Assessing options in an increasingly cluttered market
Matters such as transparency and deal flows should be investigated before a selection is made, writes Pedro van Gaalen
Investors have many section 12J venture capital companies (VCCs) to choose from, as 135 are registered with the SA Revenue Service (Sars). This can make it hard to know where to invest. Kalnisha Singh, impact economics executive at LifeCo UnLtd, says as a starting point that a VCC’s prospectus should be analysed. "It’s prudent to invest only in funds that are transparent about the way money will be invested. It is industry best practice to have a pre-approved deal pipeline the VCC can invest in once the capital is raised." Jeff Miller, CEO at Grovest, urges investors to also review the VCC’s management team and board. "Stick to VCCs that are managed by a knowledgeable and experienced team with a proven track record," he says. Another important factor to consider is speed of deployment. He says: "With 36 months to deploy capital, a VCC may not be proactive in funding qualifying companies. While fund managers must perform due diligence [investigations] investors aren’t realising a ret...