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GLOBALOUTLOOK RISINGECOSYSTEMS


RISINGECOSYSTEMS


CapeTownsharpens tech credentials


CAPE TOWN HAS A LIVELY TECH START-UP SCENE, POWERED BY LOCAL INVESTMENT BEHEMOTH NASPERS. YESSI BELLO PEREZ REPORTS


outfits such as Naspers, SouthAfrica, unsurprisingly, has a flourishing start-up ecosystem. Cape Town,where Naspers – one of theworld’s top 10 tech investors – is headquartered, hosts a thriving start-up community and though nascent, it is showing great promise. “It is perhaps too easy – and too


T


early – to designate a specific geographic zone as our local ‘Silicon Valley’.What we can say is that between Cape Townand nearby Stellenbosch, there is a good deal of entrepreneurial business action,” says FabianWhate, head of Naspers Foundry, a start-up funding initiative set up by the tech behemoth.


Diverse tech sector Cape Townis alsohome to someof South Africa’s largest financial institutions,which explains the emergence of several innovative fintech solutions – but success isn’t confined to this sector. GetSmarter, an edtech company founded in Cape Town, was sold for $103mto 2U, an American listed company, in October 2017. Takealot, founded in 2011, is Cape Town’s most notable e-commerce success story. Meanwhile, Aerobotics, a data


analytics company using aerial imagery and machine learning to


GENERALLY, THE LOCAL TECH SECTORHASATRACK RECORDOF PUNCHING ABOVE ITS WEIGHT


18


he birthplace of tech entrepreneur Elon Musk, and home to several successful tech


help farmers identify pests and disease, has raised a respectable $10.3m in six years. The list of successful ventures goes on. “Generally, the local tech sector


has a track record of punching above its weight, developing innovative products that compete on the global stage and which can potentially be scaled internationally,” says Mr Whate. Sowhy are start-ups choosing


Cape Townrather than other well- knowncities such as Johannesburg or Bloemfontein?


CapeTowninnumbers With an internet penetration of 63% and with one of the largest open access fibre networks in Africa, Cape Town is home to the vast majority (almost 60%) of South Africa’s start-ups, according to figures from Invest Cape Town. The city also has the continent’s highest number of accelerators, with more than 20, and 25-plus co-working spaces, according to a report co-authored by Invest Cape Town. The Cape Innovation and


Technology Initiative (CiTi) is credited with being Africa’s oldest tech incubator and has spun out more than 2000 businesses and supported more than 3000 entrepreneurs since its inception in 1999. According to CiTi’s CEO Ian Merrington: “Cape Town’s success can be attributed to anumber of factors, starting with an established ecosystemdevelopment strategy over the past 20 years that helped stimulate entrepreneurial activity.” The local tech community is active


withseveral meetups, including DevOps Meetup, Tech Leadership Meetup, and Cape TownFront-End Developers, while lifestyle and cost are also cited as an attraction.


“Cape Town’s cost of living is a lot


lower than that of other start-up hubs, withthe bonus that it’s also a beautiful city to live in,” said Tanaka Mutakwa, vice president of engineering at Names&Faces, a local start-upworking in the human resources area.


Governmentsupport As withmost technology ecosystems, state intervention plays a crucial role in boosting entrepreneurship, and Cape Townis no exception. “There are a number of government initiatives and projects established to promote and encourage the fourth industrial revolution (4IR),” MrWhate notes. Examples include the Technology


Venture Capital (TVC) fund set up by the Department of Trade, Industry andCompetition (DTIC) andmanaged by the International Development Corporation (DIC), whichessentially “provides business support and seed capital for the commercialisation of innovative products, processes, and technologies”, according to the government investment incentives website. These initiatives provide


significant support, butmore action is needed. “Occasionally, there are some initiatives to support new entrepreneurs. However, the local and national government are mostly focused on solving grassroots problems. Start-ups do not get as much focus,” saysMrMutakwa.


Access to talent The city is hometo severalworld class institutions, includingUniversity of Cape Townand Cape Peninsula University of Technology. “These are oftengreat sources of talent for start-ups,”MrMutakwasays. Furthermore, this talent often


www.fDiIntelligence.com August/September 2020


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