South African venture capital firm Knife Capital has expanded into the United Kingdom (UK) with the opening of a London office after introducing the UK-based Draper-Gain Investments as a strategic investor.
Knife Capital said its new London office will accelerate the international growth of companies within its portfolio.
New investor Draper-Gain is a family office with significant global resources, including existing investments in South Africa.
The transaction was facilitated by entrepreneur and angel investor Bob Skinstad, who is Knife Capital’s partner in SARS section 12J venture capital company KNF Ventures, launched last year. South African 12J schemes were created to promote early stage capital formation, and offer significant tax incentives for investors.
Skinstad, a former Springbok rugby captain who retired 10 years ago, moved to London in 2016 to head up the business development function for Draper-Gain.
“Over the past year, Knife Capital impressed Draper-Gain while conducting a number of due diligences and executing the subsequent transactions. This evolved into Draper-Gain taking a strategic stake in Knife Capital and committing funding as its lead international investor,” he said.
Keet van Zyl, investment partner at Knife Capital, said he was optimistic about the latest moves.
“The South African early stage investment ecosystem is built on the risk capital of local angels and international investors. Unfortunately local institutional investors largely avoid this space,” he said.
“While we will continue to work at changing this mindset, we are now creating a flexible structure for those international family offices which want to invest with us alongside KNF’s local 12J backers.”
In 2014, Knife Capital was sold into financial services group African Dawn. After expected synergies did not materialise, the Knife Capital team recently took back ownership of the company in a structured management buy-out.