The first round capital raise for GroTech, a fund set-up to invest and build a portfolio of disruptive digital technology high growth companies, has closed with over ZAR62 million (about US$4 million) raised.
The fund, which is a little above its target of ZAR50 million (about US$3.3 million), will be used to invest in highly scalable, post-revenue, and preferably post-profit South African startups.
Selected startups will receive an average of ZAR5 million to ZAR10 million.
Caleo Capital, a wealth and management business, invested a significant but unspecified amount in GroTech.
In a statement, Caleo’s joint CEO, Garth Wellman said, “The directors have extensive experience in the technology ecosystem, have committed their own funds and will be actively involved post investment to reduce the risk.”
“We made a decision that a partnership with the strong GroTech team would be a good way to build on the success of our venture capital interests,” co-founder and joint CEO of Caleo Capital, Nicholas Liebmann added.
Once the fund has been successfully deployed, investors will be invited to take part in the second round of capital raising.
Investors can only subscribe between ZAR200,000 and ZAR10 million to the fund with a subscription price of ZAR1,000 per share.
GroTech targets an internal rate of return (IRR) in excess of 30 per cent per annum – a return of five times the risk capital invested over a period of 6 years.
GroTech is being promoted and managed by GroTech Management Company PTY Ltd while its administrative manager is Venture Capital Management Services PTY Ltd.