South African startups with at least one black founder are set to benefit from half of ZAR 130 Bn unveiled by Cape Town-based venture capital firm 4Di Capital.
The investment comes as a sigh of relief for black-owned tech startups who have had a tough time accessing funding compared to their white counterparts.
A Survey done by Ventureburn earlier revealed that just nine percent of black-owned tech startups generate a revenue of above ZAR 1 Mn compared to 29 percent of their white counterparts.
Due to limited funds, just 10 percent of black startups can rent or own office space compared to 24 percent of white startups. The survey findings reveal that most black startups work from home (49 percent), remotely (16 percent) or incubator spaces (12 percent) and shared office space (12 percent).
The ZAR 130 Mn fund has been by launched by 4Di Capital with SA SME Fund as the anchor investor and will be invested in at least ten tech startups. 4Di Capital Fund III will be invested in startups in the FinTech, InsureTech, HealthTech, EduTech, AgriTech, and other tech verticals.
“It increases the likelihood of finding and supporting a new generation of mainly black entrepreneurs. The SA VC ecosystem is small and fragmented and needs huge investment and focus so that it can contribute meaningfully to innovation and economic growth. This partnership is one more significant step in the right direction,” SA SME Fund CEO Ketso Gordhan said.
Gordhan further stated that the fund was pleased to work with 4Di citing that the firm is one of the experienced VC fund managers.
“Naturally, we are only looking for opportunities that satisfy the typical venture capital requirement for significant scaling potential, which entails pursuing significantly large market opportunities,” 4Di co-founding general partner Justin Stanford said.
He added, “For 4Di, it is helpful for the seeding of new funds such as our Fund III, which then assists us in attracting further capital from investors – local and foreign – interested in allocating to the world of South African tech startups.”
4Di Capital Fund III is the firm’s third fund. The firm’s first fund was opened in 2011 as a general early-stage technology venture capital fund. It was launched while the startup ecosystem in SA was in its early stages. The fund invested in enterprise web platform, cloud scaling infrastructure, health startups, and fintech ventures.
4Di Exponential Tech Fund I is 4Di Capital’s second fund and opened in 2016 with MMI Holdings as the anchor LP. The fund invested in FinTech, InsurTech, and HealthTech startups.
Featured Image Courtesy: 4Di Capital
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