Section 12J Cancelled, Hlayisani Growth Fund Closes First Round

Updated on 1 March 2021

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Government Cancels Section 12J Investments

Government Cancels Section 12J Investments

The Treasury has announced that it will be putting an end to Section 12J of the Income Tax Act.

Section 12J intended to boost the South African economy by encouraging investment into a range of private companies which meet defined criteria.

The Section 12J incentive gives individuals, companies and trusts the ability to write off 100% of their investment against their taxable income in the year they invest. Therefore, investors can benefit from up to 45% immediate tax relief, thereby reducing the cost of the investment, providing downside protection and enhancing overall returns.

In its Budget 2021 statement, the Treasury said it had not “sufficiently” achieved its objectives of developing small businesses, generating economic activity, and creating jobs.

SEE ALSO: Section 12J manager, Westbrooke Alternative Asset Management Allows South Africans to Invest in Student Accommodation and Hospitality Asset Businesses and Reduce Tax

Hlayisani Growth Fund Successfully Closes First Round At R350m

Hlayisani Growth Fund (HGF) has announced its first close at R350m to invest in high-growth, high-impact businesses. The funding round was led by Standard Bank and prominent SA family offices.

Focussed on the SME ecosystem, the HGF tackles the existing SME funding gap between early-stage venture capital and more traditional private equity in South Africa. The Fund offers strategic support and capital to high-growth, highly scalable SMEs with a proven track record, and specialises in growing these SMEs into large, successful enterprises that operate across multiple territories, create jobs and generate export revenue domestically.

Investments are chosen for their sustainable growth and above-average returns potential, as well as their strong focus on delivering a positive socio-economic impact. R200m has already been invested in seven award-winning businesses that are expanding globally and operating on six continents. The portfolio of companies includes Snapplify, GoMetro, Wyzetalk, LEAP, Opennetworks, Sudonum and Ikeja.

Since July 2019, and despite the recent COVID-19 lockdown, these businesses have more than doubled their employees by creating of new direct jobs to employ a total of 422 people in the portfolio companies. These businesses have provided solutions and support to approximately 1,600 entrepreneurs, serving some 55,000 customers globally. The portfolio is also achieving the United Nations’ Sustainable Development Goals, most notably the aims of eliminating poverty and providing quality education. To this end, companies within Hlayisani’s portfolio have educated and trained around 404,000 learners and 3,900 teachers, with roughly half a million teachers also being given digital access to e-learning content in 2020 alone. In total, Hlayisani portfolio solutions are being used in more than 7,850 schools globally.

The Fifteen African Startups of the SAIS Investment Readiness Program

Southern Africa Innovation Support Programme (SAIS) and Seedstars announce the second batch of fifteen startups that are part of the Investment Readiness Program (IRP) 2019-2020. The participating startups have been chosen for their SDG-focused tech solutions and were selected to go through the IRP to maximize their startup education and bring their solutions closer to being investment-ready.

The second batch of startups that are continuing in the second phase of  the SAIS IRP program with 1on1 mentorship is the following:

  • We Deliva SA. – Deliva is a Food Ordering and Delivery Platform that provides Customers, Drivers, Restaurants and Wholesalers tools to expand and scale.
  • Sparco Inc. – They have built tools to allow businesses to collect money from their customers anywhere and also have access to a pool of delivery companies.
  • Mangwee – Mangwee is a Zambian-based mobile money transfer and remittance platform that enables learning institutions to process payments.
  • Adongo Blockchain Ltd – Decentralized online ad exchange platform that makes digital advertising fast, easy, affordable and data-driven.
  • Flamingoo Foods Company Ltd – Using cutting-edge climate tech, they forecast food deficit and surplus areas before they are known and proactively react to food insecurity.
  • NOBLE AGRITECH – They design & develop low-cost & tailor-made farming technologies using locally available resources for increased productivity.
  • GenieTech Group ( beautyApp) – This beauty product and service choice orientation platform connects seekers of beauty and well-being services or products with their suppliers.
  • BrillantTS Africa [C32-PEX] – C32 – The next generation alternate digital payment and open banking platform and mobile app for the next billion underbanked and unbanked.
  • ACE Smart Technologies Ltd – They are a robust EdTech in Zambia that successfully launched an eLearning portal in partnership with Zamtel and ECZ with 25,000+ pupils.
  • Astech-Congo – Umoja Funding – Stay connected to your school or university, wherever you are and in real-time from your smartphone thanks to Shule online.
  • Masenze Strategic Advisors – Affordable and accessible access to practical, relevant and user-friendly legal information via chat platforms such as Facebook Messenger.
  • SUMET – They digitalize FMCG distribution by connecting suppliers and informal retailers saving their money, effort, and time through data-driven AI.
  • VOID – Tecnologia e Comunicação – UBI is a platform that connects people to their city, anytime anywhere, through solutions that make the everyday simple and straightforward.
  • BANKADA – Home delivery and taxi passenger requests are solved in one digital system. The same taxi that carries passengers also delivers goods of 2 Kgs above.
  • GWork – They make remote teams in SMBs smarter by ensuring that they are continuously learning from their behaviour and improving their performance.

At the end of March, the 15 startups will participate in an Investor Roadshow where they will have the opportunity to present their companies and meet with investors who are interested in learning more about their solution. In the end, select startups will receive a grant sponsored by SAIS.

SEE ALSO: The Most Active Investors in African Startups PLUS Section 12J & More

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