TAX INCENTIVE
What's driving the surge in venture capital inflows?
Increased investment by venture capital companies is welcome while business confidence is at its lowest level in 32 years
Venture-capital investments more than doubled in 2016 to R872m, as improvements to the section 12J tax incentive led to a spike in new funds, while established managers poured more into existing portfolios. "Section 12J was a major contributor to the increase, opening up new channels of fund raising and the establishment of new funds," said Tanya van Lill, CEO of the Southern African Venture Capital and Private Equity Association (Savca). New fund managers, not active before 2015, invested R312m in 2016. Established managers invested R291m in follow-on investments. Increased investment by venture capital companies is welcome while business confidence is at its lowest level in 32 years as political and economic uncertainty weighs on private sector investment. Savca’s 2017 Venture Capital Survey, covering 2016, found that early stage deals, which are the riskiest as they involve seed funding and start-up capital, accounted for half of all deals done by value.Entrepreneurs who had been...
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