Taking ICT start-ups to the next phase and getting super returns on - - PowerPoint PPT Presentation

Taking ICT start-ups to the next phase and getting super returns on investment

Arif Hussain Founder, 26  South Investments

The linear approach … Taking ICT start-ups to the next phase and getting super returns on investment

• J. Dunstone proposes a simple, 2-step process to finding a $1Billion business:

1. You will need a product (or service) a large number need or want. 2. You will need to sell $1Billion of this product.

Source: “Finding unicorns, and how to build a ‘$1BILLION’ business … in two easy steps”, Jason Dunstone, published on LinkedIn on 6 Nov 2015

Unpacking the topic … Taking ICT start-ups to the next phase and getting super returns on investment

What drives the market opportunity?

• Evolving consumption patterns
• Start-up ecosystems – global context
• Success stories from selected markets
• South African/African perspective

Unpacking the topic … Taking ICT start-ups to the next phase and getting super returns on investment

What creates the market opportunity?

• Evolving consumption patterns
• Start-up ecosystems – global context
• Success stories from selected markets
• South African/African perspective

Reframing the concept of “super” ROI

• SA socio-economic context
• Looking for impact beyond IRR
• Innovation vs implementation

PART I: HOW TO HUNT A UNICORN

1st ORDER Use of GPT applications and direct effects Railways: faster and cheaper transport of people and goods Electric light: cleaner, safer and brighter light Appliances: time savings in housekeeping Telephone: direct end-to- end communication Automobile: faster and cheaper transport of people and freedom of mobility

The opportunity for ICT Start-Ups

2nd ORDER Changing and new practices (examples of)

• Cooking
• Grocery shopping
• Day tripping
• Mail ordering
• Shifting hygienic norms

in the household

• Housekeeping
• Going to the movies
• Casual phone calls
• Commuting (suburbs)
• Touring and camping
• Eating out
• Dating

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Evolution of consumer consumption patterns driven by the IT Revolution Payments Living Eating Working Travelling Shopping Leisure Comms Security

2017 Global Start-up Ecosystem Ranking

Source: www.startupgenome.com

….

• 2,000 – 2,700 active tech Start Ups
• 250 Israeli companies on Nasdaq

KEY ENABLERS:

• Higher education system
• Entrepreneurial spirit
• Technology
• Global mindset
• Government support
• 300 multinational R&D Centres

+

• Military (e.g. $581mn funding for

cybersecurity in 2016) Tel Aviv Start Up Scene

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• 2,300 – 3,500 active tech Start Ups
• Uber, Netflix and Tesla have Euro HQ

KEY ENABLERS:

• Education system amongst best

worldwide in maths and science

• Strong Government support
• Quality of life attracts top talent

Amsterdam – Delta Start Up Scene

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2017 Ranking: African perspective

Cape Town

• 700 – 1,200 active tech Start Ups
• 75% of VC deals concluded here
• 1/3rd of founders have 2+ years of

prior start-up experience Johannesburg

• 200 – 500 active tech Start Ups
• High concentration of talent
• Innovation tends to be locally

focused Lagos

• 400 – 700 active tech Start Ups
• 9th highest rate of founders with an

Undergraduate Degree (59%)

• 93% have a technical degree (3rd)

PART II: THE RETURNS OF THE JEDI

Top 5 risks facing investors in 2016 according to CRG:

• 1. Junk status
• 2. Govt won’t be able to deliver on

promises

• 3. Prevalence of white collar crime

and corruption

• 4. Cyber vulnerabilities

(lack of capacity across govt and business)

• 5. Loss of perspective/lack of

business confidence locally What about SA Inc Risk?

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Note: image by Johnny Miller, in a series covered on www.citylab.com

What about the people outside the bubble?

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Note: image by Johnny Miller, in a series covered on www.citylab.com

R&D/technical skills (local and international) JOBS! Quality of education at all levels

My own sales pitch

Cybersecurity training

• Hands-on simulation
• Customised by vertical
• Certification

Fibre tech SME fund

• S12j structure
• Focus on fibre network

value chain

• Bus dev support

IoT SME fund

• S12j structure
• Focus on IoT development

for industrial sector

• Bus dev support

Targets/impact:

• 10,000 jobs over 5 years
• > R500 mn in tax for fiscus
• > 250 SMEs

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“82% of Fortune 500 CEOs feel their organization did an effective job of strategic planning. Only 14% of the same CEOs indicated that their organization did an effective job of implementing the strategy.”

(Forbes, 2011)

Thank you!

Arif Hussain Founder, 26  South Investments M: 083 222 2325 E: ah@26ds.net