New $6.5 M fund established for graduates of the Grindstone Accelerator in South Africa

Grindstone Ventures, a South African venture capital firm, has announced a ZAR 100 million (US $6.5 million) fund committed to primarily investing entrepreneurs who have completed or are participating in the Grindstone Accelerator programme.

Grindstone Accelerator is a structured entrepreneurial development programme co-owned by VC fund manager Knife Capital and Thinkroom Consulting and supported primarily by the SA SME Fund.

Grindstone is a one-year equity-free structured entrepreneurship development programme that helps high-growth innovation-driven SMEs become sustainable and fundable by providing knowledge, networks, market access opportunities, and funding readiness through growth measurement, gap analysis, and value-adding interventions.

Grindstone cohorts have seen a 52 percent rise in revenue on average throughout the one-year programme, with a 30 percent boost in business efficiency across all functional areas.

The majority of Grindstone cohort firms have raised significant follow-on capital, and several have successfully exited locally and internationally.

Grindstone Ventures, a female-led fund focused on post-seed investments in early-stage technology firms headed by women, has been launched by some of the accelerator’s partners. The SA SME Fund has made its first investment in the fund, which will target 30 to 50 early-stage firms with strong intellectual property, significant growth potential, and the capacity to secure follow-on capital from reputable funders in the ecosystem or produce sustainable cash flow.

Catherine Young, Andrea Bohmert, Rapelang Rabana, and Grace Legodi lead Grindstone Ventures, an all-female team with extensive expertise in value chain investing and a track record of expanding firms. Knife Capital is in charge of several aspects of fund management.

“Our aim is to provide superior returns to investors and to create sustainable yields over the long term. While the tech ecosystem deal space across Africa has shown an exceptional growth over recent years, there remains a gap in the market for post-seed, pre-Series A funding across the continent. Our vision is to fill this gap and prepare these businesses for larger funding rounds, exponential growth and to ultimately exit,” Young, managing partner at Grindstone Ventures, said.

“Our secret sauce lies in our robust Grindstone Accelerator, which enables innovation-driven tech startups to access knowledge, networks, funding and markets. Typically, an accelerator follows a fund, but Grindstone Ventures is turning this model on its head. Grindstone Ventures was launched as a result of the excellent pipeline of businesses emerging from Grindstone Accelerator, which provide investors with a de-risked opportunity for returns.”

The SA SME Fund’s chief executive officer (CEO), Ketso Gordhan, believes the fund will cover a critical vacuum in the post-seed market.

“As a fund, it is as innovative as the startups that it will fund. The team is deeply experienced, has a proven track record and we are excited about the opportunity and impact that they will have on this market. Watch this space,” he said.