Seed Engine, WDB Investment Holdings (WDBIH) and Grovest have announced the launch of the WDB Seed Fund, an early stage, impact investment fund dedicated to fostering economic growth in South Africa.
Investors can select to invest in agriculture, agri-processing, logistics, ICT, education, retail or manufacturing, with three classes of shares available: enterprise development, supplier development, and impact shares.
In addition, the fund has been established as a section 12J Venture Capital Company allowing investors to deduct the full amount of their investment from their taxable income in the year the investment was made, equaling a tax benefit of 28% for businesses and 41% for trusts or individual investors.
Faith Khanyile, CEO of WDBIH, told Tech City that the new fund will break down the challenges that small and medium sized enterprises face when trying to expand and grow, stating, “This will be achieved through capital, high impact mentorship combined with technical and business support, as well as support in accessing markets.”
Earlier in July, prior to the fund launch, WDB Investment Holdings acquired a 30% stake, and venture capital company, Grovest, acquired a 27.5% stake in Seed Academy, creating a joint entity before the launch.
“Incubation is not producing the results SA needs and entrepreneurs are battling to build and scale their businesses and create jobs,” Donna Rachelson, CEO of Seed Engine told Entrepreneur Magazine. “Through the WDB and Grovest we will be able to tap into corporate and government relationships and networks that will help Seed Engine reach deeper into the communities and sectors that need the most urgent support.”
The fund is targeting an initial corpus of R40 million (US$2.87 million) by February 2017 with a total fundraising goal of R100 million (US$7.2 million).
“The fund allows organisations [sic] to achieve an above average targeted internal rate of return of 20% on their investment in enterprise and supplier development programmes [sic] with a focus on black women and youth-owned businesses,” Rachelson told Tech City.
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Lynda Kiernan