SOUTH AFRICA – Venture capital firm Kalon Venture Partners has successfully completed its final Section 12 J capital raise with Assets Under Management of over ZAR250 million (US$17.5 million).
Formed in 2016, Kalon Venture Partners is one of the leading South African venture capital funds and operates under the Section 12J initiative that until recently offered investors in registered funds tax breaks.
The firm invests in post-revenue start-ups with high growth and high impact potential and has so far backed nine disruptive South African technology companies.
The Section 12J scheme, so-called because it was part of Section 12J of the Income Tax Act, was introduced in 2008 to encourage investments in start-ups and Small and Medium Enterprises, riskier investments that nonetheless could help to create jobs and stimulate economic growth.
In February 2021, South Africa’s Treasury announced it was being abolished as of June 30 of the same year as it had not sufficiently met its objectives, with many such funds being used to invest in areas like property as opposed to job-creating businesses.
Section 12J offer tax breaks for investors, which offered rebates to South Africans if they made investments through approved venture-capital companies.
Kalon has managed to close out a ZAR250 million (US$17.6 million) war chest in advance of the end of the initiative, but Chief Executive Officer Clive Butkow was critical of the decision to end the initiative.
“It was short-sighted and I believe the government threw the baby out with the bathwater rather than extending the legitimate 12Js,” he said.
Kalon invests in South African entrepreneurs with innovative technology solutions and assists them in scaling both locally and into global markets.
Kalon’s executive and non-executive teams have years of experience in building and scaling international businesses.
“Having been involved in building many technology businesses, we provide more than financial capital but 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,” Butkow said.
In April 2021, Kalon Ventures Partners announced a better-than-expected capital raise that meant each of its funds have in excess of ZAR100 million (US$6.85 million) each.
May of the same year 2021, Kalon Venture Partners and Caleo Private Equity have announced a US$2.5m Series A co-investment into iXperience (iX), an educational-tech company that partners with high schools, universities and corporates to provide progressive education programs and services that equip students with industry-focused skills, a decision its CEO says was strongly motivated by the exceptional quality of the entrepreneurs and innovative technology platform surpassing what’s currently in the market.”
Kalon also infused follow-on investment into cybersecurity start-up Sendmarc, one of the leading cybersecurity e-mail protection and compliance companies, with ambitions to scale globally.
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