In a significant advancement for the country’s startup technology sector, the South African Small and Medium Enterprises Fund (SA SME Fund), in collaboration with the Department of Science and Innovation (DSI) and the Technology Innovation Agency (TIA), has officially launched a R300 million Seed Fund of Funds. This initiative aims to provide essential early-stage capital to at least 50 technology-driven startups, fostering innovation and transformation within South Africa.
The fund addresses a critical gap in the venture capital landscape, particularly for early-stage investments that have historically struggled to attract funding compared to later-stage rounds like Series A and B. The initiative is poised to inject vital resources into the country’s entrepreneurial ecosystem, nurturing the next generation of industry leaders.
Ketso Gordhan, CEO of the SA SME Fund, underscored the importance of seed funding in cultivating entrepreneurial success.
“Seed capital is the lifeblood of innovation and entrepreneurial growth. Without it, many great ideas would never see the light of day,”
Gordhan stated.
“By injecting capital at this critical early stage, we are not just funding startups—we are cultivating the next generation of industry leaders. South Africa has no shortage of brilliant minds, and this fund will ensure that more of them have the resources they need to succeed.”
Patrick Krappie, acting CEO of TIA, highlighted the government’s role in fostering innovation.
“The partnership with the SA SME Fund aims to bolster funds towards startups and small, medium, and micro enterprises (SMMEs) through a fund of funds approach. We understand that early-stage ventures, especially those grounded in technology, need a supportive environment to thrive,”
Krappie explained. He emphasized that the Seed Fund of Funds will catalyze a wave of new startups, creating a robust seed-stage funding ecosystem in South Africa.
The initiative has received crucial support from the DSI, which has played a significant role in establishing the fund. Krappie noted,
“The support by the DSI through its Innovation Fund has been instrumental in the establishment of this fund, creating a funding platform for seed-stage venture capital funds.”
Gladwyn Leeuw, CEO of E Squared Investments, expressed the fund’s strategic importance in empowering responsible entrepreneurs.
“Our mission is to drive transformative change by making strategic capital accessible,”
Leeuw stated.
“This initiative aligns with our vision to be a leading early-stage investor, contributing to entrepreneurial activity and meaningfully impacting millions of lives.”
The partners believe that fostering entrepreneurship will play a crucial role in job creation, echoing global trends where tech companies have significantly contributed to employment.
As the fund prepares to allocate capital to at least five experienced fund managers, it is expected to empower numerous technology startups over the coming years, paving the way for sustainable economic growth and transformation in South Africa’s tech sector.
With a clear focus on high-impact innovation, this R300 million investment marks a crucial milestone in strengthening South Africa’s venture capital landscape, ensuring that the nation’s diverse talent can thrive in an increasingly competitive global market.