A new, R300-million fund has been launched to invest seed capital in promising tech start-ups in South Africa.

Called the Seed Fund of Funds, the new initiative is backed by the SA SME Fund, the department of science & innovation and its entity the Technology Innovation Agency (TIA), and “impact investor” E Squared Investments.

The fund will exclusively provide early-stage capital funding to local start-ups.

“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,” the parties said in a statement on Tuesday.

Ketso Gordhan, CEO of the SA SME Fund, said in a statement that seed funding is the “cornerstone of entrepreneurial success and the lifeblood of innovation without which many great ideas would never see the light of day”.

“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,” said Gordhan.

The founding parties said early-stage funding is a major gap in South Africa, where the venture capital ecosystem has historically attracted the lion’s share of investment into start-ups.

‘Crucial role’

“Governments across the globe play a crucial role in fostering innovation ecosystems, and South Africa is no different. The partnership with the 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,” said TIA acting CEO Patrick Krappie in the statement.

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“The Seed Fund of Funds will catalyse a wave of new start-ups 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.” — © 2024 NewsCentral Media