Grindstone Ventures, a Cape Town venture capital firm, has launched a R500 million fund (about US$31 million) to invest in technology companies from seed stage through Series A. It is targeting a first close of R150 million, and it says the fund is aimed at what it calls the missing middle: businesses with commercial traction that are still too early for institutional investors. The details come from Bizcommunity and other reports of the fund’s announcement in September 2026.
## What the fund will do
Grindstone Ventures Fund II is led by chief executive Thandiwe Maqetuka and was established with Knife Capital and Thinkroom, which co-own the Grindstone accelerator programme, according to Launchbase Africa. It plans to build a portfolio of 15 to 20 companies, most of them in South Africa, with selected investments elsewhere in Africa. The fund will take meaningful minority positions and keep capacity for follow-on funding for its strongest performers.
Grindstone says it will back the companies with more than money. The support it lists covers strategy, governance, sales and commercial growth, market access, fundraising and preparation for an exit. Maqetuka described the approach this way: “We diversify at entry, allow performance to emerge and then concentrate capital behind the strongest performers.”
The fund has stated two ownership targets: at least 50% black-owned portfolio companies, and gender-balanced representation among female founders and leadership. Innovation Village describes it as a female-led, black-empowered fund.
## The gap it is aimed at
Reports of the launch cite research published in 2026 that found only 10 of 105 African startups that raised seed funding in 2022 had completed a Series A within the following 34 months. Another 81 were still active but had not raised their next equity round. Innovation Village quotes a co-founder of Knife Capital as saying that “the evolution from Seed to Series A remains one of the clearest gaps in the African venture ecosystem.”
Maqetuka’s stated aim is to find exceptional businesses earlier, invest at a point where capital is still scarce, take meaningful ownership positions and work actively with founders. She has also said that “paper valuations don’t return capital to investors, exits do”, which is why the fund plans liquidity from the start instead of relying on valuation growth.
## The first fund
Grindstone Ventures Fund I invested in seven companies. Three of them, Locstat, Welo and AgriLogiQ, raised follow-on funding from international investors, and Grindstone says the first fund is finalising an exit that is expected to return capital to investors.
That fund launched on 9 November 2021 with US$6.5 million (about R100 million), with the SA SME Fund as its first investor, according to the Southern African Venture Capital and Private Equity Association. Knife Capital oversaw certain fund-management elements, and the target portfolio was 30 to 50 early-stage companies with strong intellectual property and high growth potential. Its mandate was post-seed, pre-Series A funding for mostly South African technology start-ups, with a focus on female-led early-stage businesses, and its typical instrument was the SAFE, a simple agreement for future equity. The launch team was Catherine Young as managing partner, with Andrea Bohmert, Rapelang Rabana and Grace Legodi. Fund I came out of the accelerator pipeline: the accelerator’s alumni include iKubu, which was acquired by Garmin, and PayFast, acquired by DPO Group, along with SeaMonster, Picsa, OneCart, Quicket and Granite.
The accelerator behind both funds is run by Knife Capital with Thinkroom, described by Webber Wentzel as the first programme of its kind in South Africa. When it announced its fourth programme in 2018 it ran as an intense one-year course, took ten companies per cohort from twenty shortlisted applicants, and counted Quicket, TaxTim and WhereIsMyTransport among its alumni. Fund II is five times the size of Fund I. AllAfrica’s report on the launch gives the target as R500 million, or US$31 million, with the R150 million first close as the first milestone.
Related coverage is filed under funding, SME and entrepreneurship and tech and telecoms.
