Grindstone Ventures - Afrikan Heroes

A New $6.5m Fund For South African Startups Launched By Grindstone Ventures

November 10, 2021

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.

*Catherine Young, Managing Partner at Grindstone Ventures*

“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.
Read also Goodwell Investments Backs Kenyan Lending Startup Asante In A $7.5m Series A Funding Round

“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

Egyptian Edtech Startup, OTO Courses, Secures $400k Funding Round From EdVentures

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

South African Startups Get Newest VC Fund In Town — Grindstone Ventures. How To Apply

August 4, 2020

South Africa looks to consolidate its lead on the number of VC funds present in the country and in Africa, at large. Cape Town and Johannesburg based business accelerator, Grindstone has launched a new Venture Capital Fund, Grindstone Ventures, dedicated to providing early-stage equity funding to its cohorts of companies and alumni. By far, this is certainly going to increase the number of funds available to local startups at a time when the coronavirus has held off North American, European and Asian investors who accounted for more than 80% of all VC funds in Africa between 2014 and 2019.

“Linking a funding vehicle to our Accelerator model complements the Knife Capital value chain approach where companies can be de-risked before raising follow-on capital from our Series A and later-stage funds. The Grindstone Programme is essentially a thorough due diligence exercise to identify the best opportunities — already narrowed down from hundreds of applications,” Andrea Bӧhmert, Partner at Knife Capital said.

What Needs Would Grindstone Ventures Meet?

Grindstone Ventures, which is part of Grindstone Accelerator will be open-ended, investing in all categories of early stage startups.
However, it should be noted that the fund will be made available to startups that have participated in the Grindstone Accelerator programme, meaning that Grindstone Accelerator will, for a long time, be backing startups with funds at the end of every Grindstone Accelerator programme, instead of only providing guidance and knowledge to startups.
The latest fund’s lowest investment ticket size is R5-million ($288k) and it targets scalable innovation-driven startups. The fund will most likely participate in investments alongside other Angel Investors and Corporate VCs which may therefore see it increase its investment size.
The fund will not stop at only investing. It will also assist startups in their growth efforts, and management if necessary; as well as provide a network where entrepreneurs within its cohorts can benefit from among themselves or even mentorship and guidance by established business leaders.

“A few of our past Grindstone entrepreneurs have subsequently exited their businesses and became VC Investors with Knife Capital. We are now starting to teach our investee companies to think like investors early on — because we back them to succeed,” says Böhmert.

Nevertheless, given that startups that participate in the Accelerator programme are now given funds (lowest $288k) at the end of the programme, the criteria for selection to the accelerator may be stiffened.
However, the quality of previous participants in the accelerator has never been in doubt. Companies which have previously been through Grindstone Accelerator are relatively performing well and have raised funding, including radar startup iKubu; augmented reality animation & gaming company SeaMonster; online payment gateway Payfast; financial inclusion business Picsa; geospatial data analytics company Locstatand on-demand grocery delivery service OneCart. Knife Capital invested in ticketing solutions provider Quicket and warehouse management software company Granite via its SARS Section 12J Venture Capital Company: KNF Ventures.

What Does Grindstone Accelerator Do And How Can Startups Participate In The Program?

Grindstone Accelerator is a structured entrepreneurship development programme that is jointly owned by leading venture capital fund manager Knife Capital and market access specialist Thinkroom Consulting.
The programme assists South African SMEs with proven traction through an intensive year-long review of their strategies and provides them with the necessary support to build a foundation for growth to become investable, sustainable and exit-ready.
During the programme, key growth gaps are identified and addressed which can open up early-stage funding opportunities in order for these startups to accelerate market access.
Keet van Zyl, Partner at Knife Capital says the first Grindstone Ventures investments are imminent.

“The initial capital contributions are from Knife Capital, Thinkroom and our programme partners, but encouragingly, past Grindstone cohort entrepreneurs are coming on board and respected Angel Investors in the SA startup ecosystem are looking to invest. We already identified the first investment opportunities.”

The new Grindstone Accelerator cohorts 6 and 7 of ten companies each in Cape Town and Johannesburg are currently being finalised and will be announced soon.

To be eligible to join Grindstone, the company needs to be:

A South African registered company
Post-revenue with some customer traction
A dynamic team of awesome people
Innovative business offering with a clear competitive differentiaton.
Scalable business model’

Interested South African startups can always check this link for when the next edition of the cohort will open; or contact the company for more information through: www.knifecap.com or follow them on Twitter: @KnifeCap @GrindstoneXL @KNF_VC

Does This Stop Knife Capital From Investing In Other Companies Outside The Grindstone Accelerator?

Aside co-hosting the accelerator program, Knife Capital is also a later stage VC investing in startups outside its accelerator cohorts. The VC had, last year, made later stage investments in Snapplify, a Cape Town-based content and media technology solutions provider which focuses on distribution and mobile publishing. It is noteworthy that Knife Capital was not part of the startup’s seed financing.