BY TOM JACKSON
South African venture capital company Knife Capital has received a US$10 million commitment from the Mineworkers Investment Company (MIC) to its new African Series B expansion fund, Knife Fund III.
Knife Capital, a VC and growth equity investment manager focusing on innovation-driven ventures with proven traction, will use its latest fund to invest behind the aggressive expansion of African innovation-driven companies and fill a critical follow-on funding gap.
The Mineworkers Investment Company (MIC) is a 100 per cent Black-owned Investment Company established in 1995 by the Mineworkers Investment Trust (MIT) to create a sustainable asset base for the benefit of mine, energy and construction workers and their dependents. MIC invests in a variety of large and small companies in various sectors, as well as focusing strongly on corporate governance and true transformation.
The US$10 million commitment in Knife Fund III positions MIC as anchor investor to the fund, alongside other local and international investors. Knife Fund III’s target is to raise US$50 million.
“The move to change the way local institutional investors approach venture capital investment has been in the pipeline at MIC for a number of years now. Our venturing into the earlier-stage alternative asset class space makes sense given the slow economic growth in the last three years. We believe that the impact of investment in small to medium scale enterprises on innovation, job creation and economic growth is crucial, and therefore urgent to unlock, especially right now,” said Nchaupe Khaole, chief investment officer at MIC.
“Our commitment brings to the table the investment, along with many of our strengths as an experienced player. One of which is our ability to influence the companies within our portfolio to partner with us and effect real, tangible change to the South African economy. We are delighted to be a key catalyst in the success of this funding round.”
On the back of initial startup successes and an increased focus on building a cohesive technology ecosystem, the funding gap is slowly closing for African startups at the early growth stages. However, Knife Capital believes a Series B funding crunch looms for the crop of startups that manage to get over the Series A funding hump and then require significant risk funding for aggressive growth and scaling. Knife Fund III aims to go some way towards filling this gap.
“We gained much respect for the MIC team during the due diligence and negotiation process and look forward to the mutual learning journey ahead,” said Keet van Zyl, partner at Knife Capital. “MIC is already proving themselves to be a value-adding partner that has the funds and experience to responsibly deploy capital as well as the vision to influence positive change in this emerging market.”