South African VC firm Kalon Venture Partners, which invests in digital disruptive technologies, is to raise a US$50 million fund which will see it make investments outside of South Africa for the first time.
Formed in 2016, Kalon Venture Partners invests in post-revenue start-ups with high growth and high impact potential, and has so far backed 11 South African technology companies, including marketing startup Mobiz, payments company Ozow, prop-tech company Flow, and cybersecurity startup Sendmarc.
Its most recent fund was closed in 2021, and stood at ZAR250 million (then US$17.5 million). It began life as a Section 12J company, which incentivised South African taxpayers to invest in local companies and to receive a tax deduction of up to 100 per cent. That was abolished in 2021, and Kalon will now seek institutional investors for its new US$50 million fund, which will be Africa-focused.
“That will be our foray into African venture capital,” Clive Butkow, the CEO of Kalon Venture Partners, told the latest episode of Disrupt Podcast’s “The month in VC” series, produced in partnership with Katapult Africa, Kalon Venture Partners, and Hlayisani Capital.
Operating across Africa, as opposed to solely in South Africa, would present Kalon with challenges as well as opportunities, something Butkow said he was fully aware of.
“You can’t just lift and drop something into a new country like Nigeria, Kenya or Ghana. You look at our retailers, telcos, banks, they are dismal failures in those markets. You have to go and re-find product-market fit. There are differences – culture differences, there are differences to the way people buy, there are differences to the ideal customer profile,” he said.
“We are not naive, we don’t believe for one second we’re just doing to drop our company into a new market and it is going to work. We are definitely looking at hiring people in those markets, so we’ve got feet on the streets and boots on the ground. We don’t believe for one second South Africans can go and run a Nigerian business or a Kenyan business. We’ve just seen too much failure when you try to make that happen.”
