Here are some of the most frequently asked questions that we receive.

Why do you not invest in small and medium businesses directly?

There is a lack of co-investment (investing directly in businesses alongside other venture capital or private equity investors) opportunities for scalable businesses in South Africa. At the moment our team is also too small to pursue this avenue effectively, to maximise returns to shareholders.

Given the existing number of funds that are available in this space with solid track records in supporting and growing businesses into strong and sustainable enterprises, as well as taking into account the size of our capital base, we will have the most impact by supporting investment funds.

Our focus and approach may change over time as the Fund, its resources and the broader SME environment evolves.

What size of businesses will you invest in?

The SME Fund mandate targets high-growth and mature-stage venture capital, small and medium (enterprise value between R20m - R150m), as well as smaller mid-market (enterprise value between R150m - R500m) investment funds with high growth and significant employment creation potential.

This approach may change over time as the Fund, its resources and the broader SME environment evolves.

I have a small business that fit the criteria you are targeting; who can I approach for investment?

Businesses with a turnover in excess of R20m are best placed to approach the vast network of venture capital and private equity firms that specialise in this stage of investment. Once the SA SME Fund stars allocating capital, the details of the funds that it invests in will also be published on this website in due course. See more here for information on local VC and PE funds.

Why are you not helping microbusinesses with good potential?

A healthy small and micro enterprises sector is crucial to the growth and sustainability of the SA SME Fund, and we believe it is important for larger corporate businesses to support these smaller businesses. Therefore we are committed to strengthening the South African SME ecosystem through our non-investment capacity building initiatives – read more here.

In terms of monetary investments: our studies have found that there are numerous ways in which the government and the private sector already support these small businesses to grow and become sustainable. We want to avoid duplicating existing efforts, and have chosen to focus on larger and more mature SMEs, as this is the area where we can make the biggest impact given our resources (fund size, team size and expertise).

This approach may change over time as the Fund, its resources and the broader SME environment evolves.

What kind of returns will you achieve?

The Fund's benchmark target is real capital preservation, and over time we aim to provide gross returns at the investee fund level comparable to our peer commercial funds.

How do you choose the funds you invest in?

The investment committtee comprises four experienced investment professionals with private equity and/or SME investment experience. This team is responsible for approving intermediary fund selection in line with the Fund's mandate, selection criteria and Investment Guidelines.

SME Funds that wish to be considered for investment can contact our Fund through the website contact for a basic questionnaire to determine if the particular fund is in our investment realm. Funds that appear to fit our mandate are then invited to submit further information, and these will be discussed in detail in the weekly management meetings for possible inclusion in the pipeline. The Committee may then proceed to complete a thorough due diligence process on the fund and submit a detailed proposal for inclusion. This process takes between three to six months to complete.

How important is empowerment and transformation when selecting funds and businesses?

The Fund will have a particular focus on the transformation of the private equity fund landscape and the development of black fund managers, as well as supporting and driving the development of high-growth black SME businesses.

What is your investment horizon?

The accreditation and investment programme will take place over the next 3 – 5 years, and we aim to stay invested between 5 – 7 years.

Is the government invested in the Fund?

The government has a number of avenues through which it supports the SME ecosystem, among others various funding mechanisms for all stages of the SME landscape.

The Public Investment Corporation (the investment management arm of the Government Employees Pension Fund), Unemployment Insurance Fund and Workmen's Compensation Fund are major investors in the Fund.

Are you providing mentorship support to the businesses you are invested in?

The Fund will have a significant focus on developing the SME ecosystem, in particular determining and addressing the barriers that SMEs face in reaching their full potential. This includes supporting the Business Development Services sector, including mentorship providers, to help meet the needs of the broader SME sector.

When will you start investing in funds?

We are accrediting Venture Capital and Private Equity funds now, and aim to start allocating capital by the first quarter of 2018.

How many funds will you invest in?

Given the Fund's capital base and current investment mandate, we aim to allocate capital to approximately 7 – 12 funds ranging from R30m to R100m per fund.

Which companies have contributed to the Fund?

See Our Investors

Why is it not compulsory for all listed companies to invest in the Fund?

Companies have very different operating challenges, priorities, investment horizons and risk profiles. Many companies also already contribute in various other ways to support the SME infrastructure in the country. We believe it would be counter-productive to obligate companies to contribute to the Fund.

An obligatory contribution also adds to the bureaucracy that the private sector faces and is not conducive to an efficient market system.

Why did you establish the Fund when there are already so many structures in place to help SMEs?

The Fund's main aim is to provide an avenue for sustainable economic and employment growth, by utilising some of the private sector's financial and support resources. The Fund adds much-needed capital to the SME landscape in South Africa, and provides support to the efficient elements of the existing ecosystem, without duplicating efforts.


We welcome suggestions for areas where we can improve, and any further questions or comments.