If startup life offers low-pay accompanied by a tough culture, why then do people still go work for them? The answer may be that, for some, the challenging and flexible work environment of a startup is more important, not to mention working with someone who’s driven to become a pioneer in his industry.
The Ventureburn Startup Survey, which aims to uncover the “true picture of the South African startup landscape”, partnered with First National Bank (FNB), investment advisory firm Clifftop Colony and analytics company Qurio, to recently poll just under 200 tech startups. Each of the 200 startups were asked 42 questions ranging from funding, the profile of their founders, to their revenues and the everyday challenges they face.
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The survey found that over a third of startups are made up of “volunteers” (20%) and employees who get “below market-related salaries” (19%). Benefits are virtually non-existent in the startup world with exactly zero startups indicating they do not offer pensions. Just 2% of startups say they offer medical aid.
It’s not too surprising then that the most common reasons for losing employees is “remuneration” (26%) followed by “startup culture does not agree with them” (14%).
Startups are well known for its demanding work culture. The survey substantiates this as many startup employees also leave because of “too much pressure” (11%), “battles with multiple roles and disciplines” (9%) and “working hours” (5%) — all of which are common characteristics of a lean startup.
Justin Melville, the CEO of Cape Town-based online rental startup Ekaya, explains that while money is obviously tight and often temporary in the startup world, some employees aren’t in it for the money or benefits.
Looking at the profile of startup founders, many are driven to become “pioneers” (15%) which in turn can help motivate employees.
“I’ve worked with great young companies for free. And not because I could afford to (I couldn’t), but because I wanted to be involved with those people, doing things — amazing things,” shares Melville.
The survey does, however, show that 26% of startup founders remunerate employees with “market-related salaries” while six-percent pay “above market-related salaries”.
Many employees are also treated to office benefits (18%) such as lunch or coffee, often cited as the lifeblood of most startup teams.
Most of South Africa’s tech startups are keeping it lean with five or fewer employees (88%). With small teams such as these, Melville says that having the right DNA is everything when it comes to people you work with. “It’s my job to make sure that we only work with people who get us.”
Taking into account that the country suffers a shortage of maths and science skills, some of the biggest challenges startups face are “not enough skilled technical staff” (12%) and “not enough skilled staff” (6%).
One way certain startups look to solve the issue of low-pay is to reward employees in company shares — a trendy method of remuneration in Silicon Valley. Yet, according to the survey, only eight percent of South African startups reward their employees in shares. This contrasts South African entrepreneur Vinny Lingham’s philosophy who popularly made all his developers millionaires when Gyft exited in 2014.
More information on the Ventureburn Startup Survey:
Ventureburn survey sheds light on SA’s tough, but pioneering startup industry
No surprise: funding the biggest hurdle for SA’s startups
What do South Africa’s startup founders look like, and what drives them?
Go big or go home: most SA startups need to scale fast to survive
SA startup industry: all the stats and numbers you need to know [infographic]
Image by Erica Kawamoto Hsu via Flickr