expert views« Back to Expert Views Listings
Entrepreneur and Investor, RunwaySale, Gyft and Miombo Consulting
Michael Leeman has been touted as one of South Africa’s most noteworthy angel investors in the Internet and mobile. He currently resides in San Diego, California, keeping his eye out for opportunities on both the North American and African continents. His career includes founding and/or playing a leading strategic rolea number of companies—including Futuregrowth Asset Management, African Harvest Capital, and Clicks2Customers—as well as investing in many others—Skyrove, Gyft, RunwaySale and Cognician to name a few. SABLE’s Dave Kitley was fortunate to speak with Leeman and discuss his thoughts on what it takes to make it in America. He also elaborates on his role and contribution as an angel investor and key fundamentals that South Africa should focus on to promote an environment that enables entrepreneurs. Read on to learn more.
Dave Kitley: Can you provide some background for readers who have not followed your history or your LinkedIn? How did you get into the tech space?
Michael Leeman: I have Vinny Lingham to thank for bringing me into the tech space through my role in Clicks2Customers. However, my experience in start-ups began with my own business when completing college. My first business was Futuregrowth Asset Management, a division of Southern Life, where I was a founder and builder of the first comprehensive range of empowerment and development investment portfolios in South Africa. A noteworthy achievement was our ability to raise R5 billion for positive, developmental investments at a critical time in South Africa’s transformation. My second business, African Harvest Capital, was a niche black economic empowerment investment bank, where a highlight was raising R850 million in a very short period of time at for a listed empowerment fund.
I entered the tech space with Clicks2Customers in 2005 and have worked with a number of tech companies since then..
Dave Kitley: Based on your experience, what is your impression of cloning successful companies or models?
Michael Leeman: Cloning is great; if it works, why not? The difficult aspect about it is not merely finding a business model that works, but adapting it to local conditions. As Koos Bekker says, platforms are global but commerce is local, you need local knowledge and the ability to customize to meet the local market needs.
Dave Kitley: As an angel investor, what value besides capital do you bring to a deal, and what do you look for in potential investments?
Michael Leeman: As an angel investor, I look to get quite involved. With my actuarial and asset management background, I bring an analytical view to the table. This is complemented by my marketing and sales mindset. Often if the entrepreneur is too tech oriented, they need the prior experience to help with monetizing their idea. Overall I will help, as required, with general strategy, capital raising, online marketing, risk management, business development and analytics. I look for a strong team, early monetization and large market opportunity.
I believe that the most critical skill set I bring includes mentoring and prior experience. There is a good correlation between success and an entrepreneur who wants to listen and is receptive to advice You can always benefit from having third-party objective opinions to test your own assumptions. It doesn’t mean that the third party is right, but it is a contributing factor to consider when making decisions. Just look at Mark Zuckerberg. He’s a good case in point for bringing on board mentors and experienced parties to strengthen his decision-making.
Dave Kitley: Why are entrepreneurs leaving South Africa?
Michael Leeman: This can often be attributed to two factors. One is that the market in South Africa is not sufficient or mature enough to absorb the tech product developed or manufacturing to support it. Second, it can be a classic case of the “big fish, small pond” concept. Individuals want to come test themselves against the very best. It is generally a competitive spirit that drives this or arrogance that they can make it in an international space. Individuals can get an inflated view by dominating the local market, and it is this ego that can often be the detriment of their belief that they can dominate the international market, too.
Dave Kitley: What does it takes to be successful in the United States?
Michael Leeman: Grat question, I wish I knew the answer!. It is not enough to talk the talk or have a great product in a local market. Products need to be novel and scalable. In the USA, the competition is tougherand the margins are often smaller, so the return on effort can be lower than other markets. The South Africans who have succeeded in America are generally successful individuals with a proven track record. But in a nutshell, it is a tough market, and people can’t expect a quick turnaround from idea to overnight success. There is a lot of hard work in between.
Dave Kitley: What is it about Silicon Valley that makes it so successful?
Michael Leeman: There are a number of factors that contribute. Firstly, Silicon Valley has been through a number of generations with entrepreneurs and investors having built up priceless experience. Secondly, it is a concentration of some of the smartest individuals across the globe, with entrepreneurs, programmers and financiers all coming together for the same purpose of creating innovative ideas and succeeding. With this comes the culture of paying it forward that is so common. It is a great feature of the valley, where those who have succeeded give advice at no charge. It is a self-perpetuating cycle. People are willing to give time to help you, and it is this ease of access, within reason and networks, which can be a priceless 30 minutes that may change your complete focus or future.
Dave Kitley: What are some of the challenges that entrepreneurs in South Africa face?
Michael Leeman: South Africa lacks a number of contributing factors. We can’t expect to mirror the Silicon Valley environment overnight. A starting point is the amount of money available. There are billions of dollars here and more than 60,000 angel investments were made in 2012. The depth of capital and repeat entrepreneurs are key. South Africa is experiencing growing pains similar to a general start-up company and is still finding its feet, thus requiring focus and forgiveness to support the growth of the sector. Then you have foreign exchange and IP restrictions. But you have to start somewhere, and South Africa will mature in time, aided by infrastructure and experience.
Dave Kitley: Do you believe in nature or nurture when applied to becoming an entrepreneur?
Michael Leeman: I believe in both. You need the fundamental characteristics of an entrepreneur, and this can often come from generations who are entrepreneurial in nature. But nurture is significant. You can mentor someone who is non-entrepreneurial to become an entrepreneur, so it works both ways, but it all depends on the attitude of the person.
About Michael Leeman
Michael Leeman lives and works in San Diego. He is both an investor and entrepreneur and specializes in the Internet and mobile sectors, where his focus is on both the South African and North American markets. Leeman has an array of investments and advisory roles with a number of other Web 2.0 startups, including Cognician, Yola, ChessCube, Personera.com and Skyrove.
He graduated from UCT in 1992 with a bachelor’s of business science degree in actuarial science, statistics and economics and was admitted to the Faculty of Actuaries in 1993.
Other Expert Views:
Q&A with Piet Barnard and Dr. Andrew Bailey, Piet Barnard, Director, Research Contracts and Intellectual Property Services, UCT and Dr. Andrew Bailey, Intellectual Property Manager, Research Contracts and Intellectual Property Services, UCT