Former FNB CEO Michael Jordaan launched MonteGray Capital in 2014 with the aim of investing in lean startups with disruptive technologies and business models.
Jordaan said his investment focus is on “business models enabled by technology that solve real problems, and which can add value in existing, well-performing industries”.
Jordaan’s network of partner companies – mostly companies which he has invested in – now stands at 21.
Most of Jordaan’s investments are tech companies, with some exceptions, and his single biggest investment is in LTE-A network provider Rain.
“The network roll-out is proceeding at pace and you can expect further announcements on how Rain intends delivering a data dividend to the local economy,” said Jordaan.
But are Jordaan’s investments performing well, and isn’t an investment in big tech stocks like Facebook or Apple a better bet?
Jordaan said it is challenging to compare any venture capital (VC) portfolio to a portfolio of listed investments.
A VC portfolio has infrequent liquidity events, and valuations are largely based on directors’ estimates – while there is always a market price for large listed equities.
“What is certain is that the turnover and profit growth in Montegray’s portfolio – off a low base – would have easily outstripped the sales and profit growth of stocks by many multiples, as they would have started at a much higher base,” said Jordaan.
“My opinion is that we have had a great start by backing some exceptional entrepreneurs in exciting macro fields, but VC investing is an ultra-marathon. We will only know in the long term.”
Jordaan said he is pleased all the businesses he has invested in are still operational, as this is unusual for the VC space.
“This is unlikely to continue, as startups are risky.”
“Importantly, I am not looking for lots of good investments, but for a few exceptional ones,” he said.
Investing his own money
With Jordaan’s excellent track record at FNB and his respected status in the financial industry, many people are keen to co-invest in MonteGray Capital.
Jordaan said this is unfortunately not an option. “I would rather explain my mistakes to myself than outsiders,” said Jordaan.
However, this does not mean investors cannot benefit from Jordaan’s knowledge.
One of the companies in which Jordaan has a stake, Numerical (NMRQL), will launch a Unit Trust to the public in September.
Having live-tested their machine learning approach to financial markets over the past two years, Jordaan is confident they can outperform the market.
This will be achieved with lower drawdowns (lower risk) and at lower cost than traditional models.
In the interest of transparency, Jordaan lists all of his investments on the Montegray website.
The companies which Jordaan has invested in over the last three years are detailed below.