New VC firm eyes R1bn fund for tech start-ups

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 05 Mar 2024
Clive Butkow and Mitchan Adams, co-founders of Conducive Capital.
Clive Butkow and Mitchan Adams, co-founders of Conducive Capital.

Venture capitalist Clive Butkow’s new venture capital (VC) firm Conducive Capital is looking to create tech unicorns in SA and across Africa.

Launched in Johannesburg today, the majority black-owned, South African VC company aims to invest in early and growth-stage disruptive technologies that are post-revenue, capital-efficient and have healthy unit economics, with a good product market fit.

The founding partners are Butkow, founder and former CEO of Kalon Venture Partners, and Mitchan Adams, co-founder of Ozow, a South African fintech company, and current CEO of Aions Creative Technology.

Collectively, Butkow and Adams have invested more than R300 million in early-stage funding, with an internal rate of return of over 30% during the last seven years, they say.

Speaking at the launch, Butkow said the VC firm plans to raise its first close in July at $15 million (about R300 million), with a target final close of $50 million (about R1 billion) within 24 months.

“There is strong demand for quality capital to support emerging business in South Africa, with the deployment of early and growth-stage capital,” noted Butkow.

“We are plugged into networks that can open doors to international ecosystem players and mentors, as well as local and global investors for follow-on funding.

“We are looking for technologies that are 10 times better than what we already have in the market, not just something that is copying an already existing innovation. They should have a strong management team, with both engineering and commercial skills.”

Conducive Capital entails a fund that focuses on blending investment and entrepreneurship, supporting business owners to scale throughout Africa and beyond, he continued.

Butkow stepped down from his role as CEO of Kalon Venture Partners in the last quarter of 2023, after almost eight years at the helm of the South African digital VC firm.He has close to 40 years’ experience in building technology businesses.

Kalon Venture Partners has invested in 12 local tech start-up companies across various disciplines over the years, including cyber security start-up Sendmarc, marketing start-up Mobiz, payments company Ozow, fintech firm FinChatBot and proptech company Flow.

According to Adams, the wealth of experience behind both of the co-founders will play a key role in building Africa’s tech SME landscape. “It means we bring business acumen and tech know-how to the equation.”

They are open to adding a third partner, should they fit their strict criteria.

“We go beyond just monetary investments. Alongside funding, Conducive Capital pledges comprehensive support, offering strategic guidance, operational expertise and mentorship to nurture start-ups, facilitating their growth into industry frontrunners.”

The fund also seeks to improve diversity in the early and growth stage investment sector, and develop the next generation of black woman venture capitalists.

“We need women in this space in particular. And black women – there are not nearly enough in the tech industry. And Clive has been clear from the start that part of our reason for existence is to share knowledge and pass the baton to the next generation,” stated Adams.

Despite funding drying up over the past few years for start-ups, 2024 is a watershed year that is anticipated to show steady improvement, according to Adams. Conducive Capital is committed to fostering ground-breaking technologies, he added.

“We have identified a number of major industries and technologies that we believe are building the foundation for empowering corporations and individuals in South Africa and Africa, to create meaningful and sustainable solutions, and improve millions of lives.”