A collaborative consortium, including the SA SME Fund, the Department of Science and Innovation (DSI), the Technology Innovation Agency (TIA), and E Squared Investments, has introduced a substantial R300 million (approximately $17 million) seed fund dedicated to nurturing tech startups in South Africa. This fund is set to exclusively provide early-stage capital to domestic startups, targeting a significant funding void that currently hampers the progress of nascent technology ventures in the country.
The “Seed Fund of Funds” initiative is poised to inject seed capital into a minimum of 50 startups, with the overarching goal of spurring innovation and driving transformation within the South African context. The management of the fund will be entrusted to seasoned fund managers, who will guide entrepreneurs in transforming their innovative concepts into scalable and commercially viable businesses with the potential for both local and international expansion.
Ketso Gordhan, the CEO of the SA SME Fund, underscored the pivotal role of seed funding in the entrepreneurial ecosystem, stating;
Seed funding is the lifeblood of innovation and entrepreneurial growth. Without it, many great ideas would never see the light of day. This fund will ensure that South Africa’s brilliant minds have the resources they need to succeed.
Historically, South Africa’s venture capital landscape has been skewed towards more mature investment stages, such as Series A and Series B rounds, leaving a noticeable void for early-stage startups seeking capital. The Seed Fund of Funds is designed to bridge this gap, providing a nurturing financial environment for budding entrepreneurs.
The consortium backing the fund is confident that bolstering tech startups will not only lead to job creation but also catalyze economic transformation in South Africa. This aligns with global patterns where tech companies are increasingly recognized as significant job creators, particularly in sectors driven by innovation.
The fund is set to distribute capital through a selection of five adept fund managers, a strategy that aims to maintain the sustainability of South Africa’s venture capital industry while simultaneously empowering a new wave of tech entrepreneurs.
Patrick Krappie, the acting CEO of TIA, commented on the fund’s strategic importance;
This fund will play a catalytic role in building the foundations of a strong seed-stage funding ecosystem.
E Squared Investments, an impact investment firm dedicated to fostering transformative change, plays a crucial role in this fund. CEO Gladwyn Leeuw highlighted the importance of providing strategic capital to tech startups, asserting that such support is essential for spurring innovation and promoting economic development.
