Venture Capital – An Alternative Asset Class
Venture Capital as an alternative asset class has been around for hundreds of years in one form or another. Today it is common for entrepreneurs to approach high net worth individuals, family offices , venture capital funds and corporates to fund their initiatives.Venture Capital as an asset class has never really been available to the regular investor.
Whilst entrepreneurs mostly get there start up capital from friends and family (angel investors), it usually is not nearly enough to get these ventures off the ground. Angel funding is generally a high risk investment and the angels don’t normally have the expertise and network to add value to the entrepreneur in this alternative asset class.
Grovest is a South African Section 12J Venture Capital Company that gives investors the opportunity to invest into this alternative asset class for the first time. Grovest not only gives the investor access to this new dynamic alternative asset class, but the investor will also get the Sec 12J Venture Capital Company ( VCC ) tax allowances when investing in this alternative asset class.
The Tax allowance , allows the tax payer to deduct the full amount of their investment into the Sec 12J VCC from their taxable income in the year in which the investment is made. This tax allowance effectively adjusts the risk of the investor in this alternative Venture Capital asset class. The investor now has only 60% risk with 100% of the potential upside.
Grovest, the first operational VCC in South Africa in this alternative asset class has a full time experienced management team “sweating “the investments. Historically this alternative asset class, usually attracted “lazy money”. In order to achieve maximum potential returns from this alternative asset class, requires aggressive hands on management of the underlying investments.
Jeff Miller CEO of Grovest suggests that a sophisticated investor who wishes to take advantage of this alternative asset class should invest approximately 5% – 7% of their investment portfolio into this alternate asset class. Grovest gives the investor everything they require in this alternative asset class.
– tax benefits
– spread of investments
– experienced management team
– hands on management
– targeted return of 3 to 5 times money
– IRR in excess of 28% p.a.