Innovation Fund

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Innovation Fund Overview

South Africa is focusing on innovation to attract private sector investment, increase employment and boost economic competitiveness. The country is launching innovation funding programmes to support the growth of innovative startups and tech-enabled small, medium and micro enterprises (SMMEs), a strategy similar to global efforts to boost industrial growth.

Problem Statement 

SMMEs, particularly high-tech innovative enterprises and startups, play a crucial role in supporting economic growth and job creation. However, they often fail due to a lack of early-stage funding. Therefore, in line with global trends on innovation development and support, the Department of Science, Technology and Innovation (DSTI) launched the pilot phase of the Innovation Fund programme on Friday, 27 September 2022, at the SA Innovation Summit.
 
The Innovation Fund is a public-private funding partnership aimed to bridge the funding gap, particularly in early-stage investments, and support the commercialisation of locally developed intellectual property and innovative technologies that drive economic growth, address societal challenges and foster a resilient and inclusive innovation ecosystem. 
At its core, the fund catalyses the creation and sustainable growth of tech startups and SMMEs by de-risking early-stage enterprise creation to generate sustainable pipeline opportunities of viable, high-tech enterprises for later-stage investments by private equity.
 
Objectives
 
• Leverage private capital: Attract additional private sector investments into South Africa’s innovation ecosystem and venture capital industry;
• Stimulate innovation: Encourage the development and commercialisation of locally developed intellectual property as well as innovative products and services;
• Support startups and tech-enabled SMMEs: Provide catalytic (risk) capital backing to early-stage startups and tech-enabled SMMEs;
• Build a resilient innovation ecosystem: Strengthen the infrastructure and support systems for innovation and venture building, including venture studios, incubators, accelerators, hubs, etc. to ensure a robust and interconnected ecosystem; and
• Talent: Build the human capabilities necessary to strengthen South Africa’s innovation ecosystem.

 

 

    Reports

      Fund of Funds

The Innovation Fund is structured to drive public-private co-investment on innovative high-tech Small Medium-sized Enterprises. Moreover, the Department of Science Technology and Innovation appointed independent Fund-of-Funds investment intermediaries such as the Technology Innovation Agency, SA-SMME Fund and the Public Investment Cooperation to drive the syndication of investment with various Venture Capital Fund management entities.

To learn more about our implementing partners, click on each of the logos below.

 

     Funds Committed

The Innovation Fund has committed R917.2 million to its 3 implementing partners, through 10 Venture Capital Funds. On direct funds investment model, the fund also committed to 27Four and Anza Capital through two Venture Capital Funds.

      Investees

To date, 96 South African investees have received support from implementing partners and venture capital funds. Of these, 63 received investment through the Technology Innovation Agency, 17 from the SA SME Fund, 13 from Anza Capital, two from 27four and one from the Public Investment Corporation. Before investment, the workforce of the 96 startups consisted of 1,328 employees, including three employees with disabilities, 538 Black employees and 790 White employees, 523 women and 805 men, 590 employees younger than 35, and 738 employees older than 35. With the 1 328 employees, 802 additional jobs were created after investment, totalling to 2 130 employees.

      Publications and Media

The Innovation Fund aims to drive economic growth and job creation through strategic investments in innovation, positioning South African innovators to compete globally by providing access to networks and capital. It seeks to enhance social impact by improving quality of life through innovative solutions while promoting environmentally sustainable practices and technologies that address pressing global challenges. By fostering competitiveness and sustainability, the fund supports both economic development and positive social change.
 
Click on the following report to learn more about the Innovation Fund

   Report Oct 2020-Mar 2024

Envisaged Impact

• Economic Growth: Drive economic growth and job creation through strategic investments in innovation.
• Enhance Competitiveness: Position South African innovation actors to compete and thrive on the global stage by providing them with access to networks, and capital.
• Social Impact: Enhancement of quality of life through innovative solutions.
• Environmental Impact: Promotion of sustainable innovative practices and technologies. 

 

Implementing Partners