South African Treasury announced on Wednesday plans to create a fund for local start-ups that are mushrooming everywhere.
“Together with Ministers Zulu and Naledi Pandor, we are setting up a fund for Small Business Enterprise development that focuses specifically on start-ups,” said Malusi Gigaba, Minister of Finance, in parliament, where he was delivering the 2017 medium-term budget policy statement.
“The Government Technical Advisory Centre is assisting us to operationalise the fund.”
Gigaba didn’t reveal how much will national treasury set aside for the fund to assist start-ups.
South Africa has various start-ups that have managed to raise millions privately and are thriving such as IoT.nxt, Prodigy Finance, Locumute, WhereIsMyTransport, Domestly, etc.
Despite some of these start-ups getting funding from private investors some are still struggling to grow without capital funding.
Prodigy Finance, an international FinTech platform that has developed the world’s first borderless credit model, today announces a R3.19 billion fundraise.
This includes a R532 million Series C equity round led by venture capital firm Index Ventures, with participation from Balderton Capital and AlphaCode; and a R2.66 billion debt facility led by a global investment bank.
Prodigy Finance is a diamond member of AlphaCode, a club for FinTech entrepreneurs.
US-based Quona Capital, which is a manager of the Accion Frontier Inclusion Fund worth $141 million and Netherlands-based Velocity Capital sees value in South Africa’s fintech start-up, Yoco.
Both fintech-focused institutional investors have invested an undisclosed amount into Yoco and the funding details were scant.
Yoco said the new capital will help it to grow its national footprint, launch new fintech services and lay the groundwork for international expansion in 2018.
Yoco, which competes with Standard Bank-owned Snapscan and iKhoka, enables SMEs to accept card payments and provides card readers, and free point-of-sale and business intelligence tools to its 14 000 South African merchants.
It claims to currently process over R1 billion transactions annually.