Press release from the SA SME Fund, the Technology Innovation Agency and E Squared Investments
01 October 2024
Johannesburg, – In a major boost to South Africa’s start-up technology sector, the SA SME Fund, the Department of Science and Innovation (DSI), along with its entity, the Technology Innovation Agency (TIA), and impact investor E Squared Investments have launched a R300 million Seed Fund of Funds aimed at providing critical early-stage capital to startups.
This initiative aims to fund at least 50 technology-driven startups through experienced fund managers, with a focus on innovation and transformation in South Africa.
Ketso Gordhan, CEO of the SA SME Fund, emphasised the role of seed funding as the cornerstone 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.”
The fund addresses a key gap in South Africa’s venture capital ecosystem, where later-stage investments, such as Series A and Series B, have historically attracted more funding.
TIA has been pivotal in driving this initiative. Patrick Krappie, acting CEO of TIA, said: “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. 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 in this Fund believe that supporting entrepreneurs and small businesses will help create jobs, following the global trend where one in five jobs in the US has been created by tech companies in recent times.
With a focus on high-impact innovation, this investment marks a significant milestone in strengthening South Africa’s venture capital landscape. As the fund prepares to allocate capital to at least five skilled fund managers, it is expected to drive the success of dozens of technology startups over the next few years, empowering entrepreneurs to push the boundaries of what’s possible.
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Media contacts:
Dani Cohen dani@prologconsulting.co.za / 082 897 0443
Sandra Sowray sandra@prologconsulting.co.za / 079 167 6863
About the SA SME Fund – https://sasmefund.co.za/
The SA SME Fund was set up as part of the CEO initiative, a collaboration between government and business to address some of the most pressing challenges to the country’s economic growth. The SA SME Fund was capitalised by 52 corporates and the Public Investment Corporation with R1,4 billion. It invests in funds that support and develop mainly Black entrepreneurs. In addition to the R1,4 billion fund, it has a R300 million SME Debt fund with Gauteng Government and the IDC as investors as well as a Fund of VC Funds of R795 million, with a focus on Series A and Series B investment.
About TIA – https://www.tia.org.za
The Technology Innovation Agency (TIA) is an entity of the Department of Science and Innovation (DSI), established in 2009, with a mandate to stimulate and support the development and exploitation of innovations to improve the quality of life for all South Africans. Its interventions are geared towards bridging the innovation chasm between research and commercialisation and plays a role an active funder, connector, facilitator and enabler. TIA plays an important role as an early-stage funder that serves to derisk early stage technologies to create a rich pipeline of investable opportunities for other follow-on funders in the ecosystem.
About E Squared – https://www.esquared.org.za
E Squared is a South African impact investor that supports start-ups and growing ventures driving both commercial and social returns. It provides entrepreneur-friendly, patient capital to businesses at all stages, from pre-seed to maturity, along with end-to-end business support through post-investment value creation programmes. Partnering for growth, E Squared takes a longer-term investment view and works alongside start-ups, incubators, accelerators, and investors to capture and nurture entrepreneurial talent. E Squared supports founders across all sectors to build businesses that create sustainable commercial value, attack poverty in a meaningful way, and address unemployment and inequality in South Africa.
