Grindstone Ventures has launched a R500 million (about US$31.2 million) venture fund aimed at helping high-growth African businesses secure the capital they need to scale. The fund will target companies from Seed to Series A, focusing on a stage where many businesses struggle to attract larger institutional investors.
Led by Thandiwe Maqetuka, the fund has been established in partnership with Knife Capital and Thinkroom. It follows the deployment of Grindstone Ventures Fund I, which invested in seven portfolio companies and helped catalyse further seed investment from South African funders.
The new fund is targeting a first close of R150 million (about US$9.4 million). It plans to build a portfolio of between 15 and 20 businesses, mainly in South Africa, with selected investments elsewhere on the continent.
Targeting Africa’s funding gap
The fund will invest in high-growth, technology-enabled businesses that have moved beyond early validation but still face challenges securing the capital needed to expand.
This stage remains a significant gap in Africa’s venture ecosystem. Keet van Zyl, Co-Founder of Knife Capital, said the transition from Seed to Series A continues to be one of the clearest funding gaps on the continent.
“The evolution from Seed to Series A remains one of the clearest gaps in the African venture ecosystem,” he said.
The need for capital comes as African technology funding faces continued pressure. While funding strengthened in 2025, Seed funding declined for a third consecutive year. This has left some businesses undercapitalised as they seek to move into their next stage of growth.
Maqetuka said the fund would focus on what she described as “Africa’s missing middle”. She said the opportunity was not only to provide funding, but to identify strong businesses early and work closely with founders to build companies capable of attracting larger pools of capital.
“That is Africa’s missing middle. Our opportunity is not simply to provide more capital, but to identify exceptional businesses earlier, invest at a point where capital remains scarce, take meaningful ownership positions and work actively with founders,” she said.
Supporting growth and focusing on exits
The fund will take meaningful minority positions in its portfolio companies and has capacity to provide follow-on funding to its strongest performers. Additional capital will be concentrated behind businesses that demonstrate strong performance.
Grindstone Ventures will also support companies with strategy, governance, commercial growth, market access, follow-on funding and exit readiness.
The partners bring experience in venture investment, entrepreneur development, acceleration and scaling technology businesses. More than 1,000 businesses are screened annually through the wider Grindstone ecosystem, while about 50 participate in accelerator programmes each year.
The fund will also place a strong focus on exits and generating actual returns for investors. Maqetuka said the strategy was designed to avoid relying only on paper valuations.
“We are building for liquidity from the outset. Paper valuations don’t return capital to investors, exits do,” she said.
Grindstone Ventures Fund I invested in seven companies, including Locstat, Welo and AgriLogiQ. The companies later raised additional equity funding from international investors. The fund is also finalising an exit that it says will return capital to investors.
The new fund will also seek to broaden participation in venture capital. It aspires for at least 50% of its portfolio companies to be black-owned, while pursuing gender-balanced representation among female founders and women in leadership.
“We don’t believe investors should have to choose between financial performance and building a more inclusive investment ecosystem,” Maqetuka said.
