A recent Silicon Cape survey titled The State of South Africa’s Tech Startup Industry has been compiled in the form of the mighty infographic. Although only around 250 people have answered the survey at the date of writing, the information supplied by the small sample group provides revealing insight into the nature of the scene, and most tellingly, the perception of the scene — especially when compared to last year’s poll of 190 startups.
Let’s take a closer look.
In terms of gender and education, the results are similar to previous polls. The South African (SA) startup scene is still dominated by men, with an 80% to 20% ratio.
Education levels are split between Post-Graduate and University with the highest levels earned at 35.5% and 34.5% respectively. College and High School follow with 20% and 10% each.
In terms of sectors, the Business Application sector leads the charge followed by Communications and Mobile, with Payment lagging at the bottom.
Interestingly 60% of startups are self-funded, only nine percent have received Angel investment and eight percent VC. A rather large 26% haven’t received any funding at all.
I’d like to look at the pursuit of funding stated in Silicon Cape’s previous startup poll: 48.1% of startups did not pursue funding at all, 19.2% were in the “don’t know” category and about a third of startups did pursue funding at 32.7%. This means that about two-thirds of startups weren’t actively pursuing funding at all.
Now let’s look at what Silicon Cape calls the ‘Mindset’ of the scene in its latest survey.
At the top of perceived constraints to South African entrepreneurs, number one is, and you guessed it, “Access to Funding”.
So people perceive that there isn’t Access to Funds, and so, two-thirds of startups don’t actively pursue funding at all. This is a problem, and it’s all rooted in the perception of the scene.
Our Managing Editor, Michelle Atagana, wrote an article last month about how no one talks about money in SA’s startup scene in which I believe she touched on points that inform this perception of access to funds and reveal the nature of SA’s ‘Entrepreneurial Culture’ – the second most perceived constraint according to the early results of the survey.
Michelle deduced that no one talks about money in SA’s startup scene for any number of reasons; including embarrassment for the numbers involved (especially when compared to overseas scenes) to a competitive edge for public investors and a “none of your business” attitude from private investors. This “hush-hush” attitude is at the heart of SA’s ‘Entrepreneurial Culture’.
If the major investors and startups themselves aren’t revealing numbers around deals — whether big or small, successful or unsuccessful — then this perception that there isn’t access to funds is a natural consequence of such attitudes. SA’s entrepreneurial culture of secrecy and a lack of transparency is not just influencing, but actually moulding, the stigma around access to funds.
It’s a cycle — numbers aren’t revealed, entrepreneurs think there is no money to receive and so no one pursues it.
There is no easy solution, sure SA’s startup scene is in its infancy and we’re all still learning but I think awareness of how the scene is perceived is key to changing attitudes. Maybe I’m being naïve but we need investors and startups to start revealing numbers to promote a transparent entrepreneurial culture because without it, this access-to-funding myth will prevail.
Despite this perception, the recent results show that the majority of entrepreneurs (55%) still feel “very excited’ about the future of their businesses. Thus the drive, passion and commitment exists in the culture, but transparency (especially of successful deals) and mentorship are sorely lacking.
This may be a small sample group, but it reveals much about the mindset and nature of SA’s startup scene and alludes to what needs to be done to improve it — we all have a role to play.
The Silicon Cape survey is open until June 2013, you can participate here.
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