On 3 August 2020, Grindstone Accelerator, a South African business accelerator, launched a new venture capital fund, Grindstone Ventures, to provide early-stage equity funding to its cohorts and alumni.
Grindstone Accelerator is a structured entrepreneurship development programme jointly owned by Knife Capital and Thinkroom Consulting. It takes South African SMEs with proven traction through an intensive year-long review of their strategies and provides them with the necessary support to build a foundation for growth.
According to Andrea Böhmert, Partner at Knife Capital, the new fund complements the Knife Capital value chain approach by linking a funding vehicle to their Accelerator model. This allows companies to be de-risked before raising follow-on capital from their Series A and later-stage funds.
Grindstone Ventures is an open-ended venture capital fund structure, set to invest up to R5 million per opportunity in scalable innovation-driven ventures. The fund will likely invest in co-investment arrangements with Angel Investors and Corporate VCs.
One of the innovative elements of Grindstone Ventures is that all future Grindstone Accelerator cohort companies will obtain a stake in the fund, creating a vested interest in each other by a community of high-growth scale-ups.
Some of South Africa's best scale-up companies have been through Grindstone, including iKubu, SeaMonster, Payfast, Picsa, Locstat, and OneCart. Knife Capital has also invested in Quicket and Granite via its SARS Section 12J Venture Capital Company: KNF Ventures.
Keet van Zyl, Partner at Knife Capital, announced that the first Grindstone Ventures investments are imminent, with initial capital contributions from Knife Capital, Thinkroom, and programme partners. Past Grindstone cohort entrepreneurs and respected Angel Investors are also looking to invest.
The new Grindstone Accelerator cohorts 6 and 7 of ten companies each in Cape Town and Johannesburg are currently being finalised and will be announced soon.
