$50 M Pan-African fund to be raised by SA VC firm Kalon Venture Partners

The US $50 million fund will enable Kalon Venture Partners, a South African venture capital firm that specializes in digital disruptive technology, to make its first investments outside of its home country.

Kalon Venture Partners, which was founded in 2016, invests in post-revenue start-ups with high growth and high-impact potential. To date, the firm has backed 11 South African technology firms, including the marketing startup Mobiz, the payments company Ozow, the prop-tech firm Flow, and the cybersecurity startup Sendmarc.

Its most recent fund, which was closed in 2021, had a value of ZAR250 million (about $17.5 million at the time). It started off as a Section 12J firm, which encouraged South African taxpayers to invest in regional businesses and to get a tax deduction of up to 100% in return.

It was eliminated in 2021, and Kalon is now looking for institutional investors for its new, $50 million fund with an emphasis on Africa.

Butkow said he was fully aware of the obstacles and opportunities that would come with Kalon’s decision to operate throughout Africa rather than only in South Africa.

“You can’t just lift and drop something into a new country like Nigeria, Kenya, or Ghana. You look at our retailers, telcos, and 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.”