DSTI’s Innovation Fund: Driving South Africa’s Tech and SME Growth

Unlike traditional financial institutions such as banks and private equity firms, the Innovation Fund offers more flexible funding structures while maintaining rigorous financial oversight.

The Department of Science, Technology and Innovation (DSTI) has reaffirmed its commitment to fostering innovation and entrepreneurship in South Africa, aligning with President Cyril Ramaphosa’s vision for a thriving innovation economy as outlined in the 2025 State of the Nation Address (SONA).

Government’s Focus on Innovation Growth

During his address, President Ramaphosa highlighted the importance of bolstering innovation, particularly through the expansion of the Innovation Fund, which will be a top priority for the government in the 2025/26 financial year. This initiative will be overseen by DSTI Minister, Professor Blade Nzimande, to support the growth of technology-driven startups and Small and Medium Enterprises (SMEs).

“To build an innovative economy, the Department of Science, Technology and Innovation will establish an Innovation Fund to provide venture capital to tech startups that emerge from our higher education institutions,” the President stated.

What is the DSTI’s Innovation Fund?

Launched in 2021, the Innovation Fund is a strategic initiative designed to stimulate the development and sustainability of high-tech SMEs. By reducing the risks associated with early-stage SME development, the fund seeks to create a sustainable pipeline of investable tech enterprises that can attract later-stage private-sector investment.

Unlike traditional financial institutions such as banks and private equity firms, the Innovation Fund offers more flexible funding structures while maintaining rigorous financial oversight.

Who Benefits from the Innovation Fund?

The Innovation Fund is structured to support SMEs at different stages of their business development cycle. It enables public-private co-investment in innovative high-tech enterprises, leveraging the expertise of investment agencies such as the Technology Innovation Agency (TIA), the SA SME Fund, and the Public Investment Corporation (PIC). These institutions help syndicate investments with venture capital fund managers, ensuring broad-based support for technology startups.

Key Objectives of the Innovation Fund

1. Leverage Private Capital: Drive additional private sector investments into South Africa’s innovation ecosystem and venture capital industry.
2. Stimulate Innovation: Promote the commercialization of locally developed intellectual property (IP) and innovative products and services.
3. Support Startups and Tech-Enabled SMEs: Provide catalytic capital to early-stage startups and SMEs with a technology focus.
4. Build a Resilient Innovation Ecosystem: Strengthen infrastructure and support systems such as incubators, accelerators, venture studios, and innovation hubs to ensure a connected and robust innovation landscape.

Financial Commitments and Impact

The DSTI has invested approximately R917.2 million into various investment intermediaries, including TIA, PIC, and the SA SME Fund. This funding has successfully attracted over R500 million in co-investments from the private sector, demonstrating the fund’s effectiveness in stimulating external investments.

To date, the Innovation Fund has supported:

• 12 venture capital firms
• 96 technology-focused investment opportunities and enterprises

How Can SMEs Access the Innovation Fund?

SMEs and entrepreneurs looking to benefit from the Innovation Fund can find more information through the following resources:

• General Information: Innovation Fund Portal
• Current Open Calls:
  • Technology Innovation Agency
  • EPF Tech Fund
• Direct Inquiries: Contact Mr. Konanani Rashamuse at Koanani.Rashamuse@dsti.gov.za

With these initiatives, the DSTI continues to play a pivotal role in shaping South Africa’s innovation landscape, supporting high-tech enterprises, and driving economic growth through technology and entrepreneurship.