For a R25m deal that came to it in a surprising way.
By Larry Claasen 16 Apr 2021
Sanari Capital found LightWare in the most unlikely way. The private equity firm is always on the lookout for companies it can invest in, and usually sources them through its business network on a referral basis.
But LightWare, a laser device maker, did not come through a referral, but by applying directly through Sanari’s website.
“They came to us through a means that is usually the least successful way to get funding through a private equity firm,” says Sanari partner and CEO Samantha Pokroy.
At the time LightWare, which had been operating for about seven years, was already a global leader in light detection and ranging sensors, better known as LiDAR. These sensors have become a fixture of modern industry as they measure distance, detect degrees of levelness and determine whether there is an obstacle is in the way.
LiDAR is key to the development of emerging technologies like household and industrial robots, unmanned aerial vehicles – more commonly known as drones – and self-driving cars.
Without LiDAR, these devices would have difficulty judging distance, height and avoiding obstacle.
A lucky find
Though LightWare was a well-established company with a strong track record, the odds of getting funding just by sending an e-mail via a website that usually attracts a multitude of questionable applications, weren’t good.
But then Sanari analyst Kgosi Diphokwane had a closer look at LightWare and sensed its potential.
Diphokwane met with its management team, then brought the application to Sanari‘s deal prioritisation meeting.
This eventually led to several meetings between LightWare CEO and co-founder James Portman and his management team, and Pokroy her team.
It did not take long for the Sanari team to be “blown away” by what LightWare was doing.
“You could tell very quickly they were operating at the top of their game,” says Pokroy.
To Sanari’s surprise, this was not the first time Portman had built and sold off such a company. He is the founder of Laser Measurement, which was later sold off to Swiss industrial group ABB.
Having created and sold off a similar business gave LightWare’s management team a lot of credibility.
Aside from their track record, there was also some kismet between Sanari and LightWare.
This sort of connection is important, as Pokroy explains, because this is about more than an investment opportunity. There needs to be an understanding that the arrangement is for the long-haul, which means they have must have a shared vision and values.
Critically, there also needs to be an understanding by those running the business that they need to bring in other people to help them deal with what Pokroy calls the “inflection point”.
This is where the business needs to go through some kind of transformation, like scaling up its operations or setting itself up for a change in leadership.
As Pokroy puts it: “What got you to this initial point of success and scale is not necessarily the same set of skills or experience or challenges that will get you to the next stage of your business.”
All of this not only led to Sanari investing R25 million into LightWare in August 2020, but also to Sanari winning the inaugural Southern African Venture Capital and Private Equity Association (SAVCA) award in the Small and Medium Deal of the Year category at the SAVCA conference in early April.
Pokroy says the increasing move by many businesses to digitise their operations in the wake of the Covid crisis has boosted LightWare’s prospects because there is now increasing demand for smaller LiDAR devices. The group is well placed to tap into this trend as some of the devices it makes are unique.
These devices are especially useful for drones, which are increasingly seen as a way to deliver goods and medicines across long distances in Africa and the rest of the world.
“Their LiDARs are the smallest and lightest precision LiDARs in the world,” says Pokroy.
“There is now global demand for this product, which fits with our ambition to bring Africa to the world through our investment strategy.”