The WDB Seed Fund – which has been developed by Seed Engine, the WDB Investment Holdings (WDBIH) and Grovest – is seeking to raise R100 million to invest in early stage businesses. By Staff Writer
The fund is targeting to initially raise R40 million by February 2017.
The fund has been developed as a response to the dearth of funding for early and growth stage businesses. It will also offer significant tax advantages and Broad-Based Black Economic Empowerment (B-BBEE) points for corporates.
Corporates can select the sectors of entrepreneurs the business wishes to develop including ICT, Education, Healthcare, Services, Retail, Manufacturing, Logistics, Agriculture and Agri-Processing. It also allows returns to be reinvested. Three kinds of shares are available: enterprise development, supplier development and impact shares.
Investors may deduct the full amount of their investment into the fund from their taxable income in the year in which the investment is made. The significant tax benefit is 28% for businesses and 41% for individuals and trusts.
Additionally, investment into the fund is classified as Enterprise Development and Supplier Development spend, which contributes towards the B-BBEE scorecard as capital invested will be utilised for enterprise and supplier development initiatives.
“The fund allows organisations to achieve an above average targeted internal rate of return of 20% on their investment in enterprise and supplier development programmes with a focus on black women and youth-owned businesses,” says Donna Rachelson, CEO of Seed Engine.