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Advice on Making an Investment in Start-ups
Who is Vinny Lingham?
One of South Africa’s brightest young tech entrepreneurs, Vinny Lingham is the founder of build-a-free-website company Yola, which he currently runs from Silicon Valley, San Francisco (there are also offices in Cape Town). Previously, Vinny started and ran award-winning search engine marketing company, Clicks2Customers.
His personal accolades include being chosen as a Young Global Leader Honoree 2009 by the World Economic Forum, being recognised as a high-impact entrepreneur by Endeavor Global and awarded the 2006 Top Young IT Entrepreneur. Vinny serves on numerous international advisory boards for search engine and affiliate marketing, including Commission Junction and Yahoo!, speaks at conferences around the world and is frequently cited on Web 2.0 trends.
Can you describe your portfolio of equity investments?
My investments are mainly in tech companies — SkyRove, Personera and ChessCube, along with Yola. I tend to invest in what I know and understand.
How did you select these companies and what do you look for as an investor?
In all cases, I invested in the founders or CEOs of these companies. I invest in people that I get to know over time and whom I think I can work with to help build a good business. I also don’t over-extend myself, so I’m not actively investing at the moment, as I like to be hands-on in my investee companies.
What returns have you seen to date?
I haven’t sold any of my investments yet, so I have not yet realised a profit. I’m a long-term investor.
What lessons can you share about equity investments in start-ups and early stage companies?
I don’t recommend investing more than 20% of your total assets in start-up companies, unless you are the person managing them and can control your own destiny. Start-up investments are very risky, but the payoffs are good.
I’d advise people to work with syndicates of people they trust and respect. I seldom invest alone, and I co-invest with friends who can help add value to the businesses. If I can’t convince my friends to invest, then I probably shouldn’t invest either!