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SA SME Fund, TIA co-invest R350m in tech start-ups

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The SA SME Fund and government’s Technology Innovation Agency (TIA) have announced a public-private partnership to co-invest R350 million across three tech-focused venture capital funds.

The funds are: Savant Venture Fund, a hardware technology incubator and Fund Manager (in which two deals have already been pre-funded by TIA’s Seed Fund); the newly-established University Technology Fund (UTF); and OneBio Seed Investment Fund, a biotechnology-dedicated fund.

The current value of the fund commitments are as follows: R83.5 million to the OneBio Seed Investment Fund; R111.5 million to Savant Venture Fund; and an anticipated commitment of R152.5 million into the UTF for which the SA SME Fund anticipates receiving formal approval by the end of September.

The SA SME Fund is a private sector-led initiative born out of the “CEO Initiative”, a partnership between the South African government and CEOs to stimulate the economy and create jobs.

The shareholders of the fund are 50 of SA’s largest corporates and the Public Investment Corporation. The fund has R1.2 billion of investable capital, which it invests via partnerships with fund managers.

Savant is a commercially-focused hardware technology incubator and fund that provides bespoke business development support to start-ups with a focus on inventions rooted in innovative science and engineering technologies.

As a biotechnology early stage investor and company builder, OneBio’s vision is to stimulate biotech innovation and economic growth in Africa.

The SA SME Fund plans to set up a R150 million University Technology Fund to support the commercialisation of intellectual property developed at local tertiary institutions.

These fund managers will invest in a portfolio of early stage businesses and provide capital as well as other support to the entrepreneurs, to help them commercialise technologies and grow their businesses.

The SA SME Fund’s mandate to the three fund managers includes a requirement that they invest at least 50% of the fund into businesses owned by black entrepreneurs.

The parties signed a memorandum of understanding at the Innovation Summit in Cape Town last week.

Ketso Gordhan, CEO of the SA SME Fund, says: “We are hugely excited and energised by this partnership to support and invest in innovation, especially in black-owned start-ups and scale-ups in this space.

“This forms part of our commitment to support government, together with TIA, in stimulating and intensifying technological innovation to improve economic growth, create jobs and impact on the quality of life of all South Africans.”

Reaffirming the fund managers’ combined focus on bio-innovation and technology, Gordhan added: “We foresee that the intersection of biology and technology will be a critical component in positioning countries, communities, industries and people to harness the opportunities of the future and we see these funds as a key to unlocking those opportunities.”

Fuzlin Levy-Hassen, interim CEO of the TIA, says: “This new investment partnership is the result of the synergies and commitment that exist between government and the private sector. We are aligned in our vision of turning bright young minds into viable and sustainable business founders whose successes will create jobs and drive economic growth.

“The sophistication and creativity already evident in these businesses should make us proud as a country, and encourage us to further support innovation.”

The SA SME Fund and TIA also signed the legal agreements for the OneBio Seed Investment Fund, officially launching the only biotech-dedicated investment fund in SA.

Michael Fichardt, co-founder of OneBio, comments: “We are thrilled to be partnering with the SA SME Fund and TIA in launching this biotech investment fund.

“The fund will provide investment capital to seed early stage start-up companies. It will help to develop the country’s emerging biotech ecosystem and place South Africa at the front of this new age where we will see engineered biology disrupt many of the globe’s traditional industries.”

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