Endeavor South Africa, which offers venture capital and mentoring support to domestic and African entrepreneurial enterprises, has marked the first close of its R500-million Harvest Fund III, securing R190-million, exceeding its initial R150-million target.

The fund aims to catalyse growth in high-potential tech-related companies across Africa.

Major investors include Standard Bank, Allan Gray and the SA SME Fund.

The first close coincides with the final investment of the R190-million Harvest Fund II, which made 19 investments in 17 companies.

“In Harvest Fund III, we are doubling down on a strategy that is working, investing in Endeavor’s existing portfolio of high-growth entrepreneurs who run market-leading founder-led companies with exceptionally strong local and global growth, scalable intellectual property, robust returns and a pay-it-forward mindset,” Endeavor South Africa capital markets lead Antonia Bothner says.

The fund plans to invest exclusively in a vetted pipeline of 135 selected Endeavor companies in Africa.

The fund targets a 25% return or a three to four multiple on invested capital, with deal sizes of R15-million for Endeavor companies and R7.5-million for early-stage Endeavor companies.

“We have a deep understanding of the 135 businesses in our pipeline and are confident in their growth potential, as they have been selected through Endeavor’s rigorous two-stage international selection process, which spans one to two years.

“We engage with them continuously and will assess their capital needs to guide the fund’s investments,” says Endeavor South Africa MD Alison Collier.

Harvest Fund III is a commercial-first venture capital fund with a mission-driven approach, reinvesting 100% of the carry back into each African ecosystem that it invests in, the company points out.

“When we were designing Fund III, we wanted to stay aligned with Endeavor’s overall mission, but also carve out a business model that would create a sustainable revenue stream to support the work Endeavor South Africa does,” Bothner explains.

The Harvest Fund II portfolio comprises 17 companies in enterprise tech, fintech, retailtech and edtech, delivered 58% yearly revenue growth, reaching a total revenue of R7.7-billion as of December 2023.

These created over 9 200 jobs in 2023, growing employment by 35% yearly, Endeavour South Africa indicates.  

The fund received catalytic support from Prosper Africa, under its Catalytic Investment Facility, to enable the team to scale its raise.