Grindstone launches a Venture Capital Fund to support new early-stage start-ups

The launch of a new venture capital fund has been announced by the South African-based business accelerator Grindstone which provides early-stage equity funding to its cohorts and alumni.

The programme assists South African SMEs with proven traction through an intensive year-long review of their strategies and supports them to build a foundation for growth to become investable and sustainable. Grindstones emphasised that during the programme, key growth gaps are identified and addressed which can open early-stage funding opportunities for start-ups to accelerate market access.

“Some of South Africa’s best scale-up companies have been through Grindstone, including radar start-up iKubu; augmented reality animation & gaming company SeaMonster; online payment gateway Payfast; financial inclusion business Picsa; geospatial data analytics company Locstat  and on-demand grocery delivery service OneCart,” says Keet van Zyl, Partner at Knife Capital.

According to van Zyl, Knife Capital has also invested in ticketing solutions provider Quicket and warehouse management software company Granite via its SARS Section 12J Venture Capital Company – KNF Ventures.

Andrea Bӧhmert, Partner at Knife Capital commented, “It must be noted that the availability of risk capital remains one of the main challenges to the growth of Small and Medium Enterprises (SMEs) in South Africa.” She explained that the availability of risk capital is addressed throughout the programme.

“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,” Bohmert said.

Venture Capital Fund

Grindstone Ventures is an open-ended venture capital fund structure which is set to invest up to R5 million per opportunity in scalable innovation-driven ventures, such as co-investment arrangements with Angel Investors and Corporate VCs.

Böhmert explained that the Venture Capital fund does not only help SMEs grow but, it also facilitates the growth of a community of business leaders to help one another to grow their businesses.

“A few of our past Grindstone entrepreneurs have subsequently exited their businesses and became VC Investors with Knife Capital,” she said. Böhmert added that they were now starting to teach their investee companies to think like investors at an early stage because they back them to succeed.

Keet van Zyl said that the first Grindstone Ventures investments were imminent. He also explained, “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 start-up ecosystem are looking to invest.”

He concluded by saying, “The new Grindstone Accelerator cohorts 6 and 7 of ten companies each in Cape Town and Johannesburg and are currently being finalised and will be announced soon.”

Originally written by Ventureburn

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