Knife Capital Raises USD50 Million for Pan-African Expansion

Standard Bank and the SA SME Fund have backed venture capital firm Knife Capital’s new USD50 million African Series B expansion fund, Knife Fund III, along with other respectable investors.

The Fund’s mission is to close a crucial funding gap for follow-on projects while investing in the growth of African businesses that are driven by innovation.

“Standard Bank believes in the positive impact that investment into early-stage high-growth businesses can have on innovation, job creation, and economic development of South Africa,” said Akash Maharaj, Executive, Equity Finance and Investments at Standard Bank Corporate and Investment Banking, in response to the announcement. Knife Capital is the newest addition to our venture capital portfolio, and we are pleased to have worked with several of the top investors in this field. We can support the growth journey of firms that scale worldwide thanks to Standard Bank’s significant African footprint, our suite of specialized banking products, and our sizable clientele.

High-impact entrepreneurship in Southern Africa is severely hampered by the lack of support from regional institutional investors for the venture capital alternative investment asset class.

Standard Bank is laying the groundwork for how financial institutions can approach this asset class by making commitments to many growth equity funds. A better and more sustainable future for all may be achieved through investments in technology and innovation, which Standard Bank has already done with Hlayisani Capital and is about to do with a few more Funds.

Knife Capital is wrapping up the legal and due diligence processes for a few remaining donors to close out on the USD50 million target raise as of the second close of Knife Fund III, which increased provisional commitments to just over USD40 million. The IFC, Mineworkers Investment Company, the SA SME Fund, foreign development funders, and well-known family offices are a few other reliable financiers who have already committed.

The SA SME Fund has supported a variety of local venture capital firms, including Knife Capital’s KNF Ventures and Grindstone Ventures, to have a significant effect on the South African early-stage investing market. “We develop South Africa’s huge entrepreneurial spirit through long-term collaborations and are thrilled to follow-on into Fund III to continue supporting Knife Capital,” said Ketso Gordhan, CEO of the SA SME Fund.

Knife Fund III supports Knife Capital’s value chain approach to investing and builds on the momentum and success established by Knife Capital’s prior funds. Scalable business-to-business technology firms with alluring exit options will be the main focus.

The Fund is in a good position to directly support the aggressive expansion of South African breakout companies and to co-invest in businesses across the rest of Africa with other reliable investors. By leading the $10 million round in DataProphet, a company that offers AI-as-a-service software to the manufacturing sector, it has already made its first investment.

“We are thrilled to add Standard Bank as a growth partner as well as a financier for our portfolio companies,” said Keet van Zyl, co-founder of Knife Capital. He continued, “With their infrastructure across the continent, they are already demonstrating themselves to be a value-adding banking partner who have the resources and expertise to deploy money responsibly as well as the vision to impact positive change in African emerging economies.

The key follow-on funding gap that has plagued the Southern African venture capital asset class and prevented enterprises from realizing their full potential or from quitting too soon is addressed by Knife Fund III. The Fund comprises of two primary funding vehicles that will co-invest in portfolio companies: a limited partnership in Jersey denominated in USD and a limited partnership in South Africa valued in ZAR.