R300-Million Seed Fund Launched to Boost South African Tech Start-Ups

A substantial R300-million fund has been introduced to provide essential seed capital to promising tech start-ups across South Africa.

Dubbed the Seed Fund of Funds, this initiative is backed by the SA SME Fund, the Department of Science & Innovation, and its Technology Innovation Agency (TIA) division, along with “impact investor” E Squared Investments. The fund’s objective is to exclusively offer early-stage capital funding to South African start-ups, helping them grow and succeed in the local and international arenas.

“This initiative aims to finance at least 50 tech-driven startups through skilled fund managers, focusing on both innovation and transformation within South Africa,” stated the involved parties on Tuesday.

According to Ketso Gordhan, CEO of the SA SME Fund, seed funding is essential for entrepreneurship and innovation, providing the critical resources that help novel ideas flourish. “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,” Gordhan emphasized.

Historically, early-stage funding has been scarce in South Africa, where the venture capital sector has primarily attracted investments in more established start-ups.

'Key Role' in Innovation

Patrick Krappie, acting CEO of TIA, added, “Governments worldwide play a pivotal role in nurturing innovation ecosystems, and South Africa is no different. Our collaboration with the SA SME Fund aims to amplify funding for start-ups and SMMEs using a fund-of-funds model. We recognize that early-stage ventures, especially those rooted in technology, require a supportive ecosystem to thrive.”