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Venture capital

  • Investors clamouring for 12J VC incentive following tax hike – fund managers

    The increase in the top marginal income tax rate to 45% for high earners is driving more South African investors to seek out the 12J venture capital (VC) incentive to offset their taxable income, say fund managers. Under the incentive, which is managed by the South African Revenue Service (Sars), investors that invest in venture capital companies (VCCs) that in turn invest in qualifying small enterprises, can write off the full investment made in any one year from their taxable income. In February in his Budget speech then Finance Minister Pravin Gordhan announced a new top tax rate of 45% for individuals earning...

  • Foreign investment injection could propel South Africa’s VC ecosystem, 12J funds

    Ask any tech startup and they’ll tell you that raising venture capital (VC) in South Africa is not easy, that said, it’s a lot easier than it was seven years ago. Back then it was next to impossible to get VC funding. The local VC ecosystem is in its 10th year of building and while by US or Israel standards we may still be in our infancy. Yet for an industry that has had to entirely bootstrap itself we’ve done very well, but we still have a long way to go. The US and Israel ecosystem developments were both significantly bolstered...

  • Unpacking South Africa’s tech startup and scaleup investor landscape

    Getting access to the right seed and growth finance is critical to the success of most emerging technology companies. But finding the right investor can be a daunting task for any founding team. You have to deal with different mandates, big egos, various terms and long lock-in periods just to start discussions and there are many boxes to tick. In working on over R300-million worth of seed and growth finance deals for our clients (see the infographic below), our team has seen it all. Without significant direction, founders can spend months worth of crucial time and energy in pursuit of an investor instead...

  • Venture capitalist questions why so few women involved in angel investing in SA

    Why are there so few women angel investors in South Africa? It's a question that continues to puzzle local venture capitalist Andrea Bohmert. “I would love to have the answer to that question, because I don’t have it,” said Bohmert, a partner in venture capital (VC) fund Knife Capital. Bohmert was speaking at a women in angel investing event hosted by the SA Business Angels Network (Saban) last night at FNB’s offices in Cape Town. She pointed out that just one of the 24 investors in Knife Ventures -- Knife Capital's VC company approved by the South African Revenue Service (Sars) in August last year --...

  • SA downgrade ‘nearly irrelevant’ to startups – Michael Jordaan

    South Africa’s downgrade to junk status earlier this month by two rating agencies may have depressed Michael Jordaan, one of the country's most respected venture capital (VC) investors, but he believes the downgrade is "nearly irrelevant" to startups. "In this tough economic climate it is useful that one of the advantages of startups as opposed to big business is that the macro economics are nearly irrelevant as it is far more important for the startup to first succeed in its narrowly defined micro-market," said Jordaan in an email to Ventureburn. However, in a wide-ranging interview, the former head of First National Bank, now the...

  • SEC ban puts brakes on equity crowdfunding in Nigeria – report

    The Securities and Exchange Commission (SEC) of Nigeria's ban on equity crowdfunding "is seriously slowing down" the introduction of crowdfunding in the country, says a new report. The Crowdfunding Potential for Nigeria report released last month by the Crowdfunding Hub, says crowdfunding has significant potential in the country, but that the SEC's ban issued in August last year has stifled the setting up of crowdfunding platforms. The SEC believes that crowdfunding cannot be effective in Nigeria for now because of a lack of rules. Donation and reward-based crowdfunding are however excluded from the SEC’s regulatory remit. This is despite a fast-evolving banking system which...

  • ‘Fintech startups in Middle East, North Africa raised $100m last decade’

    Fintech startups in the Middle East and North Africa have raised $100-million over the last decade, yet 28% fail in their initial years, says a new report by business support organisation Wamda and online payment gateway Payfort. Released last month the report, titled State of Fintech: Unbundling the financial service sector in MENA, estimates that about $50-million in investments are expected to go to fintech startups in the Middle East and North Africa (MENA) region this year. The region was home to 105 fintech startups by the end of 2015 (see featured image), with half of these having been launched since...

  • South Africa’s FSB to rule on crowdfunding by June 30

    South Africa's Financial Services Board (FSB) has set a date of 30 June by which it plans to rule on whether to craft specific rules or not for equity crowdfunding, an FSB spokesman said this week. This follows the completion of a research report by the FSB on crowdfunding. FSB internal communications coordinator Thandolwethu Masango told Ventureburn however that the report on the FSB’s research would not be made public. “The research was meant to assist the FSB to get insight into how other jurisdictions are supervising crowdfunding activities and which piece of legislation would be applicable in governing the said activities in...

  • IDC approves R17m deal to fund SA’s first 3D metal printer

    The Industrial Development Corporation (IDC) has concluded an agreement with an SA startup that plans to launch the country's first production-based 3D metal printer by June. The investment of R17-million in Metal Heart, approved last month, is the 11th deal concluded by the IDC's new industries unit, since the unit's launch in 2015. Six of the deals have been in new companies. "They moved quickly," says Gert Lombard, who says he and business partner Kim Gray initially met with the unit in November last year. The deal was approved two weeks ago. The investment is in the form of a term loan and a...

  • Exclusive: ‘Government won’t match private sector in R1.5bn SME fund’

    The SA government has no immediate plans to match the R1.5-billion that 48 large companies have committed to the SA SME Fund, National Treasury Director-General Lungisa Fuzile told Ventureburn today. Deputy President Cyril Ramaphosa pledged during the launch of the fund in May last year that the government would match any contribution made by the private sector. However Fuzile, who sits on the fund's board, said the government will instead look to improve coordination between the state and private sector, while stepping up its existing funding and business support to small businesses. "It is not clear from a fiscal point of view...