions to its clients.
Thus excellent service delivery, focus, creating a niche market for itself including expansion into Africa working likeminded clients. You meet clients and craft solutions on its requirements and phasing needs
Rationale for the deal
The ICT market is still on a growth phase expecially with development of business capacity/infrastructure in Africa.
This provides a growth market and as entrepreneurs would be recognised for your output directly and grow your business from booming needs/demands
Thus providind excellent service delivery whilst achieving the creation of your own business and technological know-how in differing environments
Use of financing
The funding would be used to ensure that once projects/deals are secured there is adequate financial capital to kick off the project, excite the customer whilst awaiting payments for services rendered. Provides opportunity to market the business and its offerings both in South Africa, and ensuring that the expansion into Southern Africa and secondly East Africa is enhanced and sustainable.
Opportunity for the investor
15% shareholding with related profit share opportunities given the positive returns envisaged; 63% ROI, 30% EBITDA over 5 years
Payback period of 4 years for the finance loan provider
The investment/loan required is $620,000.
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