In January 2025, South African investment holding company Stocks & Strauss signalled the near-completion of fundraising for its University Technology Fund II (UTF II), securing the bulk of its R400m ($21.4m) target. While the capital injection is a notable milestone for the region’s deep-tech sector, the fund’s revised investment mandate marks a strategic pivot for institutional venture capital in the country: a direct expansion into backing university alumni.
Historically, the UTF was structured primarily to bridge the gap between academic ideation and commercialisation, focusing strictly on technology, intellectual property (IP), and research originating from within South African university laboratories. The first iteration of the fund (UTF I) validated this model with investments in spin-outs like Hyrax Biosciences, a bioinformatics firm critical in early Covid-19 variant detection, and CubeSpace, a satellite control systems manufacturer that now counts NASA among its 250 global clients.
However, UTF II broadens this mandate. Moving beyond the confines of faculty research and university-owned IP, the fund is now actively targeting spin-offs founded by South African university alumni.
The Stanford model and ecosystem implications
The strategic shift is designed to execute a thesis mirroring the dynamic between Stanford University and Silicon Valley. By capturing the value of graduates who may not be commercialising specific university IP but are building scalable technology companies, the UTF aims to construct a tighter, self-sustaining entrepreneurial loop around local institutions.
Wayne Stocks, managing partner at Stocks & Strauss, framed the strategy as treating university ecosystems as a distinct asset class. “Universities are hubs for deep-technology investment opportunities in Africa,” Stocks noted, pointing to the concentration of skilled talent and institutional knowledge necessary to drive long-term development.
For the universities, the implications are dual-fold: it reinforces their utility as commercial launchpads rather than just academic centres, while offering a mechanism for financial returns that can be recycled back into core research and infrastructure.
The strategy has secured buy-in from major institutional players. UTF II is anchored by the SA SME Fund, Stellenbosch University, and Allan & Gill Gray Philanthropies Africa, with participation from the universities of Pretoria, Cape Town (UCT), and the Witwatersrand.
Alumni in action: From BNPL to Biotech
The practical application of this broadened mandate is already visible in the market.
This week, Happy Pay, a Cape Town-based fintech co-founded by UCT graduate Mark Geary, announced a $5m seed round. Led by global investor Partech, the round saw participation from a consortium including the UTF.
While the UTF’s legacy lies in deep-tech, its participation in Happy Pay underscores the flexibility of the new alumni-focused thesis. Happy Pay operates an “ad-subsidised” payments network that removes interest and fees for consumers, shifting the cost of credit to merchants in exchange for improved checkout conversions. With over 600,000 registered users, the startup will use the capital to scale its merchant base and proprietary AI risk infrastructure — a highly commercial, software-driven play that sits outside traditional university IP.
Simultaneously, the fund continues to deploy capital into core science and biotech, driven by postgraduate talent. Recent deals include a $1.45m (R25m) growth injection into Immobazyme, a biotechnology firm led by Dominic Nicholas, who holds a master’s degree from Stellenbosch University. The fund also recently backed health-tech venture BioCODE with roughly $380,000 (R7m).
By blending software-driven alumni startups with complex, research-heavy biotech spin-outs, UTF II aims to balance the longer commercialisation timelines of deep-tech with the potentially faster growth trajectories of consumer and B2B software.
A broader continental shift
The UTF’s strategy coincides with a broader, albeit nascent, trend of African academic institutions mobilising capital to participate actively in the venture ecosystem.
In Ghana, Ashesi University recently became the country’s first academic institution to channel its own endowment resources into venture capital, making a strategic investment into Janngo Capital’s newly closed $78m second fund.
Ashesi’s endowment, valued at nearly $10m, follows a diversified total-return strategy spanning equities and fixed income. By allocating a portion of this to Janngo — a fund focused on healthcare, logistics, fintech, and the creator economy — Ashesi is leveraging institutional capital to stimulate the regional startup ecosystem directly.