Grindstone Accelerator Launches New Venture Capital Fund

South Africa’s business accelerator Grindstone has announced the launch of a new venture capital fund, devoted to providing early-stage equity funding to its cohorts of companies and alumni.

The Grindstone Accelerator is a structured entrepreneurship development programme jointly owned by leading venture capital fund manager Knife Capital and market access specialist Thinkroom Consulting. The programme assists high-growth innovation-driven companies to get the fundamental building blocks in place to scale quickly, become sustainable and/or fundable.

It also takes South African SMEs with proven traction through an intensive year-long review of their strategies and provides them with the necessary support to build a foundation for growth in becoming more investable, sustainable, and exit-ready.

During the programme, key growth gaps identified are addressed which exposes early-stage funding opportunities in these companies to accelerate market access. But the availability of risk capital remains one of the main challenges to the growth of small and medium-sized enterprises (SMEs) in South Africa.

Andrea Bӧhmert, Partner at Knife Capital said,  “Linking a funding vehicle to our Accelerator model complements the Knife Capital value chain approach where companies can be de-risked before raising follow-on capital from our Series A and later-stage funds.

 “The Grindstone Programme is essentially a thorough due diligence exercise to identify the best opportunities – already narrowed down from hundreds of applications.”

Grindstone Ventures is an open-ended venture capital fund structure, set to invest up to R5 million per opportunity in scalable innovation-driven ventures – likely in co-investment arrangements with Angel Investors and Corporate VCs. There is a tweak also which will ensure that all future Grindstone Accelerator cohort companies will obtain a stake in Grindstone Ventures, thereby creating a vested interest in each other by a community of high-growth scale-ups.

 “A few of our past Grindstone entrepreneurs have subsequently exited their businesses and became VC Investors with Knife Capital. We are now starting to teach our investee companies to think like investors early on – because we back them to succeed,” says Bӧhmert.

Keet van Zyl, Partner at Knife Capital says the first Grindstone Ventures investments are imminent: “The initial capital contributions are from Knife Capital, Thinkroom and our program partners, but encouragingly, past Grindstone cohort entrepreneurs are coming on board and respected Angel Investors in the SA startup ecosystem are looking to invest. We already identified the first investment opportunities.”

The new Grindstone Accelerator cohorts 6 and 7 of ten companies each in Cape Town and Johannesburg are currently being finalized and will be announced soon.