E Squared intensifies commitment to fuel African start-ups and spur inclusive growth

The Global Entrepreneurship Monitor highlights that Africa has the highest proportion of entrepreneurs within its population in the world. Most of these are micro, small, and medium enterprises, playing a vital role in sustaining livelihoods and ensuring food security.

However, the past decade has seen a dramatic evolution in African entrepreneurship, driven by the rise of start-ups and venture capital. Since 2011, over 10,000 start-ups have raised nearly $25bn across more than 4,000 deals on the continent. Even in 2023, amid concerns of a “funding winter”, African start-ups raised nearly $4bn — an impressive 200-fold increase compared to 2011.

The transformative potential of African start-ups

This extraordinary growth has left an enduring mark on the continent. Driving through cities like Nairobi, Lagos, Johannesburg, Kigali, Kampala and Accra, it’s clear that start-ups are transforming sectors such as education, healthcare and agriculture.

Take, for example, Khula! App in SA, which has revolutionised agriculture by connecting farmers to markets, ensuring fair and transparent pricing and promoting job creation and food security. Similarly, Altera BioSciences is striving to address critical healthcare challenges with cutting-edge biotechnology solutions, exemplifying Africa’s capacity for scientific innovation.

Yet, global financial shifts have exposed vulnerabilities in this growth. Funding to start-ups has declined by 55% since 2022, with a noticeable squeeze on deals ranging from $100,000 to $500,000. These start-ups, often operating in the “missing middle”, face limited infrastructure and support to scale or become investment-ready. Traditional venture capital models are frequently misaligned with their needs, underscoring the demand for alternative financing options such as revenue-based loans or blended finance, which remain scarce.

Addressing disparities: women and black founders

The challenges are even more acute for women and black founders in SA. Even during times of favourable financial conditions, these underserved entrepreneurs have historically received a disproportionately low share of the total funding.

As conditions have tightened, the situation has worsened. From 2021 to 2024, the share of funding going to start-ups with women founders fell by nearly 100%, while the funding going to black founders fell by 70%. Accelerator and incubator programmes, often grant-based, are the exception, continuing to provide much-needed support, but concerns around their effectiveness in building investable businesses are increasing. 

This systemic inequity undermines the potential of women and black entrepreneurs, whose solutions often stem from a deep understanding of the communities they serve.

E Squared Investments’ mission is to build an economically inclusive Africa by ensuring opportunities are both meaningful and accessible to all. It does so by providing funding and end-to-end business support to high-growth businesses, early-stage founders and social enterprises that create youth entrepreneurship opportunities.

Through patient capital, strategic post-investment support and partnering with initiatives like the Jasiri Growth Accelerator, 3 Capital Ventures and Allan Gray Makers, E Squared promotes entrepreneurial leadership that creates lasting impact.

Empowering the next generation

From 2017 to 2023, through its E2 Ventures investment programme, E Squared made 20 investments in 15 start-ups disbursing R275m across six sectors. Over a third of these deals have supported women-founded start-ups, far exceeding SA’s average, where only 10% of deals involve women-led ventures. These investments aren’t in traditional venture capital markets like fintech and e-commerce; they are often pushing beyond these sectors and delivering in high impact areas. 

E Squared’s investments align financial returns with social impact. Notable examples include:

• Pele Green Energy, which integrates community upliftment with renewable energy solutions.
• The RLabs ReCha Initiative, which transforms unemployment into opportunity through circular economy solutions.
• Setana Capital, which offers innovative embedded financing for underserved entrepreneurs.

These efforts were bolstered by the impact investment firm’s Pathways Pre-Seed Programme, through which it provides a mix of financial and technical support to ventures founded by fellows of the Allan Gray Orbis Foundation Fellowship Programme that invests in the education and development of aspiring entrepreneurs.

Launched in 2019, this initiative has enrolled 56 fellow-founded ventures, with 43 now active, including 18 women-led ventures (42%), 20 male-led (46%) and five mixed-gender teams (12%). 

E Squared doubles down on its commitment

In 2024, E Squared intensified its efforts, approving R439m in funding for 10 investments and successfully disbursing about R190m by the end of the year.

About three quarters of this amount was committed to ventures with black founders or shareholders and nearly half was committed to ventures with women founders and/or women shareholders. This is well above the industry average over the past year where less than 10% of funding went to start-ups with at least one woman founder and less than 20% went to start-ups with black founders.