Knife Capital has raised $10 million for its pan-African Series B expansion fund, Knife Fund III to fill a critical follow-on funding gap and fule the growth of African innovation-driven startups.
The round was led by Mineworkers Investment Company (MIC) as anchor investor alongside other local and international investors.
According to Nchaupe Khaole, Chief Investment Officer at MIC, “We believe that the impact of investment in small to medium scale enterprises on innovation, job creation and economic growth is crucial, and therefore urgent to unlock, especially right now. Our commitment brings to the table the investment, along with many of our strengths as an experienced player.”
The investments aim to fill the funding gap slowing down African startups at the early growth stages due to the series B funding crunch.
Successful entrepreneurs on the continent with world-beating innovations are simply under-funded to compete on the global stage. Therefore, while investments and investors are increasing globally, measured in terms of innovation potential, Africa remains under-capitalised.
The move aims to change the way local institutional investors approach venture capital investment to help startups scale and grow across the continent and internationally.
Knife Capital, the pre-eminent South African venture capital and growth equity investment firm with offices in Cape Town, London and Jersey currently manages Section 12J Venture Capital Funds: KNF Ventures I and II as well as select family office investments. Knife Capital previously managed Mark Shuttleworth’s HBD Venture Capital Fund to successful exit and closure. In completing its value chain investment approach, Knife Capital curates a pipeline of high-growth technology enabled SMEs through its Grindstone Accelerator programme.
“We gained much respect for the MIC team during the due diligence and negotiation process and look forward to the mutual learning journey ahead,” said Keet van Zyl, Partner at Knife Capital. “MIC is already proving themselves to be a value-adding partner that have the funds and experience to responsibly deploy capital as well as the vison to influence positive change in this emerging market,” he added.
Knife Fund III’s target is to raise USD50 million in order to be well positioned to directly invest behind the aggressive expansion of South African breakout companies and co-invest with other credible funders in companies across the rest of Africa. The focus will be on scalable business-to-business technology companies that have attractive exit optionality.
The Fund consists of two main funding vehicles: a USD-denominated limited partnership in Jersey and a ZAR-denominated limited partnership in South Africa, which will co-invest alongside one another in portfolio companies. MIC is investing in the ZAR-denominated partnership.