Last year South African startups raised in excess of US$54.5 million, according to the African Tech Startups Funding Report, with the Southern African Venture Capital & Private Equity Association (SAVCA) showing that South Africa’s VC industry continues to expand in line with the increase in entrepreneurial high-tech activity in the market. It would seem that the sector is poised for even greater growth in 2016.To find out what to expect this year we speak to the heads and founders of some of South Africa’s most successful accelerators and incubators who also unpack whether South Africa has the potential to lead the continent in the tech space and the challenges that are hindering greater progress.
They are: Keet van Zyl, investment expert, co-founder and director of VC firm Knife Capital, head of the Standard Bank Incubator, Jayshree Naidoo, executive director of Techstars, Greg Rogers as well as co-founder of Ignitor Startup Acceleration, Paul Smith. Each are at the forefront of South Africa startup landscape having worked closely with some of the country’s most exciting and innovative startups.
Here is what they had to say.
On the cusp of success – opportunities in 2016
“The 2016 SA startup landscape is well teed up for success. And as the waters become troubled for Government and big business, opportunities rise through the cracks for niche players. Necessity is the mother of invention. Many innovative local startups have the right combination of technical ability, future vision and risk tolerance to identify gaps in evolving business models.” – Keet van Zyl
“2016 promises incredible opportunities for startups on the continent in line with the growth that we have seen in this space over the last few years.” – Jayshree Naidoo
“2015 saw over R3,1 billion being invested in African startups and this year we expect that number to be even higher. This is driven by a combination of developed market growth rates slowing down, and therefore, an appetite to enter faster-growing African markets along with high mobile penetration and the ability to leapfrog legacy vendors with new disruptive technologies.” – Greg Rogers
The startup ecosystem is maturing
“More and more investors, business accelerators and corporate venturers are embracing South African innovations. The work that startup ecosystem players like SiMODiSA is doing to bring different stakeholders together to create an enabling environment for startups is starting to bear fruit. Encouragingly new investment funds are being launched and foreign investors are increasingly starting to realise that (once one gets past some fairly protective intellectual property laws) the technologies developed here are robust enough to scale internationally – resulting in partnerships and exits. As more and more local startup success stories unfold, this trend will continue.” – Keet van Zyl
“There’s been a lot of exciting changes over the past year in terms of numbers, new funds into the market and a number of wonderful new initiatives here in Johannesburg that have really started to get some traction – the BizSpark program has really expanded, JoziHub, the whole Tshimologong District that’s got up and running. I think it’s definitely growing. It’s exciting times to be part of our industry.” – Paul Smith
The startup landscape has matured significantly with large corporates, including multi-nationals, the donor communities, and state organisations creating enabling mechanisms that support the startup community which include incubators, accelerators and funding instruments designed to help this sector. An exciting development has been the creation of sector-specific support structures for the startup community.” – Jayshree Naidoo
SA in a position to lead the continent
“South Africa has the potential to lead the continent in the tech space and while the industry has matured in recent years there are a couple of issues that can be improved upon to push the sector even further.” – Paul Smith
“I have been very impressed with the quality of startups that have been able to access growth and funding support as well as the growth of the startup community. We have also seen more Venture Capitalists emerging that are targeting the start-up community and attractive funding that is globally competitive reaching start-ups on the continent.” – Jayshree Naidoo
Challenges still slow down progress
“Some of them partner with local corporates to provide market access, but substantial investment to grow these startups is still lacking.” – Keet van Zyl
“I think there’s a bit of a funding gap where funding is a little bit tougher here. One of the places which could most contribute to the ecosystem is probably at university level. I think more great engineering and software programs would be wonderful as well as more tech programs in general. When you see how much actually happens in the developed ecosystems like in Boston or Silicon Valley in California, the number of programs that are running, everything from the number of new caps, the number of accelerators, the number of incubators to the number of angel investors and funders – you see that there is just so much opportunity for more players to get involved in the ecosystem.” – Paul Smith
