By Koketso Mamabolo
Angel investor and upnup managing director, Tony Mallam, brought KFM Radio in 1996, with the popular media personality, Kevin Savage, and the Ethos Private Equity team, which was the start of his journey as an entrepreneur. They ran it for four years before selling it on. There was no looking back for Tony, who went on to invest in Clickatell, which has grown into a global business based in Silicon Valley.
“The entrepreneurial bug had bitten then, so I did some angel investing – some good, some not so good, but the best home run was Clickatell.”
Tony was a part of the SABC’s restructuring team, which he joined after qualifying as a chartered accountant and doing his articles. “I ended up in radio, working with the big commercial brands like 5FM, Metro and Highveld, as well as the advertising sales unit. So I got to know the business behind this fascinating medium, as well as the ad industry and the big agencies.”
This was followed by a stint as the financial director at Alexander Forbes, before an opportunity to buy his own radio station took him from his “real job”.
“For about 9 years I was a partner in a Venture Capital advisory firm, Cape Venture Partners (CVP). We did a multitude of capital raises, advisory services and entrepreneurial development work, before I was sucked back into radio. I set up a new station in Cape Town called Smile 90.4 FM, got the licence, the funding and ran it for a while, before being asked by Times Media to set up their radio division.”
We asked Tony about what he looks for when making an investment, how he thinks startups can attract investment, what mistakes startups are making when looking for funding and more.
What are you looking for when making an investment?
There are thousands of ideas out there, and people that want to run with them. However, 90% of those will never come to more than a concept, as finding a person with an idea and the ability to execute is rare. So I look for a great idea, a way of doing something better, disruptive and with the right jockey to ride the horse. The business needs to be innovative, scalable and exportable, with the right economies of scale – low input cost, global reach. That’s not always easy to find, and sometimes I wonder if I shouldn’t just be focusing on a nice lifestyle business for myself and the family, rather than take on new stress every few years!
What can startups do to attract investment?
Communicate exceptionally well – unfortunately this is often a contradiction, especially for technical entrepreneurs who are brilliant at what they do, but abysmal in telling the story. So if a startup has a great story to tell, and meets all of the criteria above, then they need to get professional help in putting together their pitch, as they generally have one shot at getting attention. The dreaded elevator pitch – if you can’t sell me in 30 seconds, you’ve lost me
What is micro-investment and how could it benefit South Africans?
Micro-investment is putting away small amounts of money, on a frequent basis, into asset classes that have upside potential. Our philosophy at upnup is to allow people to literally save while they spend, on autopilot, and watch their money grow. Too often you reach the end of another tough month and there’s nothing left to save. What we do is help people put money aside every week, automatically in the background. South Africa has a terrible savings culture, and we’re trying to change that and give more people access to the markets, at a micro-level – as little as R10 a week.
What skills have contributed the most to success in your career?
Without a doubt becoming a chartered accountant – I was a shy guy at school, but once you’re a young articled clerk out at a client, and you’re quizzing the FD or the MD of a large company about their books, you’ve got no choice but to work on your interpersonal skills! That, together with 3 years of working across multiple industries is what gave me the best grounding, and then the leap into entrepreneurship just kept building on those skills.
What are the biggest challenges you’ve faced in your career and how did you overcome them?
Being an entrepreneur is a roller-coaster ride, and you move from one deal to another, some very successful, some not so. You tend to have huge gaps in between successes, and have to learn to ride the lean times, dipping into the reserves from the good times, hoping each time the next deal will be even better. This hasn’t always worked, but having a partner who supports you in good times and bad is crucial.
In your experience, what are the biggest mistakes startups make when trying to raise funding?
A couple of things – usually they believe their idea is absolutely unique, and that’s rarely true. Any investor will do due diligence, including the competitive landscape, and 9 times out of 10 the startup has not done their homework properly, and they’re in a tough spot. Secondly, most startups totally overestimate their financial projections, and create these huge spreadsheets with massive profits that are unlikely to get even close to. Startups need to balance upside with reality, paint a picture that looks good, but achievable. And finally, communication – as good as the concept and team are, if they don’t sell themselves properly they won’t get the buy-in.
Please could you share some of your tips on turning a business around?
Obviously if you’re going in to do a business turnaround, there has to be a good chance of that happening, based on an analysis of why it was in trouble in the first place. So a deep dive into the business is important – the business idea itself, the competitors, the leadership, the financials etc. Try to get to the bottom of what got it into trouble, and then take a step back and think about how you would have done that differently. Then, if you believe that there is hope, you need to go in and do a brutal clearout of any legacy issues, including the team, before implementing reforms. So for me, it’s all about going to the root cause and deciding if it’s salvageable.
What books would you recommend to the business community?
I read a lot – I read fiction, non-fiction, and lots of news. I get a lot of good stuff from Twitter, despite the toxicity sometimes. From a non-fiction viewpoint, I love the stories of how people succeeded, and how to learn from that – so autobiographies are good. I also love inspiring stories. A few of my favourites: 21 Lessons for the 21st Century by Yuval Noah Harari; Let my people go surfing by Yvon Chouinard; The Innovation Stack by Jim McKelvey; and Jim Collins’ Great by Choice. I also love podcasts and the stories of great businesses.