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Foreign founders

Close to fifth of Joburg, Cape Town startup founders are immigrants

Almost one in five startup founders in Cape Town and Johannesburg are immigrants, reveals a new report.

The 2017 Global Startup Ecosystem report, released by StartUp Genome last month, reveals that 18% of founders in Cape Town and 17% in Johannesburg are immigrants – slightly under the average of 19% for the 56 cities measured by the report.

In comparison, just four percent of founders in Lagos, Nigeria are immigrants — significantly below the 46% that are immigrant founders in Silicon Valley.

Of the emerging market cities measured, Shanghai tops the list with 36% of startups founded by foreigners. Other notable cities are Berlin (43%), London (42%) and Malta (39%).

18% of founders in Cape Town and 17% in Johannesburg are immigrants

Silicon Cape director Alexandra Fraser said immigrant founders attracted to Cape Town include those partnering with local companies or those who have registered companies based in foreign jurisdictions but choose to operate out of the city.

Fraser said some immigrant founders who count themselves as running a startup in Cape Town have built companies elsewhere and are attracted by the city’s beauty and fairly efficient management, as well as good access to capital and talent that the city provides.

One such foreign founder is Sylvia Gruber. In 2009 she came from Austria to be with her then South African boyfriend. Being from a corporate background, she never intended to start a business in Cape Town.

Since then she has started four businesses, two of which she has since sold (including beauty products business Rubybox) after closing her first business.

Today she runs Carechamp.co.za, a technology and marketing platform connecting trained caregivers with people in need of home healthcare services.

Gruber said that most of the foreign founders she knows were initially attracted to the beauty of Cape Town and its people.

“Cape Town has such an entrepreneurial climate that I got inspired to start my first business, administratively it was quite easy.

“However it’s important to have a visa allowing you to start a business and also allowing you to open up the required bank account for example,” she said.

A possible obstacle in the way?

A parliamentary reply last month by former Home Affairs Minister (now finance minister) Malusi Gigaba is however cause for concern for foreign entrepreneurs looking to set up in South Africa.

Gigaba stated that not a single new business visa was approved last year by the department.

He added that all 48 applications for new business visas and 148 of the 173 applications for renewal were rejected — most because of fraudulent supporting documents.

StartUp Genome CEO JF Gauthier stressed that the figure the report uses for the percentage of immigrant founders in a city should be seen as a measure of diversity. rather than how many founders are on an immigrant visa or not.

“They (founders) may have moved 20 years prior as an 18-year-old student, might have moved at the same age with their parent, or might have moved to work for a large company… and then founded or co-founded a startup,” he said.