Good news for startups and small businesses across South Africa. A new R130 million (over $9.3m) fund is at stake, targeting only 10 startups, each of which must have a black founder. The new fund is from Cape Town-based venture capital firm, 4Di Capital and the SA SME Fund.
A Look At The Fund
- Cape Town-based venture capital (VC) fund with the launch of the R130-million fund aims to invest in at least 10 tech startups. Half of the R130-million will be targeted at startups with at least one black founder.
- The over R1.4-billion SA SME Fund is capitalized presently by 54 JSE-listed firms and R500-million from the Public Investment Corporation (PIC). The fund was launched under the CEO Initiative. 4Di Capital is one of eight funds that the SA SME Fund has invested in (see this story).
- 4Di Capital partner Justin Stanford noted that R125-million of 4Di Capital Fund III’s first close of R130-million was from SA SME Fund, the rest has been committed by the VC.
“We will be looking at options in terms of raising additional capital for the fund but for now there are no fixed plans yet — in principle though the fund is still open to new investment,” said Stanford.
4Di Capital’s new R130m fund is backed by R125m from the SA SME Fund
Who Can Access The Funds?
Stanford said the fund will follow the VC’s usual modus operandi, which is to target tech startups in the early and growth stages.
The fund is vertical agnostic but the VC will look at deals for example in:
- Insurtech
- Fintech
- Edtech
- Agritech, adding that the VC will look at a spread of both early and growth stage.
“It is designed to work together with our Exponential Fund as well, so will also co-invest in certain deals that match the mandates on both sides,” he added.
He added that the fund will invest in at least 10 companies and pointed out that the first few deals are already under consideration.
A portion of the SA SME Fund capital has been earmarked for companies that have founder teams which include black founders.
See Also: South Africa: How To Get National Empowerment Fund (NEF) To Support Your Startup
When asked how much exactly would go to startups with black founders, Stanford said while it is “difficult to predict” the exact amount that will be invested in the end, the VC fund will aim to invest “roughly half” of the R130-million in such firms.
4Di Capital is an independent and specialist seed, early and growth-stage technology venture capital fund manager based in Cape Town, South Africa with an office in Atlanta, Georgia, U.S.A., focusing principally on scalable South African and African technology opportunities.
Among others, the fund has already invested in the enterprise web platform, cloud scaling infrastructure, bio-mathematical health technology, and financial technology ventures.
The SA SME Fund, on the other hand, was established by members of the CEO Initiative — a collaboration between government, labour, and business to address some of the most pressing challenges to the country’s economic growth — as an avenue of support for the SME sector.
It allocates investment capital to accredited fund managers — venture capital or growth-oriented equity funds — that invest directly in scalable small and medium enterprises with the best potential for growth and sustainable employment creation in the South African economy.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.