Knife capitalA South African venture capital firm, is raising $ 50 million for startups to raise Series B financing. With Knife Fund III called the African Series B Expansion Fund, the firm intends to invest directly in aggressive expansion of South African breakout companies. It also plans to invest in companies in the rest of Africa.
The first fund, known as Knife Capital Fund I or HBD Venture Capital, was managed by a closed private equity fund Eben van Heerden And Kate van Zyl. The firm offered seed capital to the startup. It also generated significant exits from its portfolio – Visa Fintech startup Fundamo acquired, And orderTalk acquisition UberEats come to mind.
In 2016, the VC firm introduced its current 12J with Knife Capital Fund II. Finance (KNF Ventures), Which invests primarily in the Series A phase, has eight startups in its portfolio. Last year, the firm told TechCrunch of its intention to expand Fund II and open to new investors. Were planning to give startups Network access, Money and expansion opportunities.
“We want to help South African and African companies internationalize,” said the co-management partner Andrea Bohart those days. A testament to the cause, its portfolio company, DatapropetThe $ 6 million Series A raised to expand in the US and Europe.
Bohmert told TechCrunch that the third fund aims to address the significant Series B funding gap that has characterized the venture capital asset class in South Africa, resulting in businesses not reaching full capacity or exiting too quickly.
“Recently, we see companies able to raise funding rounds of $ 2 million to $ 5 million. While companies are operating within their home country, in our case South Africa, such an amount takes you too far due to the local cost structure. “However, once these companies start gaining international traction and need to build an infrastructure outside their country, they need to raise significant amounts to afford it. There is currently hardly any South African VC fund, other than perhaps Nesperse Foundry, who can write checks worth $ 5 million or more and deploy them to finance the externalization of South African companies in large markets Are ready. “
As a result, Bohmert argues that Africa has become an incubator for international VCs who can write these checks, but still cannot provide local assistance to these companies. Similarly, there are instances where international investors actively seek out local co-investors in South Africa to invest in a round, and one may not find any possibility to proceed with investment. Bohart says Knife Capital intends to launch the fund.
“We want to be the local lead investor who prefers to internationalize South African technology companies, co-invest with international investors, who can lead the Series B discussion and so forth.”
This week, Knife Capital acquired $ 10 million Mineworkers Investment Company (MIC), a South Africa-based investment firm. The commitment employs MIC as an anchor investor for the fund along with other local and international investors.
Open nachupayThe CIO at MIC reported that the move to change the way venture capital investment of local institutional investors has been in MIC’s pipeline for some time. And by partnering with Knife Capital, the idea could begin materially.
“Our commitment as an experienced player brings us to the table of investment, along with our many strengths. One of which is our ability to allow companies in our portfolio to partner with us and effect real, tangible change in the South African economy. We are happy to be a major catalyst in the success of this funding round, ”he said.
According to other details, Knife Capital aims to have a first by the end of May and a final closing by the end of the year. Most of its partnerships will be co-investment, and the idea is to do it in 10 to 12 companies.