SA’s Knife Capital Launches 2nd Venture Capital Fund, KNF Ventures II
South African VC firm Knife Capital has launched a second section 12J venture capital fund, KNF Ventures II in a move to encourage fresh investors to engage in this alternative asset class.
Section 12J was added to the South African Tax Act with aim of attracting investors into this typically under-funded sector, in order to help create jobs and grow small and medium-sized businesses by increasing their access to equity finance and hopefully the transfer of skills whilst these businesses are being mentored. and has been built upon from the
KNF Ventures, which was launched in 2016, took advantage of the Venture Capital Company (VCC) scheme of Section 12J, where eligible investors in permitted VCCs of Section 12J can deduct the full sum of their investment from taxable income in the tax year.
Knife Capital has now launched KNF Ventures II after investing much of its first ZAR250 million (US$16.4 million) Section 12J Venture Capital Fund. It has the same investment mission as Fund I, and will continue to build on the progress and momentum generated. KNF aims to accelerate the growth of South African innovation-driven SMEs by leveraging expertise, networks and funding to produce enhanced returns for entrepreneurial-minded investors.
Knife Capital partner Keet van Zyl said COVID-19 had exponentially increased new technology adoption rates, placing innovative startups in the spotlight.
“There is a tangible shift towards embracing new ways of working, learning, interacting and transacting. This can also be felt in the investment space,” said he.
“Certain alternative asset classes like venture capital – where fund managers have been investing in technology companies for years – are experiencing increased interest from institutional and individual investors wanting to diversify.”
Andrea Böhmert, partner at Knife Capital, said COVID-19 had a substantial, but not necessarily negative effect on the broader Knife Capital portfolio.
“The resilience of a long-term investment strategy is being tested and a diversified portfolio is a good thing in times like these. The portfolio value keeps growing and some of our companies like educational content marketplace Snapplify and pharmaceutical temperature monitoring solutions company PharmaScout really benefited,” said she.
“Snapplify provided free access to e-textbooks for remote learners during the crisis and while ticketing platform Quicket was hard hit initially, it launched new successful online products in high-load hosted streaming and fundraisers. In many ways the portfolio is coming out stronger and we are proud of the entrepreneurs we backed and the way they are navigating through this crisis with solid business models and a positive culture.”
Knife Capital has been successful in 2020, co-investing with RMB in Quba, supporting Silicon Valley-based virtual presentation startup mmhmm and participating in a US$6 million funding round for its AI for DataProphet, a manufacturing portfolio firm. It has also collaborated with the SA SME Fund to develop its Grindstone Accelerator Program and founded Grindstone Ventures, a post-seed fund investing in cohort companies of the Grindstone Accelerator.
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