SA-based digital venture capital firm Kalon Venture Partners has successfully completed its final Section 12J capital raise, with assets under management of over a quarter of a billion rand.
Kalon’s first fund started in 2016 and it invested in nine disruptive technology companies, and its second fund invested in seven of those companies.
The company says it is now seeking innovation-led South African entrepreneurs to deploy its war chest of capital.
Kalon has made significant investments in local tech start-up companies over the years.
In May, Kalon Venture Partners and Caleo Private Equity announced a $2.5 million (R35 million) Series A co-investment in iXperience (also known locally as iX).
The previous month, it infused follow-on investment into cyber security start-up Sendmarc. Last year, Kalon picked up a stake in Sendmarc, saying the start-up’s disruptive technology solves big business problems in a growing market of cyber security threats.
The venture capitalist firm also played a part in November last year when local fintech start-up FinChatBot secured R25 million additional funding from three venture capital companies for its expansion into France, UK, Portugal and West Africa.
It also announced a $1 million (R18 million) investment in Mobiz, which it said is one of the fastest-growing smart SMS marketing engagement platforms in SA.
“The Section 12J initiative enabled South African investors to participate in the exciting venture capital asset class,” says Kalon CEO Clive Butkow, on the latest capital raise.
“The Section 12J initiative was born in 2009 to raise capital to assist early stage entrepreneurs to grow their businesses.”
Section 12J has been part of SA’s Income Tax Act and provided investors with an immediate tax deduction equal to 100% of the amount they have invested.
However, National Treasury announced in its 2021 Budget that the Section 12J tax incentive will not be extended beyond its sunset date at the end June.
Butkowcomments on the premature ending of the Section 12J sunset clause: “It was short-sighted and I believe the government threw the baby out with the bath water rather than extending the legitimate 12Js.”
According to Butkow, the companies that Kalon has invested in have already created in excess of 200 jobs.
Kalon invests in South African entrepreneurs with innovative technology solutions and assists them in scaling both locally and into global markets.
Butkow continues: “Having been involved in building many technology businesses, we provide more than financial capital but [also] operational skills in helping scale the businesses. We are the operators behind the entrepreneurs and our ‘high touch’ approach is what many entrepreneurs are looking for to scale their businesses.”
Access to Kalon’s skills comes with a warning from Butkow: “We look for the best entrepreneurs and teams; the technology we invest in must have a competitive-edge that is 10 times better, faster, cheaper than competitors. Kalon also looks for businesses that display good traction with a large addressable market.”