Grindstone Ventures launches R500m fund, targets R150m first close to bridge South Africa’s Seed-to-Series A funding gap

Led by Thandiwe Maqetuka, the fund has been established in partnership with Knife Capital and Thinkroom. It follows the deployment of Grindstone Ventures Fund I, which invested in seven portfolio companies and helped catalyse further seed investment from South African funders.

The new fund is targeting a first close of R150m and plans to build a portfolio of 15 to 20 businesses, primarily in South Africa and selectively elsewhere on the continent.

Targeting the funding gap

Grindstone Ventures says the fund is aimed at businesses that have moved beyond early validation but may still struggle to secure the capital needed to scale and attract larger institutional investors.

“The evolution from Seed to Series A remains one of the clearest gaps in the African venture ecosystem,” said Keet van Zyl, Co-Founder of Knife Capital.

While African technology funding strengthened in 2025, Seed funding declined for a third consecutive year, leaving some businesses undercapitalised as they seek to scale.

Maqetuka said the fund would focus on businesses caught between proving commercial demand and reaching the scale required to attract larger pools of capital.

“That is Africa’s missing middle. Our opportunity is not simply to provide more capital, but to identify exceptional businesses earlier, invest at a point where capital remains scarce, take meaningful ownership positions and work actively with founders to build companies capable of scaling, attracting institutional capital and ultimately delivering realisable returns,” she said.

Follow-on funding and portfolio support

The fund will invest from Seed through Series A and has capacity to provide follow-on funding to its strongest-performing companies.

Its investment strategy involves taking meaningful minority positions and concentrating additional capital behind businesses that perform strongly.

Grindstone Ventures will also support portfolio companies with strategy, governance, commercial growth, market access, follow-on funding and exit readiness.

The fund's partners bring experience in venture investment, entrepreneur development, acceleration and scaling technology businesses. More than 1,000 businesses are screened annually through the wider Grindstone ecosystem, with around 50 participating in accelerator programmes each year.

Focus on exits

The fund is also placing an emphasis on generating returns through exits rather than relying on paper valuations.

“We have deliberately designed the portfolio around the realities of venture investing,” said Maqetuka. “We diversify at entry, allow performance to emerge and then concentrate capital behind the strongest performers. Importantly, we are building for liquidity from the outset. Paper valuations don’t return capital to investors, exits do.”

Grindstone Ventures Fund I invested in seven companies, including Locstat, Welo and AgriLogiQ, which subsequently raised further equity funding from international investors. The fund is also finalising an exit that it says will return capital to investors.

Broadening access to venture capital

Alongside its returns focus, Grindstone Ventures aims to increase participation by underrepresented businesses in the venture ecosystem.

The fund aspires for at least 50% of its portfolio companies to be black-owned, while pursuing gender-balanced representation among female founders and women in leadership.

“We don’t believe investors should have to choose between financial performance and building a more inclusive investment ecosystem,” said Maqetuka.

The fund will primarily target South African businesses, with selective investments elsewhere in Africa.