It’s been an immensely frustrating time in our country. Many of us feel like helpless bystanders as we’ve observed our country’s resources being looted and the most needy in our society bearing the brunt of the consequences. The antidote frequently suggested is a tax revolt – an act of defiance that would make a strong statement and restrict the flow of lootable funds. For many reasons least of all its illegality and the fact that tax revenues are critical to ongoing social support, this is clearly not a solution.
Over the past few years I’ve been involved in setting up Section 12J Venture Capital Funds. Section 12J of the Income Tax Act is a remarkably progressive incentive for South Africans to support the growth of entrepreneurial and job creating businesses. The UK have achieved great success over many years with a similar program called EIS. While the legislation is complex and includes several constraints and regulatory requirements, the headline benefit – full tax deduction for investors in 12J funds – is compelling. The benefit is mostly relevant to higher income earners as many funds have a minimum investment (our funds require investment of R1M+).
The immediate tax benefit is obviously very attractive but we’re finding another factor that is resonating more strongly than ever with our investors. South Africans have an activist history and we have always been pro-active about playing our part in improving our society. An investment in 12J is a commitment to the future of country. Like any investment though, the risks and rewards as well as the investment manager need to be very carefully considered. Our three funds support high growth entrepreneurs (Lucid Growth Fund), Technology enabled start-ups (Lucid Ignite Fund) and hospitality and tourism (Lucid Hotel Fund).
There is real opportunity right now to dig ourselves out of the trough we’re in and rebuild our country and to generate a good return in the process.
For your interest, I have attached then fact sheet for the Lucid Hotel Fund. We’d be more than happy to share more information about 12J and our funds as well as to hear about investment opportunities you may have. Come and join.