Grindstone Ventures has announced the launch of a $6.5 million (R100 million) female-led African venture capital fund to support South African technology startups that have completed or are currently participating in its Grindstone Accelerator program.

Grindstone Ventures will focus on SMEs that have a long-term impact and can provide meaningful employment. Between 30 and 50 early-stage companies with strong intellectual property, high growth potential, and the ability to secure follow-on capital from credible funders in the ecosystem, or produce long-term cash yields, will be targeted by the fund.

“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 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,” Catherine 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,” she added. ‘

Here Is What You Need To Know

• Catherine Young, Andrea Bohmert, Rapelang Rabana, and Grace Legodi lead Grindstone Ventures, an all-female team with extensive experience in value chain investing and a track record of scaling firms. Knife Capital, a venture capital firm, is in charge of certain aspects of fund management. The fund will invest largely in early-stage, female-led innovation and/or technology companies, and will serve as an early due diligence tool for the new fund.

• To synchronize the speed of negotiation and implementation with the investment stage, the conventional investment structure will be via a SAFE (simple agreement for future equity).

• The SA SME Fund made the fund’s first investment, according to Young.
   

“We were very excited about the vote of confidence the SA SME Fund’s investment showed in our vision for the fund, and our team. The SA SME Fund is known for its ability to spot and act on viable, exciting investment opportunities and as a first mover, we believe the confidence that they have shown will pave the road for other investors”, says Young.

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“We chose to support this fund because we believe it will fill a vital gap 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.” said Ketso Gordhan, CEO of the SA SME Fund.

• Knife Capital and Thinkroom Consulting own Grindstone Accelerator, which takes South African SMEs with demonstrated traction through an intensive year-long evaluation of their plans and gives them with the required support to become more investable, sustainable, and exit-ready.
   
• Radar startup iKubu (acquired by Garmin); augmented reality animation & gaming company SeaMonster (recently secured a $1-million investment from FirstRand’s Vumela Fund); online payment gateway Payfast (acquired by DPO Group last year); financial inclusion business Picsa; and on-demand grocery delivery service O have all gone through Grindstone. Knife Capital’s SARS Section 12J Venture Capital Business, KNF Ventures, invested in ticketing solutions provider Quicket and warehouse management software company Granite.

Grindstone Ventures fund Grindstone Ventures fund

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write