In a significant development for South Africa’s startup technology sector, the SA SME Fund, the Department of Science and Innovation (DSI), along with the Technology Innovation Agency (TIA) and impact investor E Squared Investments, have launched a R300 million Seed Fund of Funds. This fund is aimed at providing critical early-stage capital to technology-driven startups.
The initiative targets funding for at least 50 startups, with experienced fund managers at the helm, prioritizing innovation and transformation within South Africa.
Ketso Gordhan, CEO of the SA SME Fund, underscored the importance of seed funding as a key driver of entrepreneurial success: “Seed capital is the lifeblood of innovation and entrepreneurial growth. 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.”
This fund aims to address a long-standing gap in South Africa’s venture capital ecosystem, where later-stage investments, such as Series A and Series B, have historically received more attention and funding.
The Technology Innovation Agency (TIA) has played a crucial role in driving this initiative. Patrick Krappie, acting CEO of TIA, stated: “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.”
Krappie also emphasized the importance of support from the DSI: “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 strategic impact of the fund: “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. Partnering with experienced fund managers and leveraging synergies with entities like the SA SME Fund, we are confident in driving the success of numerous tech start-ups, paving the way for sustainable economic growth and transformation. 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.”
The partners involved in the fund believe that by supporting entrepreneurs and small businesses, the initiative will help create jobs, following global trends where tech companies are major job creators.
With a focus on high-impact innovation, the R300 million investment represents a major milestone in bolstering South Africa’s venture capital landscape. The fund is set to allocate capital to at least five skilled fund managers, who will drive the growth of numerous technology startups, empowering entrepreneurs and pushing the boundaries of innovation over the next few years.
