Vinny Lingham has become the latest South African to hit the big time after selling Gyft - a company he co-founded in January 2012 - to US-based First Data, which provides payment technology.
Gyft had a reported $54 million to $100 million price tag, although First Data did not disclose the value.
Lingham has now joined other South Africans who have made it big after spinning off companies they have founded, and leaving the country. There is Elon Musk, for example, who made his first fortune selling his PayPal stake after leaving SA at 17. Then there is Mark Shuttleworth, who sold Thawte to VeriSign for $575 million in 1999, and emigrated two years later.
Musk has gone on to found companies such as Tesla Motors and SpaceX, while Shuttleworth has since founded Ubuntu and Canonical. Lingham also created, in 2007, Yola.com, and Clicks2Customers, which won the Top Technology Company award in South Africa in 2006. He then went on to establish mobile gift card platform Gyft.
Stifling environment
ICT veteran Adrian Schofield says Lingham left SA because he was unable to raise funding locally, so moved to the US because he realised he could make "pots of money on the west coast. He went to the states and really hasn't looked back."
"We are joining First Data to accelerate our growth and significantly improve the gift card experience for both customers and retailers," says Lingham, who is also CEO of Gyft. "As a part of First Data's suite of innovation-powered products, Gyft will be added to a portfolio of technology-driven gift solutions that link advanced consumer-engagement technology with point-of-sale business solutions."
On his blog, Lingham notes his "entrepreneurial blood saved him from graduation in his final year of studies". He now lives in San Francisco, while Shuttleworth lives on the Isle of Man, and Musk resides in California.
Schofield says South Africa does not have the right culture or environment to foster incubation of technologies that can make it big on the world stage. However, he notes we do have the ability to build things that succeed, like Mxit, which come about despite the environment. "As South Africa, we should encourage incubation and innovation. We need people who take risks; it doesn't matter what schemes the government puts in place."
Firms like Fundamo ? snapped up by Visa for $110 million around three years ago ? that did make it were already past the incubation stage, notes Schofield. "I have to think long and hard to think of people who made it in SA thanks to venture capital business."
Limiting factors
Another challenge, according to Shuttleworth, is that exchange controls prejudice small businesses and individuals. This prevents South African citizens and residents from managing their finances in a global economy, without providing the state with meaningful control over the value of the rand, he previously said. According to media reports, Shuttleworth had to fork out around R250 million when he tried to move his gains from selling Thawte to an international destination.
AGIS CEO Rick Parry says emigration of talent comes down to the lack of market opportunity. Despite the Internet creating a global world, the local market is just not big enough to support tech innovation, and connectivity is still unreliable.
Parry adds the "brain drain" means the country is losing out on opportunities to create employment and opportunities, creating these elsewhere instead, while the lack of skills means people seek talent overseas.
Schofield notes SA should be encouraging entrepreneurs to bring something back, but the country is not very good at that. "We like to bask in their reflected glory without actually learning anything from it."
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