A VC’s Take on Ramaphosa’s Investment Summit

Posted on October 31st, 2018
Thought Leaders

Gavin Reardon, founder and general partner of Kingson Capital, attended the invite only South Africa Investment Summit last week. The VC firm partners with scalable start-ups for success and corporates investing in the fund.

From a VC perspective, these are Reardon’s top take outs from discussions at the milestone conference.

A land of opportunities

“South Africa is full of opportunities. South Africa is both the strategic gateway to Africa, and has the relevance, within the internal market, for scale into Africa. Products can be tested and refined here before scaling through Africa. The robust South African financial system further allows deal flow into Africa. This is important and exciting for both small business and investors.

We as an industry need to educate and champion VC investment as an alternative asset class

Need for local participation

One issue that needs immediate attention is the fact that, although international institutions like pension funds are prepared to invest in Venture Capital and Private Equity in South Africa, they are all asking why South African pension funds and local institutions are not investing? It’s a very hard sell when locals aren’t prepared to invest themselves.

When posed with this question, Minister Tito Mboweni partly answered referencing credit committees and various approval processes funds require. The good news is that the conversation has started and we, as an industry need to educate and champion VC investment as an alternative asset class. Having pension funds mandated to invest a % of their assets under management into local VC and PE funds would be a significant catalyst for the South African ecosystem.

Venture Capital, an emerging industry

VC is an emerging industry and vital to the start-up ecosystem, solving systemic issues underpinning SMEs and driving inclusive growth amongst small business and job creation. We call on corporate South Africa to get behind investment into VC Fund Managers and play their role in investing into South Africa.

Believe and act on the knowledge that entrepreneurs are key

Walk the talk

Stop the lip service. Believe and act on the knowledge that entrepreneurs are key. Jack Ma, founder of Alibaba, spoke about how important it is for us to believe in our entrepreneurs. “Make them the heroes. Don’t give up. Be optimistic. When you see challenges – they are opportunities. You will always have people complain. When people complain – you must see opportunities to solve those problems.”

President Ramaphosa summed up the interview with Jack Ma and summarized that we need to invest in:

1. Education.
2. Entrepreneurs – make them heroes.
3. Efficient government.

In closing President Ramaphosa commented that “white monopoly discourse must come to an end. We need to make our business people heroes.” This was greeted by loud applause, which paints the picture of a South Africa devoid of racial and socioeconomic divides, where small businesses are provided with a supportive growth environment for real success. Perhaps this move can be partly attributed to the great news of a staggering R290b raised with commitments from local investors into the economy, this is over and above the R400b, President Ramaphosa announced in commitments from international funders.”