In what’s sure to be a significant boost to South Africa's tech ecosystem, a consortium of public and private partners has launched a $17 million (ZAR300 million) Seed Fund of Funds designed to provide critical early-stage capital to emerging technology startups in the country.
This initiative, led by the SA SME Fund, the Department of Science and Innovation (DSI), the Technology Innovation Agency (TIA), and E Squared Investments, aims to fill a crucial funding gap in the nation’s startup ecosystem, supporting up to 50 startups with the resources they need to scale and succeed.
Seed Fund of Funds: Giving South African Early-Stage Startups a Leg Up
The fund aims to support promising technology-driven startups, with the capital distributed through experienced fund managers who specialize in identifying high-potential businesses in South Africa’s growing tech sector.
“Seed capital is the lifeblood of innovation and entrepreneurial growth. Without it, many great ideas would never see the light of day,” said Ketso Gordhan, CEO of the SA SME Fund. “By injecting capital at this critical early stage, we are not just funding startups – we are cultivating the next generation of industry leaders.”
Historically, South Africa’s venture capital ecosystem has favored later-stage investments, leaving early-stage startups with limited resources. The Seed Fund of Funds aims to bridge this gap by focusing exclusively on the foundational stages of entrepreneurial development.
According to Patrick Krappie, acting CEO of TIA, “The partnership with the SA SME Fund aims to bolster funds towards start-ups and SMMEs through a fund of funds approach.” Krappie added, “The Seed Fund of Funds will catalyse a wave of new start-ups by enabling them to transition from ideas to viable enterprises.”
A New Dawn for the Next Generation of South African Startups?
The $17 million fund is strategically designed to foster a sustainable and innovation-led economy in South Africa. By targeting early-stage tech startups, the fund seeks to support entrepreneurs who have the potential to scale locally and globally, contributing to job creation and economic transformation.
“South Africa has no shortage of brilliant minds, and this fund will ensure that more of them have the resources they need to succeed,” Gordhan emphasized.
The five assigned fund managers will provide financial backing and offer mentorship and strategic support to help these ventures navigate the competitive tech landscape.
Krappie further highlighted the importance of early-stage funding in developing a robust entrepreneurial environment: “Governments across the globe play a crucial role in fostering innovation ecosystems, and South Africa is no different. This presents an opportunity for the fund to play a catalytic role in building the country’s seed-stage funding ecosystem.”
Conclusion
While we’re yet to see if this new Seed Fund of Funds will be a transformative step in South Africa’s VC landscape, it’s certainly laying down a serious marker for its continued efforts to become a regional hub for tech and innovation.
Gladwyn Leeuw, CEO of E Squared Investments, expressed optimism about the fund’s potential impact: “By supporting early-stage ventures, we empower entrepreneurs to build scalable businesses that can make a real difference. This initiative is about more than funding; it’s about creating a sustainable innovation-driven economy.”
By bridging the gap for early-stage startups, the fund could unlock a new wave of innovation. Its success will be measured by the startups it helps launch and its long-term impact on the South African economy.
