For South African startups, winning customers is only half the battle. Even once people begin paying for their products, raising enough capital to grow can remain a struggle. That is precisely the funding gap Mamor Capital Ventures aims to address with its first venture capital fund.

The black women-owned and managed firm has raised R300 million ($18.8 million) in the first close of its inaugural fund, with the Public Investment Corporation (PIC), South Africa's largest asset manager, serving as anchor investor. The PIC, which manages funds on behalf of South Africa's public sector, including government employees' pension funds, is the country's largest asset manager, and its participation gives the fund a significant institutional stamp of credibility. Mamor is still fundraising toward its R550 million ($34.375 million) target and says it will back South African technology companies that already have paying customers. A key milestone to watch will be whether the firm reaches that final close, and how quickly it begins deploying capital into post-revenue businesses.

Mamor's fund highlights a broader problem in South Africa's startup market: companies can have paying customers and a functioning business yet still struggle to find investors willing to finance their next stage of growth.

Mamokete Ramathe, founder and chief executive officer (CEO) of Mamor Capital, said the firm spent more than three years raising the fund and found that many traditional investors, including pension funds and banks, remain cautious about venture capital. Some investors, she said, have mandates or risk limits that make it difficult to invest in early-stage companies, while others still associate venture capital with backing businesses that have not yet proven their products work.

"The fundraising journey reinforced that institutional appetite for venture capital in South Africa is still developing," Ramathe told TechCabal in an interview on Monday.

Mamor is attempting to reduce some of that risk by investing in companies that have already demonstrated customers will pay for their products or services. Ramathe said the firm does not require companies to be profitable before investing. Instead, it looks at whether they have paying customers, can retain them, have a market they can grow into, and have a realistic path to profitability.

Southern Africa's VC market recorded R13.35 billion ($834.4 million) in active investments across 1,325 deals in 2024, but limited exits and follow-on funding remain barriers. That places Mamor in a market where capital is growing, while some founders still struggle to secure their next round.

Ramathe explained that a company may have moved beyond an idea and built a business but still be too small or risky for a bank loan. At the same time, the market still has gaps in follow-on funding, with limited exits and financing for later-stage companies remaining a challenge.

"There is a significant funding gap for early-stage, post-revenue businesses in South Africa," Ramathe said.

Fuzlin Levy-Hassen, Mamor's co-founder and chief financial officer (CFO), said the fund will focus on businesses with evidence of genuine demand rather than simply promising future growth. "We are looking for businesses that have moved beyond proving an idea and can show real commercial demand," Levy-Hassen said.

The fund will focus on areas including financial access, digital infrastructure, and technology that Mamor believes can expand economic participation by helping more people and businesses access financial services and markets.

The PIC's investment is notable because institutional investors have traditionally been cautious about allocating money to venture capital, where returns can take years and some investments can fail. Leon Smit, the PIC's acting chief investment officer, said the backing gives the organisation exposure to South Africa's growing venture capital market while supporting transformation.

"Mamor Capital brings together an experienced investment team, a clear strategy, and a strong transformation proposition," Smit said.

The PIC also believes institutional investors can play a bigger role in providing the long-term capital needed to develop South Africa's venture capital market. There are signs that interest is growing: Ramathe said some institutions that are not yet investing are researching venture capital and looking at ways to participate in parts of the market where risks are lower.

Ketso Gordhan, CEO of the South African Small and Medium Enterprise Fund, which invested through its High Impact Seed Fund of Funds, an early-stage venture capital investment vehicle, said increasing the number of local fund managers able to back technology businesses is important.

"Our investment is intended to strengthen the pool of local fund managers with the capability to identify and support promising technology businesses," noted Gordhan.