You have just arrived on South Africa’s startup scene, you’re lost and not sure where to start, or what to do next. You have inherited millions and you’re looking to invest through an Angel Network and its safety in numbers. Your company is great but your growth strategy is a bit lacking.
Don’t worry, there are places, people, organisations and events to look to for advice and information. We have scoured South Africa’s entrepreneurial landscape and hand-picked some of the top players to get you started.
Bookmark this one. The intention is for this article to be a living thing, that will grow into the ultimate resource for South African tech startups and entrepreneurs. With your comments and suggestions we hope to create a clear overview of the people and organisations that influence and shape South Africa’s tech venture space.
If you’d like to add your organisation to this framework or suggest an additional category, please contact us.
Here we go:
Granted the South African education system has its challenges, yet it would do well to embrace a culture of entrepreneurship, particularly at primary and secondary levels. As research in Omidyar’s Accelerating Entrepreneurship in Africa report suggests, management and other entrepreneurial skills should be fostered in schools. African schools are currently geared for producing a corporate workforce.
At a tertiary level, the report notes a lack of practical aspects. Limited opportunities for hands-on learning and managing small projects mean that students are not afforded clear paths for cultivating competencies related to practical thinking and creative problem-solving — skills needed to successfully build and manage a business.
While we wait for government and the private sector to change course, we’re seeing promising signals emerge in the education sector.
Entrepreneurs Bootcamp is a collection of nine free courses covering different aspects of entrepreneurship, designed by leading South African entrepreneurs.
Regenesys Business School provides free, fully accredited, internationally recognised online business education for South Africans.
The UCT Graduate School of Business (UCT GSB) teamed up with growth equity fund manager Knife Capital to launch the Find Make Grow Realise education programme to promote the development of early-stage, high growth entrepreneurial activity in the City of Cape Town.
Omidyar Network’s African Leadership Academy (ALA) is a South Africa-based educational institution that dentifies the most promising 16-19 year olds from all 54 African nations for an innovative, two-year program focused on leadership, entrepreneurship, and African studies.
IBM’s Africa Innovation Centre in Johannesburg, launched in June 2008 as an enablement facility for crucial ICT skills such as Software Development. It aims to advance the creation of local jobs.
The UCT Samsung Mobile Innovation Laboratory (SMILe) is Samsung’s first innovation unit in Africa. It’s a multimillion-rand project launched in April 2011 for an initial period of three years. It aims to increase mobile innovation and skills development.
The University of Stellenbosch in Cape Town runs the MIH Media Lab which emphasises applied research — by students with engineering or computer science degrees — with projects that have a good chance of producing prototypes or proofs-of-concept that could eventually be commercialised.
Business Bridge, a not-for-profit organisation, is attempting to start a movement which enables experienced business people, entrepreneurs and business school alumni, the opportunity to share their knowledge on aspects related to starting and running a business, with entrepreneurs in historically disadvantaged communities.
BlackBerry has opened three BlackBerry Apps Labs in South Africa to date. The first launched in partnership with the University of Pretoria (UP). The labs provide local developers, including students, startups, entrepreneurs and others, with access to resources in development, marketing, sales and training to help them expand their ideas and business opportunities. The labs support the larger context and objectives of the South African Department of Communications’ (DOC) eSkills Institute.
Whether or not angel investing is on the rise in Africa, as it is in the US, South Africa has its fair share of wealthy individuals with investment sense. The South African government can do a lot to encourage angel investing — tax incentives or guarantees — and so we’re seeing angel investors emerge in groups to cover the risks of early stage investment. Meanwhile, online angel investing platforms are gaining popularity: Seedrs (UK), SeedInvest and AngelList (US) and Startup Stock Exchange (global).
AngelHub is a network of angel investors that pool funding, expertise and networks to foster startup growth. AngelHub has a partnership with FNB Private Clients, First National Bank’s specialist banking solution that works with wealthy entrepreneurs, business professionals and others to increase their asset values.
Corculture is a group of high net worth private funders that invest in technology entrepreneurs located in South Africa and abroad.
Although the South African government is doing its part to foster entrepreneurial innovation, it runs many diverging initiatives. Without a single point of entry its hard for young businesses to know where to start. Fortunately we’re starting to see some convergence with its ISP initiative.
The Department of Trade and Industry (DTI) pilots various programmes aimed at boosting the country’s economy. Its Support Programme for Industrial Innovation (SPII) and Small Enterprise Development Agency (SEDA) provide financial aid to small and micro enterprises.
The DTI’s Incubator Support Programme (ISP) encourages private sector partnerships with government to support incubators that develop micro and small businesses.
