Celebrating the successes of the Innovation Fund at the SA Innovation Summit

The celebration of the successes of the Innovation Fund at the SA Innovation Summit, included a discussion by experts led by Director-General Phil Mjwara on how to de-risk early stage technology development in South Africa. Second pic is Chair of the Technology Innovation Agency, Matsi Modise, welcoming delegates at the SA Innovation Summit 2022


The Director-General of Science and Innovation, Dr Phil Mjwara, says government, higher education, business and civil society must work together to enhance the capacity of South Africa's innovation system to improve socio-economic development in the country.


Dr Mjwara was speaking on behalf of the Minister of Higher Education, Science and Innovation, Dr Blade Nzimande, at a session to celebrate the Innovation Fund, an initiative of the Department of Science and Innovation (DSI).  The session was held on the first day of the 15th SA Innovation Summit (SAIS2022), which runs in Cape Town from 27 to 29 September.


The SA Innovation Summit is the largest start-up event in Africa, providing various platforms for developing and showcasing African innovation. It brings together top entrepreneurs, investors, corporates, policy makers and thought leaders to support start-ups and inspire sustained economic growth across Africa.


The DSI used its SAIS2022 session to raise awareness about the Innovation Fund and highlight its preliminary successes. Since its establishment in 2021, less than 18 months ago, the fund has disbursed a total of R469,5 million to businesses, including SMMEs.


It has leveraged three times its initial investment.  For every R1 invested by the fund, another R3 has been leveraged from other sources. The Innovation Fund has also supported 24 businesses, with over 50% of these projects now in the commercial stage and 70,2% of these black-led or owned. Women lead over 49% of the black-owned companies.


The fund is different from other funding instruments because it supports tech innovation and commercialisation in high-risk technology development initiatives, such as the early development and expansion stages of technology-based South African start-ups or fledgling firms, including SMMEs.


It serves as a new national financing instrument, involving formal equity investments from the public and private sectors, such as the Public Investment Corporation, the Technology Innovation Agency and the SA SME Fund, to de-risk early stage tech development phases.  This is important because most commercial investors prefer to get involved at a later stage of technology development, when the risk is lower.


As a result, the DSI is encouraging the ecosystem to stimulate economic development by deliberately assuming risk at early stages, to feed the economy with ideas that could create value.


The Director-General said that actors in the innovation space needed to "set a joint agenda, through which they purposefully develop synergies between programmes, pool their skills and financial resources, and evaluate progress so that, if necessary, the course of these initiatives can be corrected".


He said that the new White Paper on Science, Technology and Innovation (STI) emphasises the important role of the "quadruple helix" approach, involving collaboration between business, academia, government and civil society, to ensure the relevance and impact of STI interventions.


Dr Mjwara spoke about the innovation compact referred to in the White Paper, which will facilitate collaboration among government departments and other actors.  This will ensure policy coherence and innovation certainty, the absence of which will negatively affect business and foreign investment in South Africa.


The compact would also avoid the duplication of initiatives and, in particular, innovation incentives, which was a waste of resources and negatively influenced the contribution of innovation to addressing South Africa's priorities.


"The SA Innovation Summit is a platform that connects entrepreneurs to resources and opportunities because we believe that these are the people who build the African economy," said SAIS CEO Buntu Majaja.


"Through our focus on the missing middle – businesses going into the high risk, capital intensive early stage – we are closely aligned with what the Innovation Fund stands for. The Department of Science and Innovation and the Technology Innovation Agency are stepping in to give these entrepreneurs confidence to go for it, which also gives venture capital investors confidence and grows the entire ecosystem in a meaningful way."


The session included a discussion in which panelists deliberated on solutions to de-risk the early stage investment space. The CEO of the SA SME Fund, Dr Ketso Gordhan, said the Innovation Fund was not only a source of funding, but was also strengthening the ecosystem.


Acting Head of Research at the Public Investment Corporation, Lucky Pane, said larger investments in venture capital in South Africa would ensure companies were able to scale up their innovative ideas.

 Issued by the Department of Science and Innovation.


For media enquiries, contact Veronica Mohapeloa at 083 400 5750 or Thabang Setlhare at 072 659 9690.


About SAIS


The South African Innovation Summit is the largest tech start-up event in Africa.  The event has grown in leaps and bounds since its launch many years back as an outcome of the then Department of Science and Technology's strategic cooperation between the Finnish Ministry of Foreign Affairs and the Co-operative Financial Institute of South Africa (COFISA).  The summit attracts innovation actors, including venture capital firms across the globe, as part of the South African innovation ecosystem.


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