Venture capital firm Knife Capital, which is raising a new fund to back startups at the Series B stage, has found an anchor investor.
Mineworkers Investment Company (MIC) has committed US$10 million to Knife Fund III, it said on Tuesday. The commitment positions MIC as an anchor limited partner (LP) to the fund alongside other local and international investors.
“Our venturing into the earlier-stage alternative asset class space makes sense given the slow economic growth in the last three years,” said Nchaupe Khaole, chief investment officer at MIC.
“We believe that the impact of investment in small to medium-scale enterprises on innovation, job creation and economic growth is crucial, and therefore urgent to unlock, especially right now.”
MIC is an investment holding company. It was established by the Mineworkers Investment Trust to provide funding for the Trust’s social and educational projects. It invests in companies of all sizes across sectors such as financial services, health, leisure, business services, industrials and media.
Knife Capital says the third fund’s target is to raise US$50 million. The fund will support the expansion of South African breakout companies and co-invest with other credible funders in companies across the rest of Africa. The focus will be on scalable business-to-business technology companies that have attractive exit optionality.
The fund seeks to fill a critical gap in funding for startups that manage to raise their first institutional round of funding but face a serious crunch in raising capital to grow further.
The fund consists of two main financing vehicles: a US dollar-denominated limited partnership in Jersey and a South African rand (ZAR)-denominated limited partnership in South Africa.
The two vehicles will co-invest alongside one another in portfolio companies. MIC is investing in the ZAR-denominated partnership.
Knife Capital has offices in Cape Town, London and Jersey. It manages VC funds KNF Ventures I and II, and select family office investments. It previously managed Mark Shuttleworth’s HBD Venture Capital Fund to successful exit and closure.
In completing its value-chain investment approach, Knife Capital curates a pipeline of high-growth technology-enabled SMEs through its Grindstone Accelerator programme.
Keet van Zyl, partner at Knife Capital, said: “MIC is already proving themselves to be a value-adding partner that have the funds and experience to responsibly deploy capital as well as the vison to influence positive change in this emerging market.”