Hasso Plattner, one of the founders of German software giant SAP, is to start a Cape Town-based venture capital firm shortly, sources say.
The move follows from an August visit to the Western Cape by Eran Davidson, CEO and president of Hasso Plattner Ventures (HP-Ventures), when he met with some local venture capital firms and small companies.
"The process is being finalised on how they will operate, whether it will be a separate company from HP-Ventures or a subsidiary," a source says.
Davidson replied to an e-mail query by saying he could not comment, but said: "You will sure be among the first to know once we start a business in SA."
HP-Ventures was started by Hasso Plattner two years ago, with an initial funding of 50 million euros, about R350 million, with the original aim of promoting technology innovation in Germany. Since then it has taken shares in a number of technology companies in Europe and the US.
Local venture capital firms say the move by HP-Ventures would stimulate the local market and highlight innovation that is currently happening.
"When a venture capital company sets up shop in a particular market, it means they are serious about it," says Danny Naidoo, a former Microsoft South Africa executive who is now setting up his own venture capital operation.
Israeli innovation
Naidoo says Israel is a typical example of the potential that can be reached.
"In Israel, there are a large number of small technology firms with IP (intellectual property) in niche areas. Ten years ago, they meant almost nothing as far as overall Israeli GDP was concerned, but now they are a major contributor to the economic wellbeing of Israel."
Naidoo says the reason for this is that international venture capitalists set up operations there and farmed the market for IP, and fostered the technical innovation that was occurring.
Julia Long, CEO of Mark Shuttleworth`s HBD Venture Capital, says the entry of a large international player into the local market would be good for stimulating competition among the local VC companies.
"I sometimes think the local VC companies get too complacent, and having somebody like Hasso Plattner coming in would be good to stir things up," she says.
Long says a lot will depend on just how HP-Ventures plans to enter the market.
"One of the problems that international VC companies have to overcome is understanding the intricacies of a local market, but by having a direct presence here, that should help," she says.
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