Why it’s important for SA startups to adopt a social impact mindset

South Africa doesn’t have the biggest startup scene in the world. As was recently made clear by CodeX founder Elizabeth Gould’s brilliant article on why Cape Town will never be Silicon Valley, the country’s tech hubs have their own flavours, and we should all come to terms with that. Better yet, we should take advantage of that.

Reiterating what Lumkani’s David Gluckman told Ventureburn a little while ago when the startup won a social entrepreneurship award: “There’s an engine that operates in an entrepreneur from an emerging market that’s super unique and exciting.”

This has mainly been the reason I write about tech, and more specifically, tech in emerging markets: understanding and valuing that engine. There’s something wonderful and necessary about a problem-solver who sees opportunity where others see problems.

Because of these gaps and issues in society, innovative products need to have massive impact in order for the company to be successful. For instance, mobile payments company SnapScan isn’t formally considered a social enterprise. Yet, the company is adding a lot of social value to the country.

“In South Africa, a product really needs to add significant value, the threshold needs to be higher,” Kobus Ehlers, co-founder of SnapScan noted in a recent interview. “If you want to go from product to business, you really need add a substantial amount of value by solving a real problem.”

“If you look at the addressable market in South Africa, you can’t just build another app that’s going to do a little something a little bit better,” he said. “You can only do that if the market is massive, because you only need one percent of whatever the market is which will be enough to keep you going.”

“There are very specific problems in our local context and it’s quite satisfying to try and solve one of those things rather than just a generic company building a generic product that can work anywhere,” he added.

Ehlers explained that when SnapScan was founded, he and his team were inspired by the enormous number of merchants who really want to accept payments but couldn’t. Today, in partnership with the non-profit magazine, The Big Issue, SnapScan is helping vendors overcome just that. Many of them don’t even have bank accounts, but can now accept payments through cash-out vouchers, which they can use at an ATM. That’s a real problem solved.

Furthermore, during the Cape Town fires a few weeks ago, the tech startup shared a couple of posts on Facebook and Twitter, giving people an easy means of donating money towards the Volunteer Wildfire Services and the SPCA Wildlife Unit. It nearly raised R80 000 within the first 24 hours.

“We really try not to think of [SnapScan] as the thing that’s going to make us the most money. Of course that is important,” Ehlers said. “It is a business at the end of the day. But it really is about the opportunity that you have in South Africa to address some real problems.”

Entrepreneurs in South Africa have a unique edge: on the one hand they have the advantage of operating in a less competitive market, while on the other, the market is so small to begin with, a lot of user traction is required to help the company survive.

South Africa might not have the most talented people, most VCs, largest institutional support and what have you, but it does have those things. And when they work, they work well.

“The biggest challenge the country faces is overcoming the lethal cocktail of unemployment and inequality,” said Chris Whelan who’s CEO of Accelerate Cape Town in an interview.

“If you pull it down and you focus specifically on innovation, the reality is that innovation drives growth. When you’re adding value to an economy you’re growing that economy,” he added. “So the questions about how do we innovate while furthering job-creation is very pertinent.”

Image: Snapscan via Facebook.