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Clive Butkow

Grotech fund set to announce first three deals

, a venture capital (VC) fund set up under the 12J VC tax incentive, is set to announce its first three investments, said fund manager Clive Butkow speaking to Ventureburn.

Butkow (pictured above) said the three three deals are all in technology products developed by existing companies. These are:

  • A tech app for a fast moving consumer goods company.
  • A social-media influencer platform, which already has revenue of about R17-million and employs eight staff. The platform has a presence in the UK and looking to expand to other overseas markets.
  • An existing business involved in booking activities in the travel sector.

Butkow expected several jobs to be created by the fast-moving consumer companies as it rolls out offices in various countries to service the new tech app.

The fund, approved in February last year by the SA Revenue Service (Sars), had initially identified a further deal but it declined to pursue this after the owner of the firm had a fall out with shareholders.

Read more: Grotech raises R62m for disruptive tech investments
Read more:
Grotech: This fund aims to pump R100m into disruptive tech

Butkow says the fund has raised R90m from 220 investors and aims to raise another R160m by end of February next year.

‘The challenge is it’s the best kept secret in the venture capital area’

There has been plenty of interest from investors, he says, pointing out that a recent event hosted by the fund attracted 600 people. “The challenge is that it (the 12J VC tax incentive) is the best kept secret in the venture capital area,” he says.

Read more: Investors clamouring for 12J VC incentive following tax hike – fund managers
Read more: Can 12J tax incentive create the jobs South Africa badly needs?

He said since last year the fund has received about 400 applications. Of these Butkow said he personally looked at half, before sending 20 onto the fund’s investment committee to review.

While the fund usually considers those products that already have some traction, he said he and colleagues have had a rethink and have decided to also consider those deals that require only less than R1m.

Altogether the fund is now looking to allocate about 20% of capital to very early-stage investments. Of the remainder 40% each will go to growth firms and late stage businesses.