The little-known company founded by South Africa’s most prominent investor billionaire

The late Allan Gray was one of South Africa’s most prominent and wealthiest investors, but many may have never heard of the impact firm he founded, E Squared. 

Gray is primarily known in South Africa for the investment company named after him—the largest private asset manager in the world—and other ventures like the Bermuda-based Orbis. 

However, in addition to his keen interest in finance and wealth, Gray was also a prominent philanthropist.

He founded E Squared in 2007, which was set up as Allan Gray’s employment equity partner, holding roughly 18% of the investment firm.

In 2016, the company started its funding activity, with the company now offering pre-seed funding to mature-stage investments. 

The company takes a unique approach to funding by trying to marry investor returns with social good.

The company is dedicated to funding entrepreneurs to create employment opportunities to tackle social inequality and enable economic inclusivity. 

As an impact investor, E Squared provides funding and business support to high-growth businesses, early-stage founders and social entrepreneurs. 

Speaking with BusinessTech, E Squared CEO Gladwyn Leeuw said the company is essentially two companies within one. 

The first focuses on Social Entrepreneurs, which relatively smaller amounts to start-ups and non-profit benefit organisations to help them build scale. 

These businesses can often receive pre-seed funding, where business concepts are put to practice, and seed funding, where a company has started earning revenue but requires more cash. 

E Squared Ventures operates more like a conventional venture capital firm, where high-growth and scalable ventures are invested in. This can also include post-investment support. 

When it comes to larger investments, Leeuw said that E Squared will often partner with other venture capital firms with slightly more experience to ensure a greater chance of success. 

Unlike other Venture Capitalists that have to answer to shareholders and often have a shorter timeframe to receive profits, E Squared benefits from the dividends it receives from Allan Gray.

Any potential earnings from its portfolio companies are then used to fund other ventures, with the cycle then repeating. 

This means the company can adopt a longer-term investment strategy, giving entrepreneurs patient capital from pre-seed to maturity. 

The company is also sector-agnostic, allowing it to invest in various sectors. 

For instance, in 2024, the company invested in Fintr, which tries to improve financial literacy via gamified learning, and the digital agriculture company, Khula. 

Regarding more well-known entities, the company recently invested in MyNextCar, which offers services to Bolt drivers and fleet managers. 

Measuring impact  

In 2024, E Squared invested R370 million into companies, spanning the full enterprise lifecycle from pre-seed ventures to Search & Pipeline initiatives and strategic co-investments. 

The group noted that 32,000 jobs have now been created, supported and benefited from E Squared. 

The portfolio grew by 44% year-on-year, with multiple invested capital increasing to 1.42 times. 

The company’s total returns of R103 million from a total investment of R1.02 billion may seem low. 

However, it is essential to note that venture capital firms often take longer to earn returns, and that the greater risk usually leads to greater returns from only a set of investments.

Collaboration with other funds is becoming increasingly common for the group, which recently partnered in a R300 million Fund of Funds with the SA SME Fund and the Technology Innovation Agency. 

E Squared Co-Funding also funds high-growth investment with a mandate to focus on ventures with at least 25% black and/or female ownership at the Series A+ stage, where companies tend to break even.

Looking to the future, the company plans to expand E Squared Co-Funding in terms of capital deployed and geographic reach.

The company also plans to invest in more diverse founders across Africa and hopes to change how capital is allocated across the continent.