New Vinny Lingham linked R500m VC fund currently mulling 15 investments [Updated]

Silicon Valley based SA entrepreneur Vinny Lingham is partnering with an investment house in South Africa in a new R500-million venture capital (VC) fund, which has already identified 15 investments, the fund’s CEO Deven Govender revealed today.

Govender heads the Lion Pride Agility VCC Fund, a new partnership between investment house Lion Pride and Lingham’s angel investment company Newton Partners. Lingham (pictured above) is also the founder of startup Civic and a former judge on TV show Dragon’s Den and Shark Tank SA.

The new fund is in the form of a registered VC company under the SA Revenue Services’s (Sars) Section 12J and was approved by Sars in September last year. The fund is managed by Jaltech, an organisation that administers various Section 12J funds.

Vinny Lingham’s R500-million VC fund has already identified 15 investments

In a Youtube video published today (see below) Lingham says the fund has significant potential.

“It has enormous opportunity and the potential to use technology to build globally successful tech businesses from South Africa and this can have a massive impact on economic empowerment in our country,” he said.

Disruptive tech, impact investing

Speaking today on the sidelines of the Section 12J Marketplace event hosted by Jaltech at The Venue in Melrose Arch in Johannesburg, Govender said the new fund will invest in both technology that is making a social impact in South Africa and in disruptive technology.

He and his fellow fund managers have raised R20-million so far, mainly from friends and family.

The aim is to raise the first R200-million of the fund by the close of the 2018/19 tax year on 28 February, he said.

Govender said the fund managers promise a three times return on investment for investors who invest in impact investments and a 10 times return on investment for investors for disruptive technology.

However, Newtown Partners senior associate James Kilroe explained in an a subsequent email to Ventureburn that the fund has at present “not promised any returns”, but has rather used these as markers on the kind of return that investors can expect.

“Strictly it’s a three times goal for impact investing and five times goal for emerging technology section. We used the three to 10 times as an example of what technology can do for a business,” he explained.

Govender — who has 11 years’ experience in the private equity sector in California — said the partnership with Newtown Partners was concluded after he met with Lingham in October when he was in South Africa.

He said Lingham had been looking to set up a VC fund and was seeking business partners to roll out the fund.

Insurance, stokvel platforms

Without naming any companies that the fund is currently considering, Govender detailed two of the impact investments that his team is currently considering.

The first is an on-demand platform aimed at selling insurance, while the second is a platform that enables big brands to sell to members of stokvels who would be able to take advantage of the discounts derived from any bulk purchases made by the platform.

The idea, he said, is to source self-employed persons for the insurance platform from large insurance companies who were unable to accommodate such people but who want to claim points on the BEE scorecard by tapping the Youth Employment Scheme (YES) by placing the youth with the platform.

He said while the insurance platform is already underwritten by an underwriter, the stokvel platform has received a R6-million angel investment from a number of Cape Town investor.

Today’s event saw various 12J fund pitching to potential investors. Jaltech partner Jonty Sachs said the event was attended by over 400 people, most of them financial advisors.

Editor’s note (4 February 2019): Newtown Partners senior associate James Kilroe explained in an a subsequent email to Ventureburn dated 1 February 2019 that the fund has at present “not promised any returns”, but has rather used the figures of three and 10 times return for investors, as markers on the kind of return that investors can expect.

“Strictly it’s a three times goal for impact investing and five times goal for emerging technology section. We used the three to 10 times as an example of what technology can do for a business,” he explained.

Disclosure: Ventureburn editor Stephen Timm was a guest of Jaltech.

Featured image: SA entrepreneur and Civic founder Vinny Lingham (Supplied)