Africa’s technology, media and telecommunications (TMT) sector is anticipated to grow impressively in 2019. Baker McKenzie’s Global Transaction Forecast reports that transactions are expected to surpass earlier forecasts of M&A investments valued at USD 5.9 Bn in 2019.
However, the tech space is faced with a lot of challenges. Some of them are the delay in digital migration, the lack of uniformity in the methods adopted, and, most of all, access to finance is a distant pipe dream.
A report from the Competition Commission in South Africa reveals, for example, that the country’s data costs are among some of the world’s highest.
The SA SME Fund in conjunction with the government’s Technology Innovation Technology has decided to create a finance pool for South African technology. The duo entered into a first-ever-of-its-kind public-private partnership to invest ZAR 350 Mn ( well above USD 23 Mn) in three VC funds.
One of the funds is OneBio Seed Investment Fund, a biotechnology dedicated fund. The other two are Savant Venture Fund, a hardware tech incubator, and University Technology Fund (UTF). The three funds are kicking off with ZAR 3.5 Mn, ZAR 11 Mn, and ZAR 152 Mn respectively.
The fund managers, per an official statement, will fund early stage businesses and provide capital to support entrepreneurs. It will mostly be assisting companies in commercializing technologies and scale significantly. SA SME Fund has pledged to pump in at least 50 percent of the fund in black-owned businesses.
All three funds have made notable support in the past. OneBio, launched in 2018, has supported 9 startups. Under the auspices of the Cape Innovation and Technology Initiative (CIT), the fund has backed six South African and three Zimbabwean startups. OneBio typically invests seed money in companies and helps them prepare for their Series A.
Savant’s fund has backed two early-stage companies. It invested ZAR 9.5 Mn in Cape Town-based medtech SmartBlade and injected an undisclosed amount in Jonga, a security startup.
As for TIA, the company invests in startups via its seed fud, tech development fund and youth tech innovation fund. The platform claims to have invested more than ZAR 500 Mn in South Africa’s biotech sector since its inception.
Ketso Gordhan, CEO of the SA SME Fund, says, “We are hugely excited and energised by this
partnership to support and invest in innovation, especially in black-owned start-ups and scale-ups in this space. This forms part of our commitment to support government, together with TIA, in stimulating and intensifying technological innovation to improve economic growth, create jobs and impact on the quality of life of all South Africans.”