Newly launched venture capital fund, Entrepreneurs for Entrepreneurs Africa (E4E), has secured R135 million in funding and is looking to support innovative South African businesses.
Backed by a founding investment from the SA SME Fund, E4E aims to support business models that bring innovative, agile solutions to critical sectors of the South African economy, including the fintech sector, healthcare and the sustainable agriculture value chain, as well as those with the capacity to scale inside and outside of SA.
Run by experienced entrepreneurs, E4E says its founding partners have had extensive success in the local and international start-up ecosystem, both as entrepreneurs and investors.
The SA SME Fund was established by members of the CEO Initiative – a collaboration between government, labour and business to address some of the most pressing challenges to the country’s economic growth – as an avenue of support for the SME sector.
The E4E team says it will pay particular attention to supporting black and female participation in early-stage ventures, either as founders or as key players joining the scaling phase of the investee companies.
Founding members include Philani Sangweni, former CEO of AKRO Accelerate; Bas Hochstenbach, venture capitalist and former strategic advisor of e-commerce platform, Yebofresh; and Aisha Pandor, CEO of cleaning-on-demand start-up, SweepSouth.
Speaking the same language
With first-hand experience of the kinds of challenges facing the start-up ecosystem in which it invests, its founders say they speak the same language as the entrepreneurs, and can actively help accelerate the growth of their businesses.
Sangweni, managing partner at E4E Africa, says the fund is wasting no time in getting down to business. “We’re hitting the ground running. We are starting our fund with a R135 million first close and aspire to raise significantly more funds.
“We’re also making significant progress on our first investments. As a result, we have approved two investments and expect to be able to close several other investments in the coming months. We have been really impressed with the quality of the entrepreneurs and businesses that we are seeing,” notes Sangweni.
Besides its founding team of six, the fund draws on a larger circle of experienced entrepreneurs to act as mentors to selected ventures.
“We’re up and running, but still welcome experienced entrepreneurs and aligned institutional investors, locally and internationally, into our structure,” says E4E partner Hochstenbach.
“Entrepreneurial expertise, deep sector experience and relevant contacts are critical to the success of our entrepreneurs. Investors that bring this help build a healthy start-up ecosystem and drive good returns on their own investments.”
For its part, the SA SME Fund says part of what attracted it to E4E is the important role it intends to play in the entire local start-up ecosystem. “As part of our mandate to strengthen the South African economy, we were very keen to invest in a fund that brings together the power of a diverse group of experienced entrepreneurs,” says Ketso Gordhan, MD of the SASME Fund.
“Experienced entrepreneurs really understand how to grow through the first hard years, and can deliver the skills and contacts that start-ups need to succeed.”
Pandor, an E4E partner, says she is constantly approached by early-stage entrepreneurs seeking guidance and advice on funding options: “It is great to be part of a structure that can really transfer the experience, skills and contacts my colleagues and I have built up over the years to the next generation of entrepreneurs.”
COVID-19 takes toll
In February, the SA SME Fund launched the first University Technology Fund in Africa, to enable the commercialisation of technology innovations developed by South African universities through its R150 million investment into the fund.
In the current COVID-19 reality, Sangweni highlights the need to support local businesses as the crisis takes its toll on SA’s economy. “There are still major business and societal issues that need to be addressed fully in our country, and even more so under the current challenges we face. As a diverse and entrepreneurial team, we believe there is opportunity here.
“Historical funding disparity and an immature ecosystem represent an opportunity that we would like to turn into value creation for our entrepreneurs and investors, which will ultimately benefit the entire country into the long term,” he adds.
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