An Ideas-Based Online Magazine of the Global Network for Advanced Management

Entrepreneurs Thrive Near Universities

South Africa’s entrepreneurial ecosystem is in its infancy, but it has potential and has been recognized by at least one report (The Entrepreneurial Ecosystem of SA: A Strategy for Global Leadership 2017) as an emerging entrepreneurial ecosystem that is leading in sub-Saharan Africa.

Much of this is being driven by technology. Tech entrepreneur Eric MK Osiakwan, recently noted that the “Africa Rising” narrative is underpinned by an “Africa Tech Rising,” jumpstarted by pervasive connectivity as a result of Africans leapfrogging from almost non-existent fixed lines to exponential mobile growth at the dawn of the 21st century.

A GSMA study revealed that the number of tech hubs in Africa is at an all time high of 314 in 93 cities across 42 countries. South Africa is ranked as number one on this list, with a total of 54 active tech hubs, it is seen to be leading the ICT (information and communication technology) revolution on the African continent.

Cape Town – one of South Africa’s top three cities in particular – appears to be growing faster than the rest. Research shows that there are more startups (almost 60% in fact) in the Western Cape (the province of which Cape Town is the capital) than in the rest of South Africa.

Cape Town offers distinct advantages to entrepreneurs including good infrastructure and high quality of life for founders. In addition, the city boasts four universities and one of them, the University of Cape Town, is ranked as the leading university in Africa. This offers entrepreneurs a solid skills pipeline.  Founder of one of the world’s most successful incubators, Y Combinator, Paul Graham, famously wrote that the recipe for a startup cluster is having a great university near a town that smart people like and the Cape Town success story appears to corroborate this.

Cape Town provides a good environment to test and validate new ideas, although it remains constrained by market-size. Within the region, there is a range of entrepreneurship and ecosystems from micro-enterprise serving hyper-local markets to SMEs aimed at regional and national markets to innovation-driven enterprises that are scaling and serving international markets. There is evidence that high potential entrepreneurs are using the region as a base to build product and test market before launching overseas. It is a strategy that is paying big dividends for some. For example, eating-out app Feastfox, a Cape Town startup from the GSB MTN Solution Space Venture Incubation Programme, recently successfully closed an angel fundraising round, raising $175,000 (R2.3 million) primarily from Silicon Valley-based angels and venture-capital (VC) firms to allow it to expand internationally.

The opportunities lie particularly in fintech, edtech, healthtech and renewable energy.

There are also a significant proportion of entrepreneurs who are investing skills and energy into driving social enterprises that solve real challenges faced on the continent.