In the name of skills development and innovation, the DTI enhances cooperation between higher education institutions and industry through the Technology and Human Resources Programme (THRIP).
Through Khula, the DTI plays a complementary role to financial institutions, bridging finance gaps that are not addressed by commercial financial institutions in the small business sector. For example, many small businesses do not have assets to put up as collateral for a bank loan. To assist these businesses, Khula offers them a credit guarantee scheme.
The Industrial Development Corporation (IDC) provides finance for industrial development projects. The IDC invested in the animation industry when it awarded R17-million to Cape Town-based Triggerfish animation studios in 2009.
The Technology Innovation Agency (TIA) develops and nurtures technological innovation in order to improve economic growth in South Africa. In 2012, the agency approved a R100-million venture capital fund to help VCs fund startups.
Wesgro, the official destination marketing, investment and trade promotion agency for the Western Cape does its part to promote entrepreneurship. It recently published a report that showcases local startup success stories and support structures and it also runs the Western African Trade Corridor Programme — its latest programme focuses on exploring trade and partnership opportunities in Nigeria’s service sector.
The Department of Science and Technology (DST) keeps a list of innovation funds — some already mentioned in this article — although to be fair, it seems pretty stale — it was last updated in 2011.
Venture capital is all about early-stage, high-potential, high risk, growth startups. When seeking startup capital for your venture, the one thing to remember is to be patient. VC firms operate in specialised sectors and while your idea might seem risky to one, other firms are ready to invest based on your stellar management team, or simply, a hunch.
For a comprehensive list of venture capital and private equity firms check out the South African Venture Capital & Private Equity Association (SAVCA). Our picks are known internet tech startup investors.
Hasso Plattner Ventures Africa favours technology companies with a proven track record of growth and revenue. It specialises in VC and growth funds.
4Di Capital prefers early stage tech investments. Its Early-Stage Technology Fund 1 is aimed at startup investment opportunities with big growth potential at the seed and early stages in the mobile, enterprise software and web sectors.
Intel Capital is stage agnostic which means it has helped companies of virtually every size reach their next level. The company looks at tech investments, talented developers and providers of hardware, software and services.
Knife Capital is a growth equity fund manager with a specific focus on sustainable technology-enabled ventures. The company was named South Africa’s best VC last year.
eVentures Africa Fund (eVA Fund) claims to be the first European-based venture capital firm investing in sub-Saharan African SMEs active in digital media.
Business Partners fund startups in the clean energy, agri-processing, bio-tech and ICT sectors with a maximum investment of R10-million through its R400 million Venture Fund.
Grovest Venture Capital Company (VCC) claims to be South Africa’s first VC company incorporated under Section 12J of the Income Tax Act — a new asset class in the country that has proven to be successful in the UK where VC companies are traded as venture capital trusts. The VCC structure offers investors exposure to the VC sector while at the same time providing up to 40% tax relief on their investments. Grovest looks for technology-focused South African private companies.
Invenfin describes is a seed and early stage venture capital fund which looks at ventures across all industries.
Private equity firms differ from their venture capital counterparts in a fundamental way. Private equity is about taking a company at later stage in its development and restructuring it to optimise its financial performance. If things go right, it can save ailing companies from going under and turn them into profitable enterprises. Private equity have a bunch of strategies in their arsenal. They include things like buyouts, replacing management teams, or venture capital.
The private equity firms listed here have made notable investments in tech startups.
Ethos Private Equity has been around for 25 years and has raised four funds, the latest of which tops US$800-million. Ethos seems to invest in a range of markets including tech — it has an investment in Clickatell, the bulk-SMS service provider.
Acorn Equity has a few funds that invest in a range of sectors. Its tech fund invests in tech startups with an enterprise value of up to R200-million and pre-tax profit of up to R50-million at the time of investment. The targeted investment size per transaction is R30-million to R80-million. Its portfolio doesn’t yet include a tech investment for its Acorn Venture Technology Fund One.
Horizon Equity‘s portfolio includes quite a few tech investments. It invests amounts from R10m to R100m into privately held South African companies from early stage through to pre-listing, including management buy-outs.
Sanlam Private Equity (SPE) is one of the largest private equity firms in South Africa with over R4 billion invested capital. SPE has made over 100 investment in buyouts, growth capital, private equity and venture capital funds, infrastructure projects and investment companies.
Sasfin Private Equity will only look at startups valued at R50-million upwards with an annual turnover of more than R30-million. Sasfin requires an equity share of 20% to 49% and “committed and competent management with a proven track record.”
Kagiso Tiso Holdings have a private equity arm with a focus on black economic empowerment (BEE). The firm typically invests between R20 million and R70 million in its portfolio companies, in exchange for a minority equity stake of between 20% and 50%.
