Editor’s note: African-Startups is a sister publication of EU-Startups, bringing trusted coverage of startups, venture capital, and innovation across Africa.
Cape Town-based Grindstone Ventures has launched a $31.1 million (R500 million) venture fund targeting high-growth, technology-enabled businesses across Africa, from Seed through Series A.
The fund has been established in partnership with Knife Capital and Thinkroom, and is aimed at businesses that have moved past early validation but still struggle to secure the capital needed to scale and attract institutional investors.
“That is Africa’s missing middle. Our opportunity is not simply to provide more capital, but to identify exceptional businesses earlier, invest at a point where capital remains scarce, take meaningful ownership positions and work actively with founders to build companies capable of scaling, attracting institutional capital and ultimately delivering realisable returns,” said Thandiwe Maqetuka, CEO of Grindstone Ventures.
Grindstone Ventures builds on its earlier Fund I, which invested in seven portfolio companies, including Locstat, Welo and AgriLogiQ, all of which went on to raise further equity funding from international investors.
The new fund is targeting a first close of R150 million and plans to build a portfolio of 15 to 20 businesses, primarily in South Africa and selectively elsewhere on the continent.
More than 1,000 businesses are screened annually through the wider Grindstone ecosystem, with around 50 taking part in accelerator programmes each year.
“The evolution from Seed to Series A remains one of the clearest gaps in the African venture ecosystem,” said Keet van Zyl, co-founder of Knife Capital.
Grindstone Ventures invests in early-stage companies, from Seed to Series A, and can provide more funding to those that perform well. The fund aims to take minority stakes in businesses and support them with strategy, growth, market access, and exit preparation.
The focus is on achieving real returns through successful exits, not just increasing paper valuations. They are finalising an exit to return capital to investors and aim to have at least half of their portfolio companies be black-owned, with balanced gender representation among founders and leadership teams.
