Ask what connects tech innovation and South Africans and many in the startup world mention Elon Musk. But, while the Tesla Motors chief executive might be a role model, he has lived in the US since he was 18. To find creativity in Cape Town, South Africa’s hub for tech startups, you need to look locally. And there is plenty to delve into.
Silicon Cape, a non-profit organisation co-founded by well-known South African entrepreneurs Vinny Lingham and Justin Stanford in 2009, is central to Cape Town’s technology startup scene.
Why did they see a need for Silicon Cape? Lingham says: “After starting my first company in Cape Town, I realised what a lonely place it was for founders. When I moved to Silicon Valley, I quickly discovered what an interconnected place it was and wanted to create the same type of environment back in South Africa.” Lingham and Stanford’s 20-year vision was to create an abundance of startups, founders and investors who worked together.
Speak to entrepreneurs in the city and Silicon Cape is the first thing they mention. Leànne Viviers, co-founder of Mintor, an online platform for Cape Town’s young job-seekers, last year won a TV competition run by Silicon Cape. Viviers, who spent 11 years living abroad and has an MBA from Oxford University, pitched her business idea to Lingham at the event, Pitch Vinny. “It was spur of the moment preparation,” she explains. “I had a 10 minute window to pitch, then a question and answer session with Vinny afterwards. It was like being in the Dragons’ Den, but not as bad.”
Mintor, which Viviers co-founded with Chicago-based entrepreneur Kripa Rajshekhar, connects small businesses to entry level workers – in a country where 52% of 15- to 24-year-olds are unemployed, according to World Bank data.
“We really see the tertiary educated segment of unemployed youth as the skilled labour market that’s so important to this country, to help small businesses grow, to grow the economy, to create more jobs and then pull more people into those jobs.”
She explains that Mintor provides a curated platform previously lacking in Cape Town’s job market, in which businesses and job seekers were frustrated by expensive recruitment companies. Any young person can create a LinkedIn-style profile on Mintor as long as they have finished high school. Mintor’s team then reviews each profile and offers feedback to the candidate.
Recruiters can then search the profile database and are recommended potential candidates according to the site’s matching algorithm. So far around 2,000 young people and 600 businesses are using Mintor. “It’s exciting working in this space because we don’t think anyone has really solved it. We think we’re on to something,” says Viviers.
Like Viviers, Katlego Maphai, co-founder of Yoco, a card-payment solution, spotted an opportunity in solving a common problem among Cape Town’s small business owners: the need for a portable payment system.
Maphai explains that, relative to Johannesburg, there are few big corporates in Cape Town which means that many among the local working population are either working for a small company or starting a business. “It’s an extremely entrepreneurial city,” he says. “It’s an attractive place to be an entrepreneur. It’s relatively inexpensive to be here and salary expectations are pretty moderate.”
Maphai and his four co-founders saw the opportunities in payment cards because they are used across various demographics. “South Africa’s crazy in terms of issued cards,” he says. “Almost every adult in this country has a card, at all levels of the economy.” Maphai explains that the South African government issues social grants on pre-paid MasterCards: he estimates about 10m cards have been issued to poorer segments of the population.
But Maphai noticed that only a small proportion of the country’s small businesses were set up to take card payments – it was an underserved market. Early last year Yoco, which combines a card reader with accounting software, launched in beta version which, by October had picked up about 500 small business users. Since the launch of its alpha model that same month, the figure has increased to about 2,000.
Maphai says 80% of the business’s funding has come from outside of the country because, in his experience, Cape Town investors are looking for proven business ideas such as franchises or up-and-running retail businesses.
But, he adds, there are sources of seed funding in Cape Town, predominately angel investors operating through accelerators, either local or Africa-wide. Techstars, a Barclays-backed programme, started its first African operation in Cape Town. It focused on fintech startups and received 400 applications. Another is 88mph, which invests in early-stage mobile web companies across sub-Saharan Africa, and has a base in Cape Town. Others include the Grindstone Accelerator, the Founder Institute, the New Economy Accelerator and Startup 90.
Government funding is also available for some startups. South Africa’s National Empowerment Fund, specifically its Black Economic Empowerment initiatives, has been a resource for Siyabonga Tiwana and his business, Skywalk Innovations.
Tiwana studied software development at university and previously worked for a tech business. At Skywalk he creates software solutions for local businesses to improve their customer services. So far these solutions have included a property management app for landlords and a QPR code scanner for Maxibin, which offers bins for cigarette disposal to a number of businesses in the city, to track which bins have been emptied.
Aside from Silicon Cape there are a number of networking opportunities for South African and international entrepreneurs in Cape Town. These include Startup Grind and Meetups.com, which runs groups for specific segments of the local startup community, such as coding and marketing. The city also has co-working spaces such as Spin Street House ,Workshop 17 at the city’s Waterfront and a wifi lounge on top of Table Mountain where, on Table Top Tuesday, entrepreneurs can meet and work each Tuesday for free – on Table Mountain.
If you visit flexible office space Workshop 17 on a weekday, you’ll see at least 100 people on laptops, brainstorming or presenting in its meeting rooms. Does this activity represent the city as a whole? Lingham says: “I think there is a strong camaraderie and some really talented people there.” But he adds: “Although we have a pool of amazing talent there are too many startups focused on too many different areas – we need to create or find an anchor industry for them to rally around.”
Sign up to become a member of the Guardian Small Business Network here for more advice, insight and best practice direct to your inbox.