Kalon Venture Partners opens investment into 12J fund

Johannesburg-based Kalon Venture Partners, a registered Section 12J Venture Capital Company, has announced that it is open for investment into its second fund. 

Kalon Venture Partners is open for investment into its second Section12J fund

In an interview with Ventureburn, Clive Butkow, CEO of Kalon Venture Partners outlines why Section12J is the best investment vehicle.

“The tax benefit and access to an experienced management team in assisting entrepreneurs to scale their businesses. By investing in a Section 12J venture capital company, the investor not only qualifies for a full deduction of the total investment amount from their taxable income in the relevant tax year, but they are also indirectly supporting the South African economy and supporting the growth of local SMEs.

What is section 12J?

Section 12J venture capital companies enable investors to invest in higher-risk innovation-led startups and in turn, generates employment opportunities and overall positively contribute to the local economy. 

Benefits of Section12J investments

Investors are able to claim amounts incurred on acquiring VCC shares as a deduction from taxable income.

Butkow highlights the benefit of investing in Section12J. 

“A 100% deduction of your investment from your taxable income. Also provides investors an opportunity to participate in something they are passionate about, such as technology, without having the required capital and skills.”

Kalon Venture Partners claims that it delivers above-average returns with its investee companies. According to a report by the venture capital company, its investee companies grew between 96% – 240% in revenue in 2020. 

Focusing on disruptive technology

Kalon Venture Partners focuses on investing in companies/startups which have created disruptive digital technologies and are equipped with experienced entrepreneurs with domain expertise, high gross margins, large target addressable markets, and unique intellectual property (IP). 

Kalon investee company highlights from 2020 include:

• Ozow hit the ZAR1 billion in GMV in one month, a first for the company. 
• FinChatBot raised a round of capital for their European expansion.
• Sendmarc exceeded 100 paying clients in less than a year.
• Mobiz grew at a remarkable 240% in FY20.
• Flow has seen 30% month-on-month growth during the last few months and a 60% growth in January, 2021.
• Carscan has closed numerous POC’s 

The above results showcase a positive overall yield for investors who are wanting to invest in the Section12J fund. 

Economic benefits of Section 12J

With 2020 highlighting the importance of SMEs and startups in South Africa as integral contributors to the local economy, investing in a Section12J fund has a domino effect on positively contributing to job creation and national economic stability. 

Butkow explains how Section 12J assists the entrepreneurial economy. 

“It helps to provide capital to startups who want to scale their businesses locally and globally. Experienced venture capital companies also provide mentorship regarding how to scale a business, access to their vast local and global networks, and access to the human capital they require to scale their businesses. They provide capital, knowledge, and access to their network.”

Read more: Part one: All you need to know about Section 12J
Read more: Part two: All you need to know about Section 12