Addressing a Critical Funding Gap for High-Growth African Startups

South Africa’s Grindstone Ventures, a female-led venture capital fund, has announced the launch of a new ZAR500 million (US$31 million) fund. This initiative aims to fill a critical gap in the African startup ecosystem – providing financing for companies transitioning from early commercial validation to institutional scale.

The fund is backed by Knife Capital and Thinkroom, two established players in South Africa’s investment landscape. Grindstone Ventures will offer more than just capital; they’ll provide active support across strategy, governance, market access, and exit readiness, leveraging the combined expertise of their network.

Building on Past Successes

The new fund follows the successful deployment of Grindstone Ventures Fund I, which invested in seven companies including Locstat, Welo, and AgriLogiQ. The firm is currently finalizing a profitable exit that will return capital to investors, demonstrating their ability to generate returns while supporting high-growth businesses.

Keet van Zyl, co-founder of Knife Capital, noted that the “missing middle” – the challenge startups face when they’ve proven their concept but aren’t yet ready for larger institutional investments – remains a significant barrier in Africa.

A Comprehensive Approach to Venture Building

The partnership combines Thinkroom’s entrepreneur development expertise with Knife Capital’s track record in venture investment and scaling technology businesses. This creates a platform that can identify promising companies early, provide targeted support, and help founders navigate the complexities of growth.

“We aim to be more than just investors,” says Thandiwe Maqetuka, founder of Grindstone Ventures. “Our focus is on working actively with exceptional entrepreneurs to build companies capable of attracting institutional capital and delivering sustainable returns.”

The fund will initially target a first close of ZAR150 million (US$9.3 million) and plans to invest in 15-20 businesses, primarily in South Africa but selectively across the continent.

Commitment to Inclusion

Beyond financial performance, Grindstone Ventures is committed to building a more inclusive ecosystem. The fund aims for at least 50% of portfolio companies to be black-owned and will prioritize gender balance in founder representation.

“We believe investors shouldn’t have to choose between returns and impact,” adds Maqetuka. “Our goal is to demonstrate that we can generate attractive commercial outcomes while supporting underrepresented entrepreneurs who often face barriers to accessing capital.”