By SAVCA
While institutional capital remains a relatively small contributor to South Africa’s venture capital (VC) market today, local industry leaders and stakeholders believe the foundations are increasingly being laid for greater participation from pension funds, retirement funds and other long-term institutional investors.
This was revealed in the 2026 SAVCA Venture Capital Industry Survey, where 29.4% of fund managers identified “unlocking institutional investment” as a key medium-term priority, tied with attracting foreign direct investment (FDI) as the industry’s leading strategic objective.
Historically, VC allocations have often been viewed as niche investments rather than a formal component of institutional portfolios. More recently, however, the industry is generating the complete exit and performance data needed to advance understanding and confidence in private capital as a long-term portfolio strategy.
Research commissioned by the SA SME Fund, in partnership with SAVCA and Endeavor South Africa, analysed more than a decade of South African VC activity and found that R2 billion ($120 million) invested into exited businesses generated approximately R4.9 billion ($294 million) in realised returns, representing a return profile broadly comparable with more mature VC markets internationally.
“For institutional investors and pension funds, this presents both responsibility and opportunity,” says Anusha Naidu, CEO of SAVCA. “Trustees and allocators today are tasked with balancing risk, resilience and long-term sustainability in an increasingly complex world. Private capital offers tools to meet that challenge: diversification, access to innovation, and the ability to participate directly in real economic growth.”
The survey findings were echoed in discussions at SAVCA’s VC Conference, held recently in Stellenbosch, where industry stakeholders explored how institutional investors are increasingly engaging with the asset class.
Speaking on a panel around capital allocation trends, Noluvo Nela, Partner and Fund Head at Edge Growth Ventures, noted that VC allocation for institutional investors used to be more opportunistic and assessed on a case-by-case basis. “We have, however, evolved from that,” she says. “And are now at a place where allocation is becoming more structured, based on return expectations from LPs and a growing understanding of VC as an asset class.”
Nela adds that the industry now has a responsibility to provide the evidence required for more informed allocation decisions. “I think we have reached a stage where the onus is also on us as an industry to ensure that we are sharing comparable data that assists with this decision-making. This is in line with a more structured phase of asset allocation.”
Another key theme emerging from the conference was that capital exists, but access remains the challenge.
According to Anne-Marie Chidzero, Chief Investment Officer of FSD Africa, the focus should be less on the availability of capital and more on creating the structures, platforms and market mechanisms required to channel long-term institutional money into productive venture investments.
This includes addressing ecosystem frictions, improving liquidity opportunities and creating investment structures that better align with the needs of pension funds and other large allocators. “How do we then create the right types of platforms to enable liquidity and allow capital to move more efficiently?” she asks.
Arguably the strongest consensus across the recent survey and conference discussions is that an acceleration in exits and liquidity – supported by solid data – is key to unlocking greater institutional participation in VC.
Encouragingly, the industry is beginning to build exactly the evidence base institutional investors have long demanded.
“The performance is better than we expected, in line with some of the best industry players in the world,” says Ketso Gordhan, CEO of SA SME Fund. “And this data is certainly leading to more conversations with advisers and pension funds that are increasingly considering dipping their toes into the VC asset class.”
While this represents meaningful progress, Gordhan acknowledges there is still significant work to do before South African VC becomes a mainstream institutional allocation. “We’re still a long way from being a mature asset class that can easily attract institutional money.”
The next phase of growth, according to Naidu, will require continued collaboration across the ecosystem. “Improving exit pathways, strengthening the pipeline of investment-ready businesses and maintaining an enabling policy environment will all be critical to unlocking the sector’s full potential as a credible, long-term institutional asset class.”
