South Africa: SA SME Fund backs new venture capital vehicle

Posted on: 19 July, 2020 at 12:46 PM

Entrepreneurs for Entrepreneurs Africa (E4E), a new venture capital fund aimed at building internationally successful companies grown by South African entrepreneurs, officially launched this week.

E4E, backed by a founding investment from the SA SME Fund, is unique as a venture capital fund in that it is run entirely by experienced entrepreneurs. E4E’s six founding partners have had extensive success in the local and international startup ecosystem, both as entrepreneurs and investors. This means the E4E team has first-hand experience of the kinds of challenges likely to face the startups in which it invests, speaks the same language as the entrepreneurs, and can actively help accelerate the growth of their businesses.

E4E will support business models that bring innovative solutions to critical sectors of the South African economy, including financial services, healthcare, and the sustainable agriculture value chain, as well as those with the capacity to scale inside and outside of South Africa. The team will pay particular attention to supporting black and female participation in early-stage ventures, either as founders or as key players joining the scaling phase of the investee companies.

“We’re hitting the ground running,” says Philani Sangweni, managing partner at E4E Africa, “We are starting our fund with a R135 million (about $8 million) first close and aspire to raise significantly more funds.”

“We’re also making significant progress on our first investments,” he adds. “Prior to establishing as a fund, we were entrepreneurs, angel investors and many of us mentored early-stage ventures. This means we have a well-developed pipeline in place.

“As a result, we have approved two investments and expect to be able to close several other investments in the coming months. We have been really impressed with the quality of the entrepreneurs and business that we are seeing.”

Besides the founding team of six, the fund draws on a larger circle of experienced entrepreneurs to act as mentors to selected ventures.

“We’re up and running, but still welcome experienced entrepreneurs and aligned institutional investors, locally and internationally, into our structure,” says E4E partner, Bas Hochstenbach.

“Entrepreneurial expertise, deep sector experience and relevant contacts are critical to the success of our entrepreneurs. Investors that bring this help build a healthy startup ecosystem and drive good returns on their own investments.”

“As part of our mandate to strengthen the South African economy, we were very keen to invest in a fund that brings together the power of a diverse group of experienced entrepreneurs,” says Ketso Gordhan, managing director of the SA SME Fund. “Experienced entrepreneurs really understand how to grow through the first hard years, and can deliver the skills and contacts that startups need to succeed.”

Aisha Pandor, a E4E partner and CEO of SweepSouth, says she is constantly approached by early-stage entrepreneurs seeking guidance, advice on funding options, and often in her role as a female role model. “It is great to be part of a structure that can really transfer the experience, skills and contacts my colleagues and I have built up over the years to the next generation of entrepreneurs.”

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