South Africa: Grindstone launches $31.2 million fund for African startups

Grindstone Ventures has launched a new venture capital fund of 500 million rand, approximately $31.2 million, in South Africa aimed at African tech startups looking to bridge the gap between seed funding and Series A. The initiative is in partnership with Knife Capital and Thinkroom.

The fund aims for an initial close of 150 million rand, around $9.3 million, and plans to build a portfolio of 15 to 20 companies. Most investments are expected to be made in South Africa, with an openness to selected opportunities in other markets across the continent.

Grindstone targets companies that have already demonstrated commercial potential but are still too small to attract funding from large institutional investors. The fund will be able to invest from seed stage up to Series A and will reserve part of its resources for follow-on rounds for the top-performing companies.

Beyond funding, selected companies will receive support in strategy, governance, market access, fundraising preparation, and exit scenarios. The program leverages the acceleration ecosystem developed by Grindstone, which evaluates over a thousand companies each year.

A fund focused on scaling up

The new vehicle extends a previous fund that invested in seven companies. Several of these, including Locstat, Welo, and AgriLogiQ, have since raised capital from international investors, while Grindstone indicates it is working towards its first exit to return capital to its subscribers.

The company states it aims to prioritize businesses that can quickly convert commercial traction into sustainable growth. The fund also intends to maintain significant stakes and concentrate more capital on companies that demonstrate the best performance.

Grindstone simultaneously maintains diversity goals within its portfolio. The manager aims for at least 50% of companies to be owned by black entrepreneurs and seeks to enhance the representation of women among founders and executive teams.