The Department of Science, Technology and Innovation (DSTI) has expressed its strong support for government’s vision to bolster innovation as articulated by President Cyril Ramaphosa in the 2025 State of the Nation Address (SONA).
The department said the Innovation Fund will be a key priority for the government in the 2025/26 financial year, with implementation overseen by the DSTI Minister, Professor Blade Nzimande.
In his address earlier this month, President Ramaphosa reaffirmed the government’s commitment to advancing the Innovation Fund, which aims to bolster the growth of innovative startups and technology-driven Small and Medium Enterprises (SMEs).
“To build an innovative economy, the Department of Science, Technology and Innovation will establish an Innovation Fund to provide venture capital to tech start-ups that emerge from our higher education institutions,” the President said in his speech.
What is the DSTI’s Innovation Fund?
In 2021, the DSTI launched the Innovation Fund as part of its comprehensive suite of initiatives aimed at fostering innovation.
According to the department, the primary goal of the Innovation Fund is to stimulate the development and ongoing expansion of the high-tech SME sector.
It also aims to reduce risks associated with early-stage SME creation, fostering sustainable pipelines of viable, investable high-tech enterprises that can attract later-stage investments from the private sector.
In contrast to conventional financing institutions like private equity firms and commercial banks, the Innovation Fund is less stringent and offers more flexible yet thoroughly enforced financial support.
Who does this Fund target?
The Innovation Fund cuts across various stages of the SMEs’ business development life cycle and is structured to drive public-private co-investment in innovative high-tech SMEs.
The Innovation Fund model also leverages the investment expertise of institutions such Technology Innovation Agency (TIA), the SA SME Fund and the Public Investment Cooperation (PIC), which in turn, drive the syndication of investment with various venture capital fund management entities.
What is the objective of the Fund?
Leverage Private Capital: Attract additional private sector investments into the South African innovation ecosystem and venture capital industry.
Stimulate Innovation: Encourage the development and commercialisation of locally developed IP and innovative products and services.
Support startups and tech-enabled SMEs: Provide catalytic capital backing to early-stage startups and tech-enabled SMEs.
Build a resilient innovation ecosystem: Strengthen the infrastructure and support systems for innovation and venture building, including venture studios, incubators, accelerators, hubs, and so on to ensure a robust and interconnected ecosystem.
DSTI’s financial investment:
The department has currently invested nearly R917.2 million in various investment intermediaries, including TIA, PIC, and the SA SME Fund.
This Fund has successfully leveraged over half a billion in co-investments from the private sector.
To date, it has provided support to 12 venture capital firms and approximately 96 technology investment opportunities and enterprises.
How can SMEs access the Fund?
More information on the Fund can be accessed at https://innovationbridge.info/ibportal/innovation-fund.
For current open calls visit https://www.tia.org.za/innovation-fund-first-time-and-emerging-fund-managers/ or https://epftechfund.orcaa.ai.
For further inquiries on the Fund please contact Mr Konanani Rashamuse on Koanani.Rashamuse@dsti.gov.za. – SAnews.gov.za
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