To support early-stage SA startups, new $17.3 M “Seed Fund of Funds” launched

A ZAR300 million (US $17.3 million) “Seed Fund of Funds” has been launched by the SA SME Fund, the Department of Science and Innovation (DSI), its affiliate the Technology Innovation Agency (TIA), and impact investor E Squared Investments with the goal of giving crucial early-stage capital to South African tech startups.

According to recent media reports, there are forecasts indicating that the amount of venture capital available in the South African tech ecosystem will rise in the upcoming years as creative de-risking models—such as funds of funds—draw in more institutional investment.

That has already happened, as a new ZAR300 million “Seed Fund of Funds” has been established with the intention of investing through seasoned fund managers in at least 50 technology-driven startups, emphasizing innovation and transformation in South Africa.

“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,” said Ketso Gordhan, CEO of the SA SME Fund.

“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.”

In South Africa’s venture capital ecosystem, where later-stage investments like Series A and Series B have traditionally drawn more funding, the fund fills a significant void.

“The partnership with SA SME Fund aims to bolster funds towards start-ups and SMMEs through a fund-of-funds approach,” said Patrick Krappie, acting CEO of TIA.

“We understand that early-stage ventures, especially those grounded in technology, need a supportive environment to thrive. The Seed Fund of Funds will catalyze 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 a sustainable footing for the future.”