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Tech is the future and fostering innovation is in vogue. South Africa’s Technology Innovation Agency (TIA) is in agreement. According to a Business Day report, the agency is dedicated to helping grow innovation in the country has approved a R100-million venture capital fund to help VCs help fund startups.
According to the report, the agency — which received an allocation of R433-million in this financial year — has been under some strain questioning if this was part of its mandate. TIA was established in 2008 as an effort to bridge the innovation gad between ideas and executed products.
The agency’s CEO Simphiwe Duma confronts these questions saying that venture capital in SA works in a sense like private equity and that it was the agency’s job to help foster innovation.
“They say we shouldn’t do it (be involved in venture capital), but who else is doing it? We do it for technology innovation in South Africa. Venture capital in South Africa acts more like private equity.”
“The state should not be involved in commercialisation because (it forces them to) cherry pick, and so you do not allow innovation to happen.”
As this fund is meant to be a “funder of funds” the agency is currently in process of picking at least three venture capital firms from the private sector to award the R100-million to.
“There is a commitment of R100-million (from the board), and the proposal is to put this into at least three private sector venture capital funds (which) will invest these funds over a five-year period,” executive for industrial sectors Pontsho Maruping.
The selection process for the fund will be based on the VCs focus and whether or not that “aligned with TIA’s mandate”.
According to Keet van Zyl co-founder of Knife Capital (winner of SA best VC of the year) and co-founder of Angel investment hub AngelHub:
“The TIA VC Fund will enable continued momentum for entrepreneurship and innovation in South Africa. TIA catalysed successful research and development initiatives, but this could pave the way to creating real success stories through commercialisation. Other emerging markets effectively created VC industries through Government intervention (like Yozma in Israel) and it is encouraging that SA is starting to follow this trend.”