South African venture capital (VC) firm Knife Capital has announced the launch of a new, South African Revenue Service (Sars)-approved section 12J venture capital company, KNF Ventures, dedicated to investing in innovation-driven ventures.
Those investing in approved section 12J VC firms can deduct the full amount of their investment from taxable income. Knife Capital said recent changes to section 12J of the Income Tax Act are beginning to have a positive impact on the South African VC industry.
“Through the 12J incentive, investors start the investment process in a favourable position by compensating for risk and enhancing future compound returns as a result of the immediate tax benefit,” said Knife Capital co-founder Keet van Zyl, who has been appointed as CEO of KNF Ventures.
The new company has targeted investment capital of R100m, although the initial closing will be smaller “to start taking advantage of impending investment opportunities”.
“KNF will be based on the style and success of previous funds and investments managed by Knife Capital where investors achieved superior returns and investees enjoyed accelerated growth,” the company said.
Knife Capital facilitated lucrative exits of local technology companies, with companies such as General Electric, Visa and Garmin buying companies it’s invested in. It has also assisted portfolio entrepreneurs with management buyouts.
“KNF will find, make, grow and realise scalable investments while aiming for a minimum of 40% annualised return on investments,” it said.
“We are taking our learnings in the local venture investment space over the last ten years, partnering with value-adding investors and utilising the Sars section 12J VCC regime to create something unique.” — (c) 2016 NewsCentral Media