South Africa’s top banking CEO who became a venture capitalist

Michael Jordaan went from one of South Africa’s most influential banking CEOs to venture capitalist due to his strong belief that innovative technologies can change South Africa.

Jordaan had a normal childhood and matriculated from Paul Roos Gymnasium in the 1980s. He admitted later that he was not the best student at school.

This changed when he discovered his love for economics in his third year at university. Jordaan’s interest in the field propelled him to work harder, and he graduated cum laude.

He went on to complete an M.Com in economics and a PhD in banking supervision at Stellenbosch University, setting him up for a great career in finance.

Jordaan completed a management trainee programme with Deutsche Bank in Hamburg, learning about all aspects of banking on the job, and became a corporate banker at Deutsche Bank in Frankfurt in 1992. 

In 1994, Jordaan returned to South Africa and joined a programme in the credit and corporate finance divisions of Rand Merchant Bank. 

Jordaan was FirstRand co-founder Paul Harris’ personal assistant for some time, and he has pointed to Harris as someone he looks up to. “You want to work with people that are better than you,” Jordaan said.

This philosophy guided Jordaan from early in his career until now because, in his view, the only thing that really sets businesses apart is the people. 

Jordaan considers it fortunate that he realised this early on in his career. “That is the thing that is going to make you grow far more than whatever industry or whatever brand you join.” 

Jordaan had broad exposure from serving as the CEO of Origin Bank and holding several chief executive positions within the FirstRand group, which prepared him well for his role as the CEO of FNB.

Jordaan was extraordinarily young for the role of CEO, at just 36 years old, but this did not stop him from being one of the best CEOs the bank has ever had.

He is widely seen as his generation’s best banking chief executive, who created tremendous value for FirstRand shareholders and FNB clients.

Under his leadership, FNB showed strong subscriber growth and was named the most innovative bank in the world.

Due to Jordaan’s brilliant performance, FirstRand’s share price rose from R5.54 to R35.70 over a decade, which translates into a 20% annualised return.

What makes his performance particularly impressive is that he achieved it despite having to steer the bank through the 2008 financial crisis.

Despite his tremendous success in banking, which included becoming chief executive at 36, he left this world for a new career.

In 2013, Jordaan left FNB to start his own venture capital firm, Montegray Capital, to invest in technology businesses with businesses with high growth potential.

He explained that few things genuinely create the future and that entrepreneurs and humble start-ups are the only organisations that truly succeed and work at it.

Through Montegray Capital, Jordaan has partnered with 20 South African ventures, including Rain, Valr, BankZero, and Purple Group. 

Jordaan explained that to become a venture capitalist as a conservative banker, “you need to learn how to make some mistakes”.

In banking, if you lend money to 100 people and two cannot pay, you lose your margin. If you lend to 10 people and one cannot pay, you lose your capital. 

In venture capitalism, if you invest in 10 businesses, half may fail. Of the other half, one or two investments may offer affiliate returns of more than ten times your money each – “that is why the portfolio then pays for itself.”

Jordaan found a sweet spot for investing in new ventures. He looked for companies who already had clients who were happy with the product. 

Working to make the business idea a reality is a larger part of a business venture than coming up with the idea. “And then you use the capital to help growth rather than to just prove the concept.”

Jordaan previously elaborated on his venture investment strategy: He avoids people seeking funding dressed in suits and people who pay large salaries from the start. 

He found that smartly dressed people compensate for half-baked plans and believes entrepreneurs should know that growing equity leads to oversized returns, not a high salary. 

Jordaan enjoys being involved in a strategic capacity with the business ventures he partners with, having the title of co-founder or director at several. “The role of leadership is to facilitate good decision-making,” he believes.

He wants ventures to use his expertise when they need it, and he gives them the freedom to grow the business themselves. 

But mentors, Jordaan says, are all around. “As long as you ask nicely and are truly willing to learn because most people are helpful and willing to share their knowledge,” he said.

Jordaan learnt from people in the same way – former FNB employees who were his colleagues attest that he would frequently visit them in non-executive positions to talk about their work. 

Additionally, Jordaan said that he loves to read, and his best friends growing up were books. He reads autobiographies to find role models, and he reads history to find heroes. 

He also believes that books are a way to gain an understanding of issues, whereas the news simply reports on issues. 

Because of this, Jordaan is always reading and looking for book recommendations. He says he immediately buys them so he never runs out of reading material. 

Since becoming a venture capitalist, Jordaan says he has more time to look after his relationships and health. 

He likes to go cycling with friends, who refer to him as a ‘lazy cyclist’. However, to Jordaan, exercise is fun after the fact – not during. 

He previously said that people looking for funds constantly invite him to coffee to discuss their plans, which consumes a lot of his time.

However, he has also said he hopes there are more entrepreneurs in South Africa on whose door he can knock for a cup of coffee or a glass of wine. 

“I am a techno-optimist,” Jordaan explains, saying he believes that many of the technologies he’s interested in can be applied in South Africa. This is why he invests in disruptive technology-based business ventures. 

“The wonderful thing in South Africa is that we have problems to solve and I believe entrepreneurs are best positioned to solve them for South Africa,” he said.