Ventureburn can today confirm that a venture capital deal concluded by Cape Town based KNF Ventures earlier this month in SA healthtech firm 5nines Technologies has made history — as the first investment that the R1.4-billion SA SME Fund has effectively become involved in.
The much awaited SA SME Fund, which is capitalised by 48 JSE-listed companies, was announced by President Cyril Ramaphosa over two years ago when he was then deputy president.
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Knife Capital partner Keet van Zyl, whose VC oversees the R100-million KNF Ventures fund, confirmed on Monday that the SA SME Fund had concluded an investment of R20-million in KNF on 23 October and that the 5nines Technologies deal was signed on 2 November (pictured above are 5nines Technologies’ Greg Daus, left and Doug Siepman, right signing the deal).
The undisclosed investment by the KNF Ventures is to help 5nines Technologies to grow its pharmaceutical temperature monitoring solution PharmaScout.
Read more: Knife Capital invests in healthtech 5nines Technologies’ PharmaScout solution
Last week Ventureburn reported that KNF Ventures had on Monday (19 November) concluded its fifth deal. The deal is effectively the second that the SA SME Fund has taken part in. KNF is run as a Section 12J Fund under the Income Tax Act.
KNF Ventures’ PharmaScout deal earlier this month has made history as the first investment that the R1.4-billion SA SME Fund has taken part in
At the time Van Zyl said the deal has not yet been announced to the public yet (see the below tweet from Van Zyl last Monday, 19 November).
New @KnifeCap VC Deal Loading… pic.twitter.com/BHTcWWYGZ5
— Keet van Zyl (@KeetvZ) November 19, 2018
The three other deals that the fund has so far concluded are: cloud-based ticketing platform Quicket, machine learning startup DataProphet and e-Learning platform SkillUp.
‘KNF still open for investment’
Last week Van Zyl told Ventureburn that KNF is still open for investment until February next year and that investment is “trickling in” every week from individual investors (who must each invest a minimum of R1-million). The fund, he added, is currently tracking “around the R120-million mark”.
He said there are plans to increase the Knife Capital fund to R150-million to R180-million, in which case the SA SME Fund would put forth an additional R10-million (Section 12J rules don’t permit any one shareholder to have a stake higher than 20% in a Section 12J fund.
“Knife Capital and the SA SME Fund have a great working relationship and we are currently considering other funding initiatives and various structuring options that may allow the SA SME Fund to commit to larger amounts with us,” said Van Zyl.
He pointed out that Knife Capital also has access to additional funding pools for investment via the VC fund’s London office and in partnership with select family offices.
Van Zyl added that one of the core value propositions of the SA SME Fund is its access to a vast network of local and international Corporates with a vested interest in its success.
“The investment also gives the SA SME Fund exposure to Knife Capital ‘s current investment portfolio of five exciting local SMEs, with some more to be added soon,” he added.
Read more: Knife Capital announces R100m fund to amplify more SA startups
The fund’s CEO Ketso Gordhan last week told Ventureburn that he expected 75% of the total capital of R1.4-billion to be deployed by the accredited funds in small businesses by the end of the first quarter next year. In all, 75% of the fund’s capital is to be deployed in black-owned small and medium-sized enterprises (SMEs).
Gordhan added that in addition to the investment in KNF, his fund had so far approved investments in various other funds, including a R100-million investment in a R500-million pan-African private equity fund, an investment of R125-million to capitalise a venture fund run by Edge Growth and a R100-million loan into a company that aims to offer loans to SMEs.
Read more: SA SME Fund in new mandate to invest over R1bn in black small firms, startups
Read more: Former PPC Cement head announced as new SA SME Fund CEO [Updated]
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Read more: Over a year on, when will big companies’ SA SME Fund get going? [Opinion]
Read more: SA SME Fund will commence with due diligence in July says CEO
Read more: SA SME Fund is not aimed at venture capital sector, says CEO
Read more: Exclusive: ‘Government won’t match private sector in R1.5bn SME fund’
Editor’s note: In June Ventureburn editor Stephen Timm promised Discovery’s Lisa Klein (Discovery CEO Adrian Gore was leading the setting up of the fund on behalf of the heads of top listed companies) that he would crack open a bottle of champagne — and photograph this and carry this as a story — upon receiving the announcement of the SA SME Fund’s first deal. We’ve done just that (Timm with Ventureburn writer Daniel Mpala today, about to pop a bottle). Cheers!
Featured image: 5nines Technologies’ Greg Daus (left) and Doug Siepman (right) pictured signing the deal with KNF Ventures earlier this month (Supplied)