Building better venture capital

Back in 2012, the idea of a vibrant venture capital ecosystem in South Africa was still a distant dream. Then, the total size of the local venture industry was estimated around R300m, a modest figure compared to the thriving innovation economies elsewhere in the world. Fast forward to today, and the landscape has changed dramatically, thanks in part to pioneers who helped build it from the ground up.

“When I joined Futuregrowth more than a decade ago, The Development Equity Fund existed but it wasn’t focused on venture capital,” says Amrish Narrandes, Head of Private Equity and Venture Capital at Futuregrowth. “We have spent the past decade developing it into the institutional-grade platform we have today.”

In the early days, venture capital in South Africa was driven largely by high-net-worth individuals and small angel investors. It was fragmented, relationship-based and difficult for most entrepreneurs to access. Now, with institutional investors like Futuregrowth entering the space, they have brought not only deeper pockets but also stronger governance and long-term sustainability.

As a result, deal sizes are increasing, investor sophistication is growing, and South African founders are finding more structured support. “Early-stage activity is vibrant, particularly in Series A funding rounds where companies have already shown product-market fit,” Narrandes explains. “But capital for later-stage growth is still scarce, and we often see founders having to look offshore for follow-on rounds.”

What sets Futuregrowth apart

With one of the longest venture track records in South Africa, Futuregrowth has earned its reputation as a patient, disciplined investor. Over the years, the team has backed and exited several successful ventures, including Retail Capital, sold to TymeBank, and Cash Connect, acquired by Lesaka Technologies.

“Those exits were great results for our investors and valuable experiences for us,” says Narrandes. “We’ve been through the full cycle, from backing early-stage entrepreneurs to helping them navigate growth challenges and ultimately achieve strong outcomes.”

Performance has been robust, too. “We’ve maintained a blended track record of over 30% in this space,” he notes, “and that’s not by chasing hype. It’s through disciplined, long-term investing.”Futuregrowth’s institutional heritage gives it a distinctive edge in governance and risk management which are qualities often in short supply in early-stage investing. “Co-investors know that when they bring us into a deal, they’re getting a credible and robust partner,” says Narrandes. “We apply rigorous investment committee discipline, not to slow founders down but to strengthen the business.”

That partnership philosophy extends beyond funding. When portfolio companies face difficulties, Futuregrowth’s team gets involved. “If one of our startups hits a rough patch, we’ll roll up our sleeves and help, whether it’s helping restructure, raising follow-on capital, or providing operational support,” says Narrandes.

The power of the team

Behind the portfolio is a diverse, multidisciplinary investment team – a deliberate choice that mirrors the kind of balance Futuregrowth looks for in its investee companies. “We’ve built one of the larger and more experienced teams in the local VC space,” Narrandes explains.

That diversity of background and thought is a big advantage. It reflects the very qualities Futuregrowth values in founders – complementary skills, sound judgement, and a variety of perspectives that help uncover opportunity and manage risk from multiple angles.

Integrating ESG with realism

Environmental, social and governance (ESG) considerations are central to Futuregrowth’s broader investment philosophy, but the team applies them pragmatically in venture capital.

That pragmatic approach is evident in SweepSouth, a Futuregrowth-backed platform that connects SweepStars with households seeking cleaning services. “It’s a powerful example of social impact,” says Narrandes. “It empowers mainly women to take control of their time and earnings, while creating safer, more formal employment opportunities.”

Managing risk in a volatile world

Venture capital, by nature, involves higher risk and in an unpredictable global environment, that risk needs careful management. “The key is diversification,” says Narrandes. “Our venture capital fund currently sits within a larger developmental equity fund, so we’re able to diversify across multiple sectors.”

While the fund remains overweight in fintech, still one of the most active and investable areas on the continent, it also backs innovation in agritech, proptech and energy. “We look for sectors with structural growth,” he adds. “But diversification gives us resilience when macro factors shift.” That includes negotiating strong governance rights and downside protections in startup agreements.

The next chapter: A dedicated VC fund

As South Africa’s venture ecosystem continues to mature, Futuregrowth is preparing for its next big step: the launch of a stand-alone venture capital fund. “Up to now, our VC investments have sat within the Developmental Equity Fund,” explains Narrandes. “The exciting part is that we’re now launching a dedicated vehicle called the High Growth Developmental Equity Fund (HGDEF), which will focus purely on venture.”

The new fund will allow Futuregrowth to broaden its footprint beyond South Africa, with the flexibility to invest in high-potential businesses across the African continent. “Our current fund is mostly South Africa-focused,” says Narrandes. “The HGDEF will include African exposure, which is where we’re seeing incredible innovation and market opportunity.” Set to launch before the end of 2025, the fund represents a milestone in Futuregrowth’s venture journey and is a signal of confidence in both the local innovation ecosystem and the asset class itself.

Building for long-term growth

For all the excitement around venture investing, Narrandes returns often to one theme: discipline. “The fundamentals don’t change,” he says. “Strong teams, good governance, realistic valuations, and businesses that solve real problems – those are what make venture capital sustainable.”

In an ecosystem still finding its rhythm, Futuregrowth’s blend of institutional discipline and entrepreneurial empathy is helping shape the next generation of African innovators.

This article originally featured in the November issue of Money Marketing SA. Read the original here.