Start-ups, stay in SA, says Vinny Lingham - TechCentral

Start-ups, stay in SA, says Vinny Lingham

Vinny Lingham

Vinny Lingham

Technology start-ups and the entrepreneurs who lead them should tackle the “many great opportunities” in South Africa and Africa more broadly rather than trying to emulate his decision to move to the US, says Gyft founder Vinny Lingham.

Lingham, now one of the “dragons” in the South African version of reality television series Dragons’ Den, tells TechCentral that there are so many business opportunities at home that technology start-ups should “focus their energies on building the next big thing for South Africa and the African continent”.

In July, Lingham hit pay dirt in the US when he agreed to sell Gyft, an online gift card service, to First Data, a big player in the payment technology space, for a rumoured US$54m-plus. Gyft pioneered the concept of a mobile wallet for gift cards.

Lingham founded Gyft in January 2012. The company raised $6m in total funding prior to the acquisition from several investors including Google Ventures, Canyon Creek Capital, The Social+Capital Partnership, Karlin Ventures, David Sacks and Hass Portman.

TechCentral: You relocated from South Africa to San Francisco to take Yola, your previous business, big. What did the decision to leave South Africa for Silicon Valley have on your ability to grow Yola and later Gyft?

Vinny Lingham: I decided to leave South Africa in 2008 to pursue my goal of competing in the global technology market with millions of Internet users. It’s very hard to do from South Africa and at the time broadband penetration or mobile were not even options to build a business on top of. Things have changed somewhat in seven years, but we still have a way to go before the country is fully connected. Internet access in South Africa is expensive, but I think that’s changing.

TC: Where did the idea for Gyft come from and how did you go about launching and growing the business?

VL: The idea came to me when I paid for my coffee one day at Starbucks in San Francisco using their new app on my iPhone. I actually paid using a digital gift card and, after digging into the market stats, I realised what a big market gift cards was in the US ($150bn/year, mostly plastic).

Vinny-Lingham-280TC: How did the First Data deal come about? What’s the background to it? I see David Frankel, former co-CEO of Internet Solutions, was partly involved. What was his and others’ roles in doing this deal?

VL: I am proud to count David as one of my early investors in Gyft — he has been very supportive and it was great to have him involved. We had been working with the First Data team for some time and they had been looking at the digital and mobile gift card space very keenly. We got to the point that we decided to join forces and tackle the move from plastic to mobile together.

TC: There are plenty of South African technology entrepreneurs and start-ups who are going to want to study what you’ve achieved here and how you’ve done it. What advice would you give to them?

VL: The only way to study it, is to do it. You achieve a lot more by focusing on building businesses than spending too much time planning it. Find a market opportunity, make sure it’s a big one and execute on that — and stay focused. If you’re going to fail, do that quickly and move on. Talk to your potential customers and make sure you’re building what they want. Use the lean start-up methodologies to help kick-start you.

TC: Specifically, would you advise South African entrepreneurs who want to make the big time to relocate to the US, or can they do it from South Africa?

VL: I’m investing heavily in South Africa. I think that Africa has really become the final frontier and there are many opportunities to build and grow businesses. Moving to and getting connected in the US is very difficult and time consuming — and expensive! There are so many great business opportunities in South Africa — and I got a taste of them on Dragons’ Den — that I highly recommend that South African entrepreneurs focus their energies on building the next big thing for South Africa and the African continent.

TC: What’s next for you personally?

VL: I’m focusing on building Gyft up to the next level, plus I’ll be involved in a bit of angel investing and participating in Dragons’ Den. That’s about it.  — (c) 2014 NewsCentral Media

20 Comments

  1. Others will invest in Africa while some find excuses. Customers don’t care whether you are white or black, they only care about the service or product you are offering and your value proposition. I choose to invest in Africa.

  2. You’re right, customers don’t care. But guess what, government does. As they will force you to be BEE compliant when your start up becomes big enough. Its a system I don’t believe in.

  3. Others will invest in Africa while some find excuses. Customers don’t care whether you are white or black, they only care about the service or product you are offering and your value proposition. I choose to invest in Africa.

  4. Actually thats not true.
    You can remain non-BEE.
    Companies become compliant for TAX benefits etc.

  5. What initiatives do you need to think of an idea, build a product / service, finance it through your white family and friends network and sell that product / service to customers?

  6. Oh yeah sure, because every white person got rich during apartheid and has the capital to fund ideas…. Makes perfect sense!

    I think you should just stick to selling cheese mate…

  7. Yes, they did. And entrepreneurial white families had all the ingredients for success.

    If you aren’t able to succeed, it’s because you’ve failed yourself. Not that the government (that you didn’t support or vote for) failed you.

  8. What proof do you have that all white families were rich?
    Show me stats?

    I came from a poor background. My family were migrant workers to this country. Not english or afrikaans unlike your racist family.

    Please highlight government entrepreneurial initiatives that don’t just target black candidates??

    I will iterate onece again, you should just stick to selling cheese than commenting on things you know nothing about!

  9. Pre 1994 the average white South African earned between R36k and R100k per month (equivalent of today). This is based on the 1991 Census.

    The majority of South African families that moved from England to South Africa were poor when they arrived – as were mine. They did, however, benefit enormously from apartheid – as did mine who all except myself worked as civil servants.

    Are you stupid? My point is that there are none and that there is no need for any.

    With your love of cheese, perhaps you should start producing and selling cheese. You’ve already got a viable brand “Angry Pork & Cheese”.

  10. This is not encouraging – even cheese making requires basic maths skills.

    Average earnings were R68k (equivalent) and not R36k.

  11. Greg Mahlknecht on

    Actually that’s not true.
    My company’s just hit the size we have to do the BEE thing – we don’t get any tax benefits from it as far as I’m aware. We have to get a BEE rating because
    1) it’s the law – over a certain turnover you have to. You have to get your BEE certificate even if it’s a miserable rating.
    2) we would be unable to trade with companies that need their suppliers to be BEE compliant – a list of companies which is growing.

  12. But this is easy. You find a black person who you get along and shares the same business ambition and ethics and setup a majority black-owned business and use that business to secure deals that require BEE. There are many proper black business people who are willing to partner with whites.

    I am talking from experience. Whenever i need business from most White companies in SA, i use a white partner to secure the deal and we do the work. voila!!!

  13. Greg Mahlknecht on

    They closed that loophole a year or two ago. SARS is on a war-path against that kind of fronting. It’s an avenue we investigated and very quickly retreated from.

  14. Greg Mahlknecht on

    I do, and that doesn’t work either. Look up how BEE works (Wikipedia has a decent article on BBEEEE). Giving a black partner a chunk of your business is the least efficient way of improving your BEE rating as it only satisfies 1 of the 7 pillars for a max of 20% of your rating. And it has to be proper legal ownership, they’ve closed up all the clawback/give-shares-later loopholes in the past year or 2.

    My company has a great BBEEE rating and we don’t have any black ownership (ie. direct empowerment), even though a few suitors have tried to use the BEE myths that you mention to con us out of shares. The other 5 “indirect empowerment” portions of the BBEEE ratings are far more reasonable; the 2 direct empowerment portions just get all the press because they’re hot-buttons.

  15. If you want to make a lot of money, you must not be afriad to invest in the riskiest of places. SA and Africa is risky, but th returns will be higher. Going to a more stable country will give you more peace of mind, but for the same returns you will have to work 10x harder.

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