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While many other investors may have been frightened off by South Africa’s unstable economic and political environment, UK angel investor Kevin Gaskell says he believes in the country.
“I like South Africa. And I believe South Africa will sort itself out,” says Gaskell. “I have faith in the long-term.”
While he admits that he hasn’t realised any returns yet on the three South African tech firms he has invested in since 2012, he reckons the country is a good investment bet.
“I’d say keep looking at South Africa because it’s a thriving centre for technology, there are some good companies around. But you’ve just got to be brave and let the politics go past you and concentrate on the company,” he says.
Gaskell built his career in the construction, chemical and automotive industries — including having been appointed as managing director of Porsche GB at the age of 32.
‘UK angel says investors should keep looking at South Africa because it’s a thriving centre for technology, there are some good companies around’
Over the years he has invested in 14 technology companies in Europe and South Africa, having since sold his stakes in seven of these investments.
He got involved in his first investment in South Africa after speaking at a 2012 event hosted by accounting firm EY.
Upon leaving the stage he was approached by someone from Cape Town based Traderoot Technologies. The 12-year old firm provides back-end payments infrastructure and made an investment. The company now serves as the national clearing platform for Namibia.
“I help them to get themselves organised and get structured, build a strategy and basically (I) act as a non-executive director,” he says.
He’s now in South African every six weeks for a week to 10 days to assist with the startups he’s invested in.
Gaskell’s approach is to first develop a 100-day plan and then a 1000-day plan. “I spend a lot of time walking around and talking to everybody people in the business, understanding the issues in the business,” he said.
“She (Scott) grabbed me as I walked off stage (four years ago) at the Marketing Indaba in Joburg, and I was speaking there. She said she wanted to build her own business, but didn’t know how to do it. She was about 25 years old (at the time). And I liked her and I liked her ideas, so I said ‘I’ll help you’,” he said.
The business, he says, has grown 400% this year by doing internal communications for some big corporates such as big mining companies and Tiger Brands. Scott was also a finalist in the Entrepreneur of the Year Awards.
Gaskell says he’s puts in various amounts in these companies, in amounts of up to R3-million and prefers to take a “meaningful stake” of for instance between 10% and 20%. “You have to allow the entrepreneurs to have the majority stake — it’s their business,” he adds.
He then usually looks to hold his investment for four years before selling.
Is there anything South Africa can do to encourage more investment in startups?
Gaskell says more could be done to offer attractive tax incentives to investors who invest in startups.
“I think that reducing taxation on early-stage investment isn’t attractive in South Africa, as far as I can see,” he said.
Perhaps it means more then should be done to extend and publicise the 12J tax incentive administered by the South African Revenue Service (Sars)?