South African venture capital firm, Knife Capital, has successfully concluded its African Series B expansion fund, known as Knife Fund III, with a total value of R941 million (approximately $50 million USD). The fund’s primary objective is to provide support to African innovation-driven companies, specifically focusing on high-growth scalable South African B2B technology firms that display potential for impact and substantial returns through exit strategies.
This initiative addresses a critical funding gap that promising African startups often face after reaching the Series A funding stage. Despite their potential, these startups struggle to secure sufficient capital to further scale and globalize their innovations.
Knife Fund III secured investment from a diverse range of entities, including the International Finance Corporation (IFC), the Mineworkers Investment Company (MIC), the SA SME Fund, Standard Bank, AfricaGrow, and various other entities. These co-investment partners not only provide capital but also open doors to alternative funding mechanisms and follow-on investments, enhancing the growth prospects of the portfolio companies.
Keet van Zyl, co-founder of Knife Capital, expressed satisfaction with the investor base, emphasizing their shared interest in promoting venture capital investments in Africa. He noted that raising a venture capital fund in Africa is a challenging journey, but the outcome exceeded expectations.
Knife Capital’s reputation for exit-centric business development and its history of preparing South African technology startups for strategic acquisitions have contributed to its credibility. The firm has successfully divested its entire Fund I, a noteworthy accomplishment in the African venture capital landscape.
The fund is already collaborating with successful entrepreneurs across the continent. It has invested in companies like DataProphet, an AI-enabled process optimization firm, and Kasha, a digital health access platform. The fund’s pipeline is reportedly robust, with several transactions in various stages of finalization.
Opinion:
Knife Capital’s successful fundraising for its African Series B expansion fund is a significant boost for the African startup ecosystem. This infusion of capital will not only provide growth opportunities for startups but also bolster investor confidence in the continent’s venture capital landscape. It’s heartening to see local and international entities collaborating to support innovation and entrepreneurship in Africa.