Bank loans are usually a last resort for financing as they have the strictest criteria of all funding options. In 2011, research conducted by an independent company BMI and the competition commission into retail banking, indicated that only 24% of startup businesses are funded through banks while 49% through an entrepreneur’s own savings.
While the credit products among ABSA, FNB, Standard Bank, Nedbank, Capitec and African Bank overlap, some however, are tipping their toes into entrepreneurial water.
ABSA has the Small and Medium Enterprise Fund that will fund businesses that do not qualify for traditional bank credit due to a lack of a credit rating, security or capital. Loans between R500 000 and R1 500 000 are available, but they will only be given to businesses with 100% BEE ownership.
Among its bank loan products, Standard Bank offers Khula guaranteed loans — a loan type made possible through the DTI. The scheme is an indemnity to Standard Bank should the business fail to repay the loan. 50% to 90% of the bank loan can be indemnified under the Khula scheme. The maximum amount that can be approved under the scheme is R3-million.
FNB Private Clients, First National Bank’s specialist banking solution has partnered with business angel investor network AngelHub, to allow its wealthy entrepreneurs, business professionals and others to increase their asset values.
Arguably the bank with the most visible entrepreneurial focus is Nedbank. The bank touts its ability to offer “specialist business mentorship and technical assistance programmes like business strategy, problem diagnosis and financial management as well as access to all aspects of business training, workshops and seminars” to young businesses.
Nedbank offers free transactional banking for up to two years with a startup loan of R100 000 and its Nedgroup Investments Entrepreneur Fund invests in the shares of small- and medium-sized companies listed on the JSE — not surprisingly then, Nedbank has a private equity arm.
As far back as 2009, Nedbank has been investing in entrepreneurs when it launched a R3-million enterprise development project in partnership with Raizcorp, a private sector business incubator which saw 12 handpicked black entrepreneurs receiving support over a period of three years to develop their new enterprises.
An incubator brings in an outside team to manage an idea that was developed internally and takes a larger chunk of equity in the resulting company. Incubation programmes run over longer periods (years). An accelerator on the other hand, takes a smaller amount of equity in a company that passes through it — typically for a shorter time of three months — in exchange for small amounts of funding and mentorship.
The RLabs Innovation Incubator provides entrepreneurs with a shared space to develop their ideas with help from an experienced developer and entrepreneurship network. Ventures that have a social impact, are sustainable and show potential for growth are welcome.
The Maxum Business Incubator at The Innovation Hub works with a timeframe of two to three years in which it fast tracks startups from knowledge-intensive sectors including sustainable development, green economy information and communications technology (ICT), biosciences, electronics, and advanced manufacturing and materials.
Founded in 2000, Raizcorp is the only unfunded for-profit business incubator in Africa. It has seven physical incubators in South Africa and one in Angola. To date, 900 companies have graduated from Raizcorp.
Collectively, the founders of Aurik Business Incubator have created and sold twelve companies. As Aurik, these founders have worked with 480 entrepreneurs to develop their ideas.
Bandwidth Barn has been in operation since 2000 and is today regarded as one of the leading ICT business incubators in the world.
A newcomer, JoziHub wants to transform the technology industry by connecting potential entrepreneurs and developers with the critical resources they need. It has backing from heavyweights such as Omidyar and Google.
The Shuttleworth Foundation looks for “amazing people”, give them a fellowship grant, and multiply the money they put into their projects by a factor of ten or more. Startups that receive fellowship grants get office space for a year during which their ideas are developed.
The Awethu Project is pioneering a new approach to identifying talented entrepreneurs in under-resourced South African communities. Its applicants don’t need any minimum level of education, business experience, capital or even an investable idea. The only requirement is that an applicant comes from an under-resourced background and can prove that they have world-class entrepreneurial potential through Awethu’s Talent Identification Process.
Seed Engine works as follows: in exchange for equity, 10 startups receive R100 000 startup capital to turn their ideas into business plans, with the wind of three 13-week accelerator bootcamps at their backs. At the end of the programme, the teams are introduced to potential investors that can invest amounts between R200 000 and R2 million.
The 88mph accelerator started in Kenya, and later moved to Cape Town where it merged with Google’s Umbono programme for entrepreneurs, subsequently being called Google for Entrepreneurs. The three-month programme runs in in Nairobi and Cape Town and sees simultaneous investments upwards of US$100 000 in 10 to 12 startups. Funding, entrepreneurs-in-residence and office space is provided.
South African growth equity fund manager Knife Capital runs the later-stage business accelerator, Grindstone, in order to assist high-growth technology enabled SMEs to become sustainable and fundable.
