Agency to back venture capital fund
THE Technology Innovation Agency (TIA) last Friday gave a nod to a R100m venture capital fund, said executive for industrial sectors Pontsho Maruping.
The move by the agency came when critics questioned if this was in line with its mandate. The agency, which received an allocation of R433m in this financial year, was established by an act in 2008 to bridge the innovation chasm, the gap between idea and marketable product.
Although South Africa has increased its academic research output in the past decade, the number of its patents has remained poor. Patents are considered an important innovation marker.
TIA came under close scrutiny in the 2010 ministerial review into science, technology and innovation, which called for the agency to be reviewed to ascertain whether it is "fit for purpose".
The agency is a merger of seven entities — the Innovation Fund, Tshumisano Trust, Cape Biotech Trust, PlantBIO Trust, LIFElab, BioPAD and the Advanced Manufacturing Technology Strategy Implementation Unit — and this has given rise to a number of challenges. Its detractors have accused the agency of misunderstanding its mandate, and that it was playing in the venture capital space, where it did not belong.
"They say we shouldn’t do it (be involved in venture capital), but who else is doing it? We do it for technology innovation in South Africa," TIA CEO Simphiwe Duma said recently. "Venture capital in South Africa acts more like private equity."
A former senior employee, who asked not to be named, last month told Business Day: "(TIA) should not be making money. They don’t understand the innovation chasm (between idea and prototype).
"The state should not be involved in commercialisation because (it forces them to) cherry pick, and so you do not allow innovation to happen."
However, the venture capital fund aimed to be a "funder of funds", Ms Maruping said. "There is a commitment of R100m (from the board), and the proposal is to put this into at least three private sector venture capital funds (which) will invest these funds over a five-year period."
She said the private sector funds had not been selected, and that the agency would begin a process to select them, based on "their focus (being) aligned with TIA’s mandate".
Meanwhile, Mr Duma said he expected the independent review of TIA to be completed by the end of the year.