New early-stage Venture Capital Fund to back cohort companies launches

South African based business accelerator, Grindstone has launched a new Venture Capital Fund, Grindstone Ventures, dedicated to providing early-stage equity funding to its cohorts of companies and alumni.

Grindstone Accelerator is a structured entrepreneurship development programme that is jointly owned by leading venture capital fund manager Knife Capital and market access specialist Thinkroom Consulting.

The programme assists South African SMEs with proven traction through an intensive year-long review of their strategies and provides them with the necessary support to build a foundation for growth to become investable, sustainable and exit-ready.

Grindstone Ventures is an open-ended venture capital fund structure, set to invest up to R5-million per opportunity

During the programme, key growth gaps are identified and addressed which can open up early-stage funding opportunities in order for these startups to accelerate market access.

It must be noted that the availability of risk capital remains one of the main challenges to the growth of small and medium-sized enterprises (SMEs) in South Africa.

Andrea Bӧhmert, Partner at Knife Capital explains that the availability of risk capital is addressed throughout the programme.

“Linking a funding vehicle to our Accelerator model complements the Knife Capital value chain approach where companies can be de-risked before raising follow-on capital from our Series A and later-stage funds. The Grindstone Programme is essentially a thorough due diligence exercise to identify the best opportunities – already narrowed down from hundreds of applications,” she adds.

Venture Capital Fund

Grindstone Ventures is an open-ended venture capital fund structure, set to invest up to R5-million per opportunity in scalable innovation-driven ventures – likely in co-investment arrangements with Angel Investors and Corporate VCs.

Not only will the Venture Capital fund providing assistance and help small and medium enterprises grow but it also will facilitate the growth of a community of business leaders to help one another to grow their businesses.

In essence, all future Grindstone Accelerator cohort companies will obtain a stake in Grindstone Ventures, thereby creating a vested interest in each other by a community of high-growth scale-ups

“A few of our past Grindstone entrepreneurs have subsequently exited their businesses and became VC Investors with Knife Capital. We are now starting to teach our investee companies to think like investors early on – because we back them to succeed,” says Böhmert.

Some of South Africa’s best scale-up companies have been through Grindstone, including radar startup iKubu; augmented reality animation & gaming company SeaMonster (see this story); online payment gateway Payfast; financial inclusion business Picsa; geospatial data analytics company Locstat  and on-demand grocery delivery service OneCart. Knife Capital invested in ticketing solutions provider Quicket and warehouse management software company Granite via its SARS Section 12J Venture Capital Company: KNF Ventures.

Keet van Zyl, Partner at Knife Capital says the first Grindstone Ventures investments are imminent.

“The initial capital contributions are from Knife Capital, Thinkroom and our programme partners, but encouragingly, past Grindstone cohort entrepreneurs are coming on board and respected Angel Investors in the SA startup ecosystem are looking to invest. We already identified the first investment opportunities.”

The new Grindstone Accelerator cohorts 6 and 7 of ten companies each in Cape Town and Johannesburg are currently being finalised and will be announced soon.

Read more: Sea Monster bags $1-million investment
Read more: Cape Town startup SweepSouth raises over R50m in new funding round
Read more: Entrepreneur-driven Venture Capital Fund E4E Africa launches in SA

Featured image:  Keet van Zyl and Andrea Bohmert at Grindstone ‘FIND-MAKE-GROW-REALISE’ workshop (Supplied)