by Patrick Hearn

It is no secret that in 2016 three of the top four active global lead investors, two of the top four active global seed investors and active global late-stage investors were from Silicon Valley. From e-Gaming to transportation to biotech, fin-tech and e-Commerce and more, the array is comprehensive and formidable. At the same time, according to UNCTAD (United Nations Conference on Trade & Development) the $1.7 Trillion globally invested was, in fact, a global drop over the prior year and most interestingly the developing world saw a drop of 14% over the prior year. Within South Africa, the historical drop has been precipitous with a recent statement by President Cyril Ramaphosa showing FDI being only 17% of what it was a recently as 8 years ago. 

Part of the solution by South Africa, announced two days ago, is the creation of a series of initiatives ranging from some high-level conferences to key leaders of the country making investment visits to major global financial centers in an effort to achieve a goal of $100B USD within a five-year period. The President himself has highlighted many strengths of the country: strong institutions, well-regulated financial sector and a strong infrastructure of energy, telecommunications and energy. 

Yet in any investment decision, most especially FDI, decisions are based in no small measure on what is the “X Factor”. South Africa has many X-Factors. A history of innovation (first heart transplant, invention of the CAT scan) global business leadership (Sequoia, Tesla), dominance in industry verticals (SAB Breweries) and yes its role in advancing human rights and dignity. However, this will not be enough to distinguish itself in the many other regions of the world who are competing even harder for those exact same dollars 

Achieving a $100B USD goal requires a foundational mindset within South Africa to ensure recipients of Foreign Direct Investment, the businesses of South Africa – new and existing, put innovation in the forefront of their planning & operations. 

Secondly, adapting the mindset of FDI decision makers, who are constantly surrounded by innovation, into a South African/Silicon Valley version can set the stage for “leap frogging”. This is not an HR, think tank or a consulting exercise. It is a fundamental change in all elements that create a “Team South Africa” in a way that has never been seen before. This means initiatives led by business in cooperation with other stakeholders to engage with Silicon Valley as a pride of lions vs individuals.  

Stay tuned… 

Patrick Hearn