Secha Capital bags $16m to back South Africa’s small businesses

AFRICAN BUSINESS AND ECONOMYSeptember 29, 2023 at 2:54 PM UTC

South Africa's Secha Capital has successfully achieved a first close, securing $15.7 million for its second fund, with a target size of $34 million. Established in 2017, Secha operates on an operator-investor model, which involves deploying highly skilled human capital resources into its portfolio companies to spearhead high-impact value creation initiatives, ultimately driving exponential growth for its entrepreneurial partners.

Secha Capital's inaugural fund demonstrated that the combination of equity investments and the strategic deployment of human capital is a replicable model capable of delivering financial returns and fostering social impact, particularly within women-founded businesses in South Africa.

Secha Capital Fund II will adopt a similar mandate, and its first close came from investors including RMB Ventures, 27four Investment Managers, the SA SME Fund, and Caleo Capital. The fund's primary focus is on traditional companies spanning various sectors in Southern Africa that are in the process of transitioning into tech-enabled green economy businesses.

Key Takeaways

Unemployment in South Africa, currently ranked as the world's highest, continues to persist at alarming levels. Initiatives like Secha Capital's play a crucial role in bolstering the country's primary job creators: small businesses. While small enterprises often operate beneath the limelight, their significance to South Africa's economic development is undeniable. According to a recent report from the International Finance Corporation (IFC), small businesses make a substantial contribution, accounting for up to 34% of the total GDP and employing an estimated 50% to 60% of the workforce. These figures underscore the pivotal role small businesses play in the nation's growth and job creation.