Start-ups, particularly those in technology, are key job creators. However, these startups are usually faced with financial hurdles. Providing essential capital to early-stage companies will help Africa tap into the innovation economy, fostering growth and resilience in the global tech landscape.

On October 1, a new $17.2 million (300 million rand) Seed Fund of Funds dedicated to technology start-ups was launched in South Africa. The fund, backed by the SA SME Fund, the Department of Science and Innovation, the Technology Innovation Agency (TIA), and E Squared Investments, aims to address a shortfall in early-stage capital for local start-ups.

Patrick Krappie, TIA’s acting CEO, stressed the government’s role in fostering innovation ecosystems. “The Seed Fund of Funds will catalyze a wave of new start-ups by enabling them to transition from ideas to viable enterprises,” Krappie said, adding that the fund would help place South Africa’s venture capital industry on sustainable footing.

The initiative aims to fund at least 50 technology-driven companies, focusing on innovation and transformation. Experienced fund managers will oversee the investments, ensuring that these start-ups have the resources to scale both locally and globally.

Ketso Gordhan, CEO of the SA SME Fund, highlighted the importance of seed funding, calling it the "cornerstone of entrepreneurial success" and the "lifeblood of innovation." He emphasized South Africa's wealth of brilliant minds and how the fund will help ensure more of them have the opportunity to succeed.

The launch of the fund is particularly timely as the country continues to grapple with high unemployment rates. As of Q2 2024, 8.4 million people (33.5%) remained unemployed, according to Statistics South Africa. This persistent challenge underscores the importance of fostering job creation, particularly in high-growth sectors like technology.

Start-ups have the potential to generate significant employment opportunities, particularly in innovative fields such as fintech, healthtech, and eCommerce, which are key drivers in South Africa's digital economy. With the new fund targeting at least 50 technology-driven companies, it can help reduce the country’s high jobless rate by empowering start-ups that contribute to both economic growth and job creation.

Hikmatu Bilali