The success of small businesses needs to be a high priority for everyone. In particular, success must be a priority for those who are decision-makers. This includes CEOs, government and lawmakers. In South Africa, these decision-makers have come together to create the SA SME Fund.
Supporting the growth of small to medium-sized enterprises (SMEs) is crucial to the growth of South Africa’s economy. This allows businesses to grow, innovate and create jobs. Currently in South Africa, there are over 3 million SMEs but not all have had financial support.
In this article we look at the SA SME Fund, what its purpose is and how it provides funding to small businesses in South Africa.
What Is The SA SME Fund?
The fund is a registered investment vehicle. It’s managed by an executive management team which reports to an independent board of directors. The fund also has an independent investment committee which is responsible for approving investments into funds that enable the fund to fulfil its mandate.
The fund was established by members of the CEO initiative. The initiative is a collaboration between government, labour and business. It aims to address the press challenges to the country’s economic growth by supporting the SME sector.
What Does The SA SME Fund Do?
The fund allocates investment capital to its accredited fund managers. This includes venture capital or growth-oriented equity funds which invest directly in scalable SMEs. The SMEs which are funded demonstrate great potential for growth and sustainable employment creation.
The SA SME Fund is mandated through its partner funds to invest 50% of its capital into black-owned and managed businesses. 25% is allocated to Indian and Coloured owned and managed businesses, with the remaining 25% being at the discretion of the fund manager.
The SA SME Fund typically funds businesses with an enterprise value of less than R100 million.
The organisation invests in two types of funds: venture capital funds (seed, pre-revenue and post-revenue) and growth funds (revenue-generative and profitable).
The SA SME Fund Investments
The organisation has R 1,24 billion in investment capital. The SA SME Fund has partnered with various venture capital, growth, and industry-building initiatives.
SA SME Fund Venture Capital Partners
Knife Capital
Knife Capital is a Cape Town-based venture capital investment manager. The organisation accelerates the international growth of African innovation-driven businesses.
OneBio
OneBio is also a venture capital firm and studio. The company invests in companies that are seeking to improve human planetary health.
Savant
Savant is a hardware technology incubator that provides business development support. The company partners with highly skilled science and technology inventors on their start-up journey.
4Di Capital
4Di Capital is a venture capital firm based in Cape Town that focuses on early-stage technology investments in sub-Saharan Africa.
University Technology Fund
The University Technology Fund works in partnership with South African universities to commercialise technologies and business concepts that come from the institutions.
Digital Africa Ventures
Digital Africa Ventures focuses on digital technology innovations. The company focuses on innovations that are research-driven and are ready to be taken to the market.
Grindstone Ventures
Grindstone Ventures provides start-up businesses with a supportive, collaborative environment. This enables the businesses to grow and be successful.
SA SME Fund Growth Partners
PAPE Fund Managers
PAPE is a private equity fund manager that invests long-term equity risk capital into South Africa mid-cap unlisted enterprises.
SummerPlace Equity Partners
SummerPlace is a black female-owned fund manager. The organisation invests in established businesses that are ready for the market and need capital to scale.
Spartan
Spartan is a South African company that provides growth finance, specialised asset finance, and working capital finance to small businesses.
Masisizane Fund
The Masisizane Fund is an initiative by Old Mutual aimed at providing small businesses with financing, business support and development for commercialisation.
A2Pay
A2Pay works to increase the economic capabilities of informal businesses through digitisation, finance, training, and job creation.
SA SME Fund Industry Building Initiatives
SAVCA Fund Manager Development Programme
The programme is meant to drive transformation within small businesses through mentorship and education initiatives.
Grindstone
The Grindstone accelerator aims to help innovate South African start-ups scale globally.
These are the initiatives that are funded through the SA SME Fund. The organisation has also partnered with a range of companies such as FNB to ensure that small businesses get access to funding.
The organisation also launched the #PayIn30 initiative. The programme seeks to get large cooperatives to pay their SME suppliers within 30 days. This aims to help small businesses with the constraints of low cash flow.
Note: If you need to find out more about funding from the SA SME Fund, contact the organisation at info@sasmefund.co.za.
South Africa has many funding sources for small businesses. It’s all about finding the right funding platform for your business needs.
For more information on funding, visit the SME South Africa website.
