South African Section 12J venture capital company Kingson Capital announced on Monday it has launched its second fund, which will provide venture capital for high growth tech and black-owned small and medium-sized enterprises (SMEs).
The fund will enable high growth tech and black-owned SMEs to accelerate their growth potential.
The fund is valued at R400million, according to Kingson Capital website.
“We believe South Africa needs a model that not only facilitates transformation, creates jobs and grows the economy but gives the investor a sustainable, stable supply chain and a return on their capital,” the company said.
Kingson Capital is a registered Section 12J Venture Capital Company (VCC) founded in 2015.
As a Section 12 J VCC, all investments with Kingson are fully tax deductible in the tax year that they are made.
Kingson invests in entrepreneurs who have unique and scalable business concepts, whose products change the current landscape and existing business models.
Ongoing business support is critical to ensuring long-term business sustainability, which is why Kingson has launched a brand-new High-Growth Tech and Black-Owned SME Fund.
The hope for the success of both Enterprise Development and Supplier Development hinges strongly on the idea that capital and supply contracts are enough to bring about meaningful transformation, but studies have shown that capital alone is not a sufficient driver to propel SME’s and black-owned businesses into their next growth phase.
“Although we see a substantial rise in South African start-ups,” says Gavin Reardon, founder of Kingson.
“It is unfortunate that when it comes to them sustaining that start-up momentum, many fall by the wayside due to lack of support.”
The Fund pairs investment with business support through its investment structure. This allows investors to score B-BBEE points under both Enterprise and Supplier Development scorecards, whilst acting as a minority shareholder in the black-owned business in which it has invested.
Pairing investment with business support facilitates meaningful economic transformation, driving stable and sustainable black-owned business. Where SME’s look to enter a corporate Enterprise and Supplier Development program, they should not only seek funding, but this holistic approach.
By investing in the SME or black-owned business as an equity shareholder, the fund aligns to its long-term success, growth and profitability.
The Fund Manager acts as a shareholder representative and plays an active role in strategy and business development, as well as providing financial management and a key governance oversight role. These are all essential factors in the transfer of skills to executives and senior management that ensure long-term success and sustainability.
Kingson Capital’s Fund One includes a portfolio of tech assets, focusing on communication, engineering, FinTech and HealthTech with a mix of start-up and expansion capital.