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GroVest raises just over $4m for GroTech

Africa Global Funds
March 24, 2016, midnight
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Word count: 436

GroVest, a venture capital firm that invests in innovative technology companies, has raised R62m ($4.01m) in the first round of funding for its GroTech fund with a significant capital injection from Caleo Capital, a wealth and asset management business.

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GroVest, a venture capital firm that invests in innovative technology companies, has raised R62m ($4.01m) in the first round of funding for its GroTech fund with a significant capital injection from Caleo Capital, a wealth and asset management business.

Clive Butkow, GroTech’s CEO, said: “We have funding and are ready for business, so we want to engage quality tech entrepreneurs who aim to disrupt industries and grow rapidly. Once this capital has been deployed, we will open for second round funding to investors who want to take advantage of great returns and the tax relief offered by our Section 12J status.”

GroVest is South Africa's first venture capital company, which enables investors to write off up to 100% of their investment capital against their taxable income.

GroTech investors (individuals and trusts) are eligible for a 41% tax break at the time of investment (28% for companies) which mitigates the investment risk and significantly enhances the potential return.
Provided the investment is held for at least five years, there is no recoupment of the tax benefit when the investment is realized.

GroTech aims to achieve an investment return of five times the risk capital invested within 6 years with a targeted IRR in excess of 30% per annum.

The fund will invest in entrepreneurs looking for growth capital to scale businesses disrupting traditional industries, such as banking, insurance, health and wellness, telecommunications, retail, media and entertainment.

The fund’s strategy is to provide growth capital and acquire a minority stake in high growth innovative digital technology companies, assist these companies with hands on involvement to help build the businesses into assets of value and exit the business to trade buyers or through an IPO (a buy to flip strategy).

The GroTech team is extensively networked in the tech ecosystem and has a pipeline of investment opportunities under evaluation.

Caleo Capital has invested significant capital into GroTech to help build and grow their venture capital interests.

Nicholas Liebmann, Co-Founder and Joint CEO of Caleo Capital, said: “We made a decision that a partnership with the strong GroTech team would be a good way to build on the success of our venture capital interests.”

Garth Wellman, Caleo Capital’s Co-Founder and Joint CEO, added that GroTech’s strong management team was another attraction.

“The directors have extensive experience in the technology ecosystem, have committed their own funds and will be actively involved post investment to reduce the risk,” he said.

“In addition to strong investment possibilities and great returns, we want to support how these disruptors will change the way we interact with businesses, people and our environment,” he added.

Caleo Capital will be represented on GroTech’s Board as well as on its Investment Committee.

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