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The Western Cape region, which includes Stellenbosch and Cape Town is colloquially referred to as “Silicon Cape”, a nod to the legendary Silicon Valley in the United States.
The Western Cape is generally acknowledged as having South Africa’s strongest entrepreneurial ecosystem. The Digital gateway to Africa report recently jointly published by Wesgro, City of Cape Town and PwC, shines a light on exactly why the region has become so attractive to both intrepid capital seekers and providers.
We’ve gone through the lengthy 88-page report and picked out six reasons why the fairest Cape of them all is worthy of parallels to Silicon Valley.
1. Cultural overlap with Silicon Valley
Successful entrepreneurs and business people draw similarities between Cape Town’s entrepreneurial community and the one spread out through Silicon Valley.
FNB CEO Michael Jordaan sees a cultural overlap. Cape Town and Silicon Valley serve as networking hubs for wealthy entrepreneurs and tech geeks alike. Both groups, being highly mobile, use “quirky coffee shops” against interesting architectural backdrops, as platforms to connect with like-minded people — a practice which Jordaan says speaks to the “creative and unconventional spirits” that embody tech entrepreneurship.
Koos Bekker, CEO of publishing behemoth Naspers and Deon van Biljon, the VP and GM of ACI who developed Postilion — one of the largest payment processing platforms in the world — agree that Cape universities, locally, as they do abroad, encourage research and academic innovation that spill over into the business hubs around them. Jordaan adds that Cape Town is already known as the IT and asset management hub in Africa, but in order to match Silicon Valley punch for punch, the Cape needs to fill its VC void and offer tax breaks that encourage venture funding and entrepreneurial activity.
2. Undeniable talent
Silicon Valley has its standout tech success stories and so too has the Cape. Cloud computing leader, Amazon Web Services was conceived in the region. Mark Shuttleworth built Thawte, the first authority to issue Secure Socket Layer (SSL) certificates to public entities outside the US, in his parents’ Durbanville garage. Fundamo, now a Visa company, was founded by Hannes van Rensburg in Cape Town and launched the world’s first mobile financial service for the unbanked in developing economies in 2002.
CEOs from successful startups like Mxit, Triggerfish Animation Studios and BSG, readily attribute their growth to the talent pool in Cape Town. The talent argument is hard to ignore. South Africa hosts 70% of the world’s most powerful radio astronomy telescope — the Square Kilometre Array (SKA). The MeerKAT telescope — a pathfinder to the SKA — has an engineering office in Cape Town.
3. A strong support community
Several initiatives in the Western Cape have boosted the region’s profile as startup hub and area of innovation. Some of our favourites include Bandwidth Barn, Silicon Cape Initiative, SABLE, UCT SMILe, RLabs, MIH Media Lab, Start-up Weekends, Pitch London and IBM Innovation Centre. For the complete list be sure to read the full report.
Bandwidth Barn — Having been in operation since 2000, it is today regarded as one of the leading ICT business incubators in the world. The Bandwidth Barn is a wholly-owned subsidiary of the CITi. Its 49 tenants and more than 50 successful graduates add more than R800 million per year to the economy in revenue alone. The Bandwidth Barn has contributed to almost 2,500 direct and indirect jobs.
Silicon Cape Initiative — The Silicon Cape Initiative is a non-profit, private sector community organisation introduced in 2009. Its vision is to establish an ecosystem in the Western Cape that attracts and brings together local and foreign investors, technical talent and entrepreneurs so as to foster the creation and growth of world-class IP startup companies that are able to compete with other similar hubs around the world.
The SABLE (South African Business Link to Experts) Accelerator — This international group is dedicated to helping South African entrepreneurs. That includes assistance with expanding into global markets. Academics from the technology transfer and innovation offices of both University of Cape Town and Stellenbosch serve on the faculty of the SABLE Accelerator.
The UCT Samsung Mobile Innovation Laboratory (SMILe) — Samsung’s first innovation unit in Africa – is a multimillion-rand project launched in April 2011 for an initial period of three years. It aims to increase mobile innovation and skills development.
RLabs — RLabs is a global movement and registered Social Enterprise that provides innovative solutions to address various complex problems. The RLabs’ ‘main hub’ is in Athlone, Cape Town, but it has activity in the United Kingdom, Europe, Asia and Central Africa with a goal of reaching all continents by 2012.
MIH Media Lab — The MIH Media Lab at Stellenbosch University was founded with the purpose to promote research in ‘new media’ technology in South Africa. In close partnership with MIH, the internet division of Naspers, the MIH Media Lab aims to participate in research on next- generation technologies that will influence the ways in which humans interact with computers, the Web and other forms of electronic media.
Start-up Weekends — Start-up Weekends are 54-hour events where developers, designers, marketers, product managers, entrepreneurs and startup enthusiasts come together to share ideas, form teams, build products and launch a startup.
Pitch London — Silicon Cape Initiative — A trade mission of 11 Western Cape tech startups went to London to showcase their businesses and develop relationships with investors and potential clients in November 2012. The objective of the mission was to give the 11 businesses that attended access to inventors, mentors, entrepreneurs, acceleration and innovation labs in London.
IBM Innovation Centre — International information technology company IBM has opened a special centre in Cape Town to help promote computer skills development and business growth in the country.
4. Access to funding
As acknowledged in Omidyar Network’s latest report, Africa is lacking in VC and Angel funding, and yet South Africa, and Cape Town in particular, is considered better off than most of the other regions in sub-Saharan Africa.
We’ve compiled a top 10 VC list, and we’ve written about plenty of incubators and accelerators, but the Digital Gateway to Africa report makes special mention of Knife Capital, 4Di Capital, Invenfin, World of Avatar, Business Partners, Hasso Plattner Ventures Africa (HPVA), Technology Innovation Agency (TIA) and AngelHub.
5. Technology companies fund research at universities
The University of Stellenbosch (USB), through funding provided by Naspers, opened its new facility for the MIH Media Lab in October 2012. The university and the media giant have been collaborating since 2008, when they formed a research group with four postgraduate students that focused on developing a new media service.
The University of Cape Town (UCT) has also attracted corporate backing. Global electronics group Samsung has funded the establishment of a laboratory that specialises in the development of mobile applications.
UCT also has the Centre for Information & Communication Technologies for Development (ICT4D) and the Centre for IT & National Development in Africa, which both look at ways to use technology to address developmental issues. The ICT4D centre is funded by the Berlin-based Hasso Plattner Institute but also gets funding from the likes of Microsoft and Nokia. Microsoft is funding the development of games at UCT for its Xbox platform.
6. Strong IT infrastructure
In December 2011, the City of Cape Town, as part of its broadband infrastructure project, completed a R125 million, 500km optic fibre network project, thereby increasing the City’s bandwidth by approximately 1,000 times. The project was aimed to provide low-cost broadband to support municipal services while it will lease excess capacity to other third-party network users in order to encourage economic growth.
Image credit: fabulousfabs via Flickr