The fund, led by Grindstone Ventures chief executive Thandiwe Maqetuka and established with Knife Capital and Thinkroom, is targeting an initial close of R150 million. It plans to invest in 15 to 20 companies, mainly in South Africa, while making selective investments elsewhere on the continent.
Grindstone said the strategy will focus on businesses that have moved beyond early validation but remain too small or insufficiently mature to attract major institutional investors. The firm sees that transition from seed to Series A as one of the weakest points in Africa’s venture-capital pipeline, where promising companies can struggle to secure the capital needed to scale revenue, strengthen governance and expand into new markets.
Maqetuka said the opportunity was to back companies after they had demonstrated commercial demand but before they reached the size typically required by larger investors. She described the segment as Africa’s “missing middle”, arguing that the fund’s role would extend beyond supplying capital to helping founders build companies capable of attracting institutional funding and producing realisable returns.
The vehicle will be able to provide follow-on financing to stronger-performing portfolio companies. Grindstone plans to take meaningful minority stakes at entry and then concentrate additional capital behind businesses that demonstrate the strongest progress, rather than spreading follow-on funding evenly across the portfolio.
Portfolio support will include strategy, governance, commercial growth, market access, preparation for subsequent fundraising and exit readiness. The wider Grindstone ecosystem screens more than 1,000 businesses a year, with about 50 joining accelerator programmes annually, giving the fund a pipeline of companies that have already undergone structured assessment and development.
Keet van Zyl, co-founder of Knife Capital, said the move from seed to Series A remained one of the clearest gaps in Africa’s venture ecosystem. That bottleneck has become more significant as capital available to younger technology companies has failed to keep pace with the number of ventures seeking to progress from product validation to sustained commercial scale.
Funding data underline the uneven recovery. South African technology startups raised about $335.9 million in 2025, more than triple the roughly $100.4 million secured in 2024, according to industry tracking. Forty-two South African startups received investment during the year, up from 25, but disclosed deals remained concentrated unevenly across stages and sectors.
Seed funding across Africa declined for a third consecutive year in 2025 even as overall technology investment strengthened, leaving some early-stage businesses with fewer options at the point where additional capital can determine whether they reach Series A. Grindstone’s new vehicle is designed to invest across that transition rather than confining itself to a single narrow stage.
The fundraising comes as venture managers across the continent compete for institutional capital in a market that remains selective despite the rebound in investment totals. Grindstone’s first vehicle received backing from the SA SME Fund, while the platform has worked with the Mineworkers Investment Company. Its accelerator-linked model is intended to give investors visibility into companies before investment decisions are made and capital is committed.
The fund also places greater emphasis on exits and cash returns than on portfolio valuations alone. Maqetuka said Grindstone had designed the portfolio to diversify at entry, identify stronger performers over time and direct more capital towards those companies, while building towards liquidity from the outset.
Grindstone Ventures Fund I invested in seven businesses, including Locstat, Welo and AgriLogiQ. Several portfolio companies later secured additional equity from international investors, and Grindstone said it is finalising an exit that is expected to return capital to investors.
The earlier Grindstone fund was created to address the post-seed, pre-Series A financing shortage facing innovation-led companies, particularly businesses emerging from the group’s accelerator. Its investment model combined equity or quasi-equity capital with operational support intended to prepare companies for larger funding rounds.
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