State agencies launch R300m tech startup fund

A trio of State agencies have partnered with an “impact investor” fund to launch a R300-million startup fund.

The SA SME Fund and the Department of Science and Innovation (DSI), along with its entity, the Technology Innovation Agency (TIA), have partnered with impact investor E Squared Investments to launch the Seed Fund of Funds. 

Aimed at providing critical early-stage capital to startups, the initiative aims to fund at least 50 technology-driven startups through experienced fund managers. The focus of the fund is on innovation and transformation in South Africa.

“Seed capital is the lifeblood of innovation and entrepreneurial growth,” said Ketso Gordhan, CEO of the SA SME Fund. “Without it, many great ideas would never see the light of day. 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. Our goal is to make sure these companies have a fair chance at success and scale in the local and global markets.”

The fund addresses a key gap in South Africa’s venture capital ecosystem, where later-stage investments, known as Series A and Series B, have historically attracted more funding.

Said Patrick Krappie, acting CEO of TIA: “Governments across the globe play a crucial role in fostering innovation ecosystems, and South Africa is no different. The partnership with SA SME Fund aims to bolster funds towards start-ups and SMMEs through a fund of funds approach. 

“We understand that early-stage ventures, especially those grounded in technology, need a supportive environment to thrive. The Seed Fund of Funds will catalyse a wave of new startups by enabling them to transition from ideas to viable enterprises.

“This presents an opportunity for the fund to play a catalytic role in developing the country’s seed stage funding ecosystem, building the foundations that will deepen investment into the innovation economy and placing the venture capital industry on sustainable footing for the future.

“The support by the DSI, through its Innovation Fund, to both TIA and the SA SME Fund has been instrumental in the establishment of this fund, with the view to create a funding platform for seed stage VC funds.”

Gladwyn Leeuw, CEO of E Squared Investments, highlighted the fund’s strategic importance: “At E Squared, our mission is to empower responsible entrepreneurs driving transformative change. By making strategic capital accessible, we hope to foster innovation and ensure South Africa’s tech sector reflects its diversity. 

“This initiative aligns with our vision to be a leading early-stage investor, contributing to entrepreneurial activity and meaningfully impacting millions of lives. By focusing on both innovation and transformation, this fund is ensuring that the future of South Africa’s tech sector reflects the diversity and talent of its people.”