Having set up shop in Johannesburg earlier this year, the Founder Institute is looking to expand to Cape Town. The Founder Institute is an early-stage startup accelerator and global launch network with a part-time four month programme. The idea is that entrepreneurs can launch their dream company with training, feedback, and support from experienced startup CEOs, while not being required to quit their day job
U-START facilitates matching and cross-border investment among European investors and early stage companies in Southern and Eastern Europe, Africa and Latin America. U-START is currently raising an Investment Fund (target size of EUR 30 million) with the most important investors in its network in order to co-invest in start-ups accelerated by U-START partner organisations worldwide. Operations of the U-START Fund are intended to begin in the first half of 2014.
mLab Southern Africa is a vertical accelerator that focuses on mobile innovation and startups. It offers a number of support services including mentoring, development, infrastructure, funding and access to industry players and government locally and internationally. mLab is backed by the World Bank, infoDev, the Ministry of Foreign Affairs of Finland & the Department of Science and Technology.
With the popularity of crowdfunding platforms like Kickstarter, new initiatives tailored specifically for businesses have emerged. These venture-focused platforms allow investors to grow their investment portfolios by making smaller investments across a wide range of ventures, thereby minimising risk and increasing the potential for returns. For startups however, crowdfunding, which is hit and miss affair, remains a last resort.
In South Africa Crowdinvest leads the way. It has a comparatively small footprint however, when taking into account an international heavyweight like SeedInvest. More recently Startup Stock Exchange, a play on the traditional crowdfunding model, has opened to a global audience.
Finally, the rather fledgling but compelling RainFin, is based on a peer-to-peer financing model — borrowers are able to borrow with better conditions than in the traditional collateralised loan market and lenders can experience the benefits of lower fees and better interest.
Entrepreneur Magazine is South Africa’s best selling entrepreneurship magazine. It’s also a great online resource for general topics on entrepreneurship.
Bandwidth Blog (BWB) has a wide scope for local and international technology news coverage. BWB’s coverage, often in the form of video interviews, includes startups and the entrepreneurs that head them up.
TechCentral has a very strong South African flavour. Its focus is more on general technology news, but it does publish entrepreneurial stories as well.
The Entrepreneurs Organisation (EO) is a global business network of 8,000+ business owners in 122 chapters and 35 countries. Founded in 1987 by a group of young entrepreneurs, EO enables small and large business owners to learn from each other, leading to greater business success. Read more about the South African chapter of EO.
Endeavour is a non-profit organisation that identifies and assists high-growth entrepreneurs in emerging markets around the world. The entrepreneurs cultivated by Endeavour in turn help create jobs, propel economies, and cultivate leaders and role models.
Silicon Cape is a non-profit, community owned and driven initiative that aims to improve the environment in the Western Cape to create more and better startups as well as increase access to capital.
Tech in Braam is connecting IT entrepreneurs and professionals with the aim of creating and growing a world class technology sector in Johannesburg.
The Sable accelerator is an international partnership group dedicated to helping South African entrepreneurs, new venture startups, academic institutions and companies commercialise technology innovations, promote and protect intellectual property, fund new business concepts, finance growth, as well as expand into global markets. Sable is powered by MentorCloud, the cloud-based mentorship platform, which also works with the University of the Witwatersrand Alumni Association, powering their mentoring programme between alumni and students.
The Cape IT Initiative (CITi) is a non-profit organisation focused on supercharging the Western Cape’s technology sector as well as tech-enabled industries like financial services, retail and government. It considers itself a “mothership” for a number of initiatives in support of startups, skills development, cluster development, research and market growth programmes. CITi also runs smaller initiatives like codersRcreative, the Software CEOs Forum, the Academic HODs Forum, IT Heroes and CITi Café Conversations.
The Branson Centre for Entrepreneurship based in Johannesburg provides free training, mentoring and other networking and marketing platforms for entrepreneurs who demonstrate the potential to move their small business to the next level of growth.
Net Prophet is an annual conference that is laser-focused on startups and entrepreneurship. Every year entrepreneurs in the Internet space share their stories, ideas and predictions for the future in a format that is fresh, relevant and engaging.
Tech4Africa is one of Africa’s biggest mobile, web and emerging technology conferences and brings a global perspective to the African context. Each year it hosts the Ignite startup competition which gives African startups exposure to “investors, mentors, thought leaders, buyers, decision makers, journalists, influencers and potential recruits.”
Mobile Web Africa is part of a series of conferences held across Africa — Mobile Web East Africa, Mobile Web West Africa, Mobile Entertainment Africa — that’s all about the mobile internet and building applications for mobile devices in Africa. Following a successful inaugural event for South Africa in 2012, the event is looking to become the definitive annual mobile conference.