Tech sector in Cape Town needs more high-profile exits, state support – Winde

The Western Cape’s Minister of Economic Opportunities Alan Winde says Cape Town needs more high-profile exits and better support from national and local government.

Responding to questions from Ventureburn on what his office is doing to promote the city as a tech startup location, Winde said in addition to more high-profile exits, the city needs better governmental support via policy initiatives at national and local level.

These he said include the introduction of entrepreneur visas, strategic funding support and the removal of intellectual property (IP) exchange controls (which the Reserve Bank is attending to).

Read more: Reserve Bank is looking to further unblock ecosystem challenges – Winde

In addition, he said, the continued support of the ecosystem, particularly raising awareness and global profiling to attract skills and investment, is also required.

We have committed significant investment in the tech sector and can see the kind of energy in the ecosystem that this has created – Winde

Winde however pointed to a number of initiatives that his office had already carried out to promote the province and city’s tech sector.

“We have committed significant investment into the development of the tech sector, and we can see the kind of energy in the ecosystem that this has created,” he added.

He singled out the announcement earlier this year by Startupbootcamp that it had launched its African programme in Cape Town, as well as the launch last year of French Tech Labs‘ facility in Century City, as part of an R11-million investment into the Western Cape.

Read more: ‘SA corporates now more keen to back initiatives like Startupbootcamp’
Read more: French Tech launches first of its kind incubator in Cape Town

In addition he noted that Absa Aliens, Absa’s development centre, is offering a young participants a space to completing internships as software developers, while Barclay’s Rise, located in the Woodstock exchange, connects startups with the world’s top financial experts.

He said his department’s Red Tape Reduction Unit, which was launched in 2011, remains the only government team dedicated solely to ensuring that unnecessary regulations do not hamper economic growth. “This team has dealt with over 6 000 cases since its inception, with a 93% success rate,” he said.

He added that an independent assessment of a sample of cases the unit attended to between 2014 and 2016 confirmed that, through their interventions, businesses have saved R600-million.

He said the annual Western Cape Funding Fair, which the department has hosted with Deloitte for the past two years, has resulted in small enterprises securing over R11-million in funding, with deals worth a further R45-million in the pipeline.

The department in 2015 also launched the Design Innovation Seed Fund, in partnership with the Technology Innovation Agency (TIA), to provide funding to the province’s entrepreneurs, with a particular focus on valuable high-risk early innovation.

Affordable internet access

He said the department has prioritised the expansion of affordable internet access to residents, with the provincial government together with Neotel having installed 150 hotspots, with 250 new users signing up to the service each day. In the past year, 70 000 devices have connected to our public Wi-Fi hotspots, he added.

“In 2017/18, a further 224 hotspots will be rolled out. This initiative forms part of our 10-year broadband roll-out programme, a R3-billion government investment,” he added.

He said to ensure that entrepreneurs are able to participate in the new global economy, the Cape IT Initiative, which is co-funded by his department, is providing entrepreneurs with incubation space at the Bandwidth Barn in Woodstock and Khayelitsha.

“At the Barn Khayelitsha, 50 innovative entrepreneurs are working to solve the specific challenges of their communities, which they understand best. Several incubators and co-working spaces have been established in Cape Town, with significant growth in the last five years.

“Such hubs have contributed to more than 20 acceleration programmes being active in the city, across more than 25 co-working spaces — among the highest of any African city,” said Winde.

He said through the Java Post-matric programme, his department – along with the Oracle Academy and the MICT Seta — is seeking to ensure that young coders are ready for the workplace. Participants complete internships with leading digital companies in the Western Cape.

Winde said Wesgro, the province’s tourism, trade and investment promotion agency, also actively promotes the growing tech sector and seeks investment into startup businesses.

VC hub for SA

“We believe these efforts are making an impact. The Western Cape has emerged as a centre for venture capital activity in South African, a trend which being boosted by
tech startups.”

He pointed to figures from the South African Venture Capital Association (Savca), which show that between 2012 and 2015 three quarters of all VC investments were made in Cape Town.

“Our region has a dynamic, collaborative startup ecosystem that encourages learnings from institutions, corporates and other startups. In addition, it is a great place for business to develop and test solutions that are applicable in either developed or developing country conditions, given the location of the city and its’ proximity to formal and informal markets.

“This allows companies to trial solutions that they would potentially not be able to test adequately in developed countries, as well as consider solutions that they would not be exposed to if working in a developed country,” he said.