Endeavor South Africa has successfully secured R190 million in the initial funding round of its Harvest Fund III, aimed at investing in high-potential tech startups across the African continent. This funding round, which surpassed its initial target of R150 million, is part of a larger goal to raise R500 million for the growth and development of the African tech ecosystem.

The launch of Harvest Fund III coincides with the closing of Harvest Fund II, which was established in 2021 and previously invested R190 million across 17 companies. This strategic timing highlights Endeavor's commitment to supporting emerging businesses while transitioning from one successful investment cycle to another.

Fund Objectives and Investors

The primary aim of Harvest Fund III is to channel investments into a carefully selected pipeline of 135 companies within the Endeavor network. Although the fund is open to investing across Africa, approximately 85% of the total funding is expected to be allocated to startups in South Africa.

Key investors contributing to the success of Harvest Fund III include prominent financial institutions such as Standard Bank, Allan Gray, and the South African SME Fund. Their involvement not only underscores the confidence in the fund's potential but also emphasizes the growing interest in the African technology landscape.

A Rigorous Selection Process

Alison Collier, Managing Director of Endeavor South Africa, emphasized the importance of a thorough selection process for the companies included in the pipeline. “We have a deep understanding of the 135 businesses in our pipeline and are confident in their growth potential,” Collier stated. The companies were selected through Endeavor’s rigorous two-stage international selection process, which spans one to two years. This due diligence is expected to be pivotal in delivering substantial returns on investment.

Endeavor South Africa aims to achieve a targeted return of 25% on its investments, translating to a projected three to four times multiple on invested capital. This ambitious target reflects the organization’s commitment to fostering high-growth startups that can make significant contributions to the economy.

Previous Success and Future Prospects

Harvest Fund II, which concluded with notable success, backed 17 companies and delivered impressive results, including an annual revenue growth rate of 58% and over R7.7 billion in total revenue by the end of 2023. This fund not only showcased Endeavor’s effective investment strategy but also contributed to job creation, with more than 9,200 jobs generated across its portfolio companies.

Among the successful investments are well-known entities such as Go1 and TymeBank, as well as high-growth companies like Clickatell, Sendmarc, and Onafriq (formerly MFS Africa). These investments highlight Endeavor’s strategic focus on identifying and nurturing companies with the potential to disrupt markets and drive economic growth across the continent.

Strategic Focus on Southern Africa

Harvest Fund III intends to maintain a similar investment philosophy as its predecessor. The fund is set to invest in 20 to 25 companies, with a significant portion dedicated to those based in Southern Africa. This strategic focus will not only enhance the regional tech landscape but also foster a sense of community among entrepreneurs, investors, and innovators.

In addition to local investments, the fund plans to allocate resources to promising startups in other African regions, thereby contributing to the continent's overall growth narrative. This approach reflects Endeavor’s commitment to nurturing a vibrant and interconnected tech ecosystem that can thrive across borders.

Endeavor South Africa’s successful R190 million fundraising round for Harvest Fund III represents a significant milestone in the mission to bolster the African tech startup landscape. With strong backing from reputable investors and a carefully curated pipeline of companies, Endeavor is well-positioned to drive innovation, economic growth, and job creation across the continent. As the fund embarks on its investment journey, the potential for transformative impact within the African tech sector remains promising, paving the way for the next generation of entrepreneurial success stories.