In a bid to nurture and create groundbreaking technologies across South Africa and the African continent, venture capitalist Clive Butkow, former CEO of Kalon Venture Partners, and Mitchan Adams, co-founder of South African fintech company Ozow, have unveiled their latest venture capital (VC) firm, Conducive Capital. The firm through the new fund, majority black-owned, seeks to invest in early and growth-stage disruptive African tech startups with a focus on post-revenue, capital efficiency, and robust unit economics.
Fostering Innovation and Growth
Conducive Capital, launched in Johannesburg today, plans to bridge the gap in quality capital for emerging businesses in South Africa. The founders, with a collective investment of more than R300 million in early-stage funding over the past seven years, have demonstrated an internal rate of return exceeding 30%. The firm aims to support technologies that are not only innovative but also ten times better than existing market solutions.
“We are looking for technologies with a strong management team, possessing both engineering and commercial skills,” said Clive Butkow at the launch. The founders aim to raise the initial close of $15 million (approximately R300 million) in July, with a target final close of $50 million (about R1 billion) within 24 months.
Blending Investment and Entrepreneurship
Conducive Capital’s approach involves blending investment and entrepreneurship. Butkow emphasized that the fund is committed to supporting business owners in scaling their ventures throughout Africa and beyond. The founders bring nearly 40 years of combined experience in building technology businesses, with Butkow having recently stepped down as the CEO of Kalon Venture Partners.
The fund’s previous investments through Kalon Venture Partners include various tech startups such as Sendmarc (cybersecurity), Mobiz (marketing), Ozow (payments), FinChatBot (fintech), and Flow (proptech).
Comprehensive Support and Diversity
Conducive Capital distinguishes itself by providing more than just monetary investments. The firm pledges comprehensive support, including strategic guidance, operational expertise, and mentorship to nurture startups, facilitating their growth into industry frontrunners. The founders are open to adding a third partner, provided they meet their stringent criteria.
Adams highlighted the importance of increasing diversity in the early and growth-stage investment sector, particularly the need for more black women in the tech industry. “Clive has been clear from the start that part of our reason for existence is to share knowledge and pass the baton to the next generation,” stated Adams.
Navigating the Funding Landscape
Despite funding challenges for startups in recent years, Adams remains optimistic about 2024, anticipating steady improvement. Conducive Capital is positioned to play a pivotal role in fostering ground-breaking technologies. Adams expressed confidence, stating, “We have identified major industries and technologies that we believe are building the foundation for empowering corporations and individuals in South Africa and Africa, creating meaningful and sustainable solutions, and improving millions of lives.”
Conducive Capital’s innovative approach and commitment to supporting diverse and impactful technologies position it as a key player in Africa’s evolving tech landscape. The founders believe their wealth of experience will contribute significantly to building a robust tech SME landscape across the continent. The new fund for African tech startups is expected to go a long way to achieve this.
