Leading South African SME investment and business development firm, Edge Growth, has officially launched an innovative catalytic debt fund to support established, technology-enabled scale-ups. Set up more than three years ago, the fund has now reached a R350 million first close.
It will invest in growth-stage businesses, typically at Series A to C funding rounds, that have proven their business models but require flexible growth capital to scale at a time when valuations are evolving. This fund also aims to address a significant funding gap, serving scale-ups not yet suitable for traditional debt and providing much needed non-dilutive capital for founders.
The Edge Impact Fund (EIF) is managed by Edge Growth Ventures, the impact investing arm of Edge Growth, and provides catalytic debt and hybrid capital to qualifying businesses in South Africa and select African markets. Financing options include, but are not limited to, term loans, working capital finance, venture debt, convertible loans and revenue-based finance. The EIF is anchored by commitments from two major local financial institutions.
The EIF is aimed at established, high-growth, technology-enabled businesses with annual revenue of R20 million or more, that have proven business models, predictable revenue and a clear strategy to scale their operations and impact. Sectors being focused on include fintech, health tech, education and green technology. Investment sizes will range between R20 million and R60 million per company.
“At Edge Growth, we have established an extensive track record in venture debt, having launched South Africa’s first dedicated venture debt fund in 2022. The launch of the EIF is another important step in providing bespoke, fit-for-purpose funding to high-potential, impactful and scalable businesses,” says Noluvo Nela, Partner & Fund Head at Edge Growth Ventures, who will be heading up the EIF.
The EIF is led by an all-women management team, demonstrating its commitment to fostering diverse leadership while backing the next generation of high-growth African businesses.
The launch of the EIF also marks a strategic evolution for Edge Growth Ventures – from managing funds that were mostly backed by corporate Enterprise and Supplier Development (ESD) programmes, to a model that appeals to major institutional investors. “This is both a landmark in our expansion strategy and a vote of confidence in the SME funding value proposition by the wider investment community,” says Janice Johnston, Chief Executive of Edge Growth Ventures.
Following the R350 million first close, the fund is targeting a final close of R750 million by December 2027.
Since 2009, Edge Growth Ventures has raised approximately R2.9 billion funds under management, supported more than 200 small and medium-sized businesses, completed around 90 investment realisations and helped create over 9 000 jobs. Backed by nearly two decades of investment experience, the team has extensive expertise in debt, equity, and hybrid financing solutions.
For more information, go to https://edgegrowth.com/edge-impact-fund/