The notion of tech start-ups became synonymous with California’s Silicon Valley – out of which came some of the most ubiquitous tech companies in the world. Tech giants including Apple, HP and eBay have their headquarters in what has become known as the world’s number one tech hub. Silicon Valley was originally formed by a Stanford University community of incubators, venture capitalists and angel investors. Today, the estimated worth of Silicon Valley’s most successful start-ups exceeds 2 trillion US dollars.
An exciting and encouraging development is that South Africa is applying some of the lessons from Silicon Valley. Amidst a series of unique socioeconomic challenges that are part and parcel of its status as a developing market, South African entrepreneurs are leading the charge in innovation and towards building our very own Silicon Valley in Cape Town – an environment that enables the growth and development of tech start-ups.
Cape Town is currently one of the world’s fastest-growing regions in terms of foreign investment, according to a report from fDi Intelligence, a data division of the Financial Times group. Just two years ago, the number of tech startups in the city alone stood at 550, employing over 40 000 people. A similar “tech wave” is taking shape in Johannesburg, the birthplace of startups, that are changing the game in the banking, financial services, entertainment and property sectors.
These tech start-ups are an integral pillar of the small and medium enterprise (SME) sector in South Africa, not only because of their contribution to GDP and their role in decreasing unemployment, but also because of their ability to put South Africa on the global stage.
Our country has the potential to become a global incubator for innovation, because adversity tends to breed innovation. Grit, creative thinking and the ability to see challenges as opportunities are the hallmark qualities of an entrepreneur.
Below are just two examples of how South African startups have positively impacted the country.
SweepSouth
As the recipient of multiple awards, including Best Small Company in the 2018 SAVCA Industry Awards, SweepSouth is a prime example of how technology can be used to address uniquely South African challenges. SweepSouth is an app-based cleaning service that was founded by young entrepreneur, Aisha Pandor, in 2014. The app connects a community of home and office cleaners with the people who require their services. To date, it has been the source of over 15 000 jobs while solving a problem for end-users. The app addresses a number of pain points, including the need for reliable and trustworthy cleaners, the on-demand availability of cleaners and the payment of a fair wage for a community of workers who have been historically exploited. This year, this startup celebrates seven years of operation, having successfully pushed through the foundational years, which are notoriously difficult for local start-ups.
Yoco
If you’ve visited a coffee shop or interacted with a market vendor, you will most likely have used a very compact-looking, card machine to complete your transaction. The company responsible for distributing these machines, while also offering an online payment service, is Yoco – a Fintech company that began as a startup and grew exponentially to serve a community of over 150 000 businesses, many of which are SMEs. According to TechCrunch, Yoco has processed more than US$ 2 billion in card payments since it was founded six years ago.
A look at the marketing efforts of the brand will reveal a company that is youthful, energetic and witty – a breath of fresh air in a financial services environment that could certainly do with more relatability. In a recent round of Series C funding, backed by Dragoneer Investment Group, Yoco raised US$ 83 million – the largest single investment raised by an SME-focused payments platform in the Middle East and Africa.
These ideas were born out of necessity and have thrived because they offer a solution to a mass problem. There are many more similar opportunities in our developing market, for those brave enough to take the first step. Funding will always be attainable for entrepreneurs who are able to present a well thought out business plan that answers a real market need.
ENDS
About the Author: Ben Bierman
