The SA SME Fund, which brings together government and business to stimulate economic growth has secured over $30m (R600 million) Venture Capital Fund. The standalone investment vehicle is pleased to announce that this amount exceeds the fund’s initial target of R500 million.
The VC FoF’s appeal to institutional and pension funds establishes it as a pioneering force in the venture capital asset class. Notably, the SA SME Fund, USAID, and the Department of Science and Innovation have contributed a first-loss capital layer. Additionally, the VC FoF has received investment from the Consolidated Retirement Fund for Local Government, represented by Sukha and Associates.
Adrian Gore, the chairperson of the SA SME Fund, expressed his contentment with the accomplishment. He emphasized that the Fund has been instrumental in fostering the growth of the entrepreneurial and start-up ecosystem by offering transformative capital.
“The VC Fund of Funds launch supports the vision and establishes venture capital as a credible asset class in South Africa. I am excited to witness the impact we have made in realizing our country’s potential,” he said.
Ketso Gordhan, CEO of the SA SME Fund, stressed the significance of institutional and pension fund capital in the VC sector. He underscored the value of the first-loss capital layer as a characteristic found in recent SA SME Fund funds. This is because of its ability to mitigate investment risks and entice private sector involvement.
Keet van Zyl, the founder of Knife Capital, a partner fund of the SA SME Fund, expressed appreciation for the Fund’s backing. He recognized its substantial role in advancing the development of the South African VC sector.
“The Fund has become the largest institutional investor in VC funds in South Africa and has effectively doubled the size of the VC industry in our country through its investment program. We are grateful for their support of Knife Capital and look forward to a prosperous partnership together,” he said.
As per the VC FoF, its venture capital strategy will remain unchanged, concentrating on later-stage VC funds within South Africa. In addition to pursuing superior risk-adjusted returns, the VC FoF is dedicated to fostering industry transformation. Completing the initial commitments to VC funds is anticipated by June 2023.
It is worth noting that the SA SME Fund has already made investments in 16 different funds. These funds encompass various types such as venture capital, debt, and private equity. As a result, the SA SME Fund has been instrumental in mobilizing an additional R3 billion of capital for its partner funds.
This signifies a significant achievement in leveraging financial resources to support the growth of small and medium-sized enterprises (SMEs). These investments not only provide crucial funding but also serve as a catalyst for fostering entrepreneurship and driving economic development in South Africa.
The SA SME Fund aims to empower and support Black entrepreneurs with a capital of R1.4 billion. The support for this empowerment comes from 52 corporates and the public investment sector.
The Fund has allocated more than R630 million to VC fund managers and oversees an R300 million SME debt fund. This includes investments from the Gauteng government and the IDC. The inclusion of the VC FoF elevates the SA SME Fund’s total assets under management to R2.3 billion.