On June 30th, Seedstars World hosted the first leg of its South African round in Cape Town. 10 Capetonian startups were invited to pitch, five of which were selected to go on to the second and final South African round that will take place in Johannesburg this Friday, July 17th. During our time in Cape Town, we were blown away by the expertise of investors, the quality and diversity of startups, and the general structure of the entrepreneurial ecosystem. Here is a recap of our findings and the first of a series of articles on South Africa and its entrepreneurs.
The New Wave of Silicon Cape
A decade ago, few people in South Africa knew what the terms “angel” and “tech startups” meant. People were progressively adjusting to a new democracy led by the awe-inspiring Nelson Mandela. The government’s focus was on breaking down the barriers of racism and apartheid, not investing in risky ventures. But some individuals, like Justin Stanford and Vinny Lingham, anticipated the tech wave. We spoke to Justin, 31, who explained to us how this dynamic duo set up the entrepreneurial ecosystem in South Africa. A self-made man, Justin dropped out of high school to come to Cape Town and become an Internet entrepreneur. Working from a garage through blood, sweat and tears in the wake of the dotcom crash, he managed to grow a pan-African Internet based software company from scratch. This was the pillar upon which 4Di Group was built, a family office and diversified investment company headquartered in Cape Town. Justin co-founded it with the tagline “From Garage to Global”.
Justin Stanford and Vinny Lingham
Through his success stories and ventures, Justin became the South African “Golden Boy” and gained in credibility. People began to approach him for entrepreneurial advice and funding. “I was becoming an angel investor without realizing it” he says. Vinny and him went to Silicon Valley back and forth to understand the core structure and values of the successful startup ecosystem there. By grasping the essence, they managed to implement a vibrant and receptive entrepreneurial ecosystem back home. Their inspiration even led them to create a network of South African entrepreneurs called ‘The Silicon Cape Initiative’ in 2009.
When asked how different South Africa is to the rest of the African countries, Justin explains: “You cannot speak of an African market. There is a Nigerian market, a Kenyan market, a South African market…”. Africa is therefore not one in this sense as different African countries have different entrepreneurial ecosystems. But so how does the South African government feel about tech startups?
Democratic Entrepreneurship
In terms of politics, Cape Town is somewhat of a hub within South Africa. The city is led by the Democratic Alliance, which has shown undeniable support for entrepreneurship and innovation. The present leader of the DA is Mmusi Maimane who succeeded former Mayor of Cape Town and Premier of the Western Cape Helen Zille on May 10th 2015. The Mayoral Committee of the City of Cape Town is also very supportive of startups. Xanthea Limberg, who oversees Corporate Services within the Mayoral Committee, is adamant about the importance of private-public partnerships. She happily agreed to be one of the jury members at our Seedstars World event in Cape Town.
The corporate sector is also starting to get involved. Banks for example understand that in this new era of tech-savvy web gurus, they must step up and propose something enticing and innovative. Standard Bank has done just this by launching innovation incubators to support entrepreneurs in South Africa. “We want to become the bank for entrepreneurs” says Linda Swart, the Incubation Manager at Standard Bank, who was also one of the jury members at our event in Cape Town. For now there are two incubators in Johannesburg and one virtual incubator in Cape Town, which will provide co-working spaces.
Linda Swart acting as a jury member for Seedstars World Cape Town
A Natural Home for Entrepreneurs
Cape Town in general is a very welcoming place for startups. There are many events and initiatives, like Seedstars World, that help and connect entrepreneurs with top VCs and CEOs. One example is Entrepreneur Traction, which has created a strong network of like-minded, driven entrepreneurs from around South Africa. Vuyisa Qabaka, the Co-Founder and CEO, was our local Ambassador in Cape Town and helped us source the best startups for the competition. Another successful initiative is Startup Grind, a global community for entrepreneurs based in 175 cities. They host monthly events where successful local founders, investors and innovators share their stories and life experiences. We attended one of their events in Cape Town and listened with fascination to Paul Simon’s anecdotes.
In terms of co-working spaces, entrepreneurs have their pick. For the more hippie bunch, the funky Woodstock Exchange houses vibrant spaces like The Barn and the Cape Town Garage. Daddy.O is another cool spot located in the charming Old Biscuit Mill, and Twenty Fifty is great for those seeking a more cosmopolitan vibe as it is in the city centre. For those seeking a more lean and modern environment, the newly built Workshop 17 at The Watershed is a must. And for women who prefer working with female counterparts, there is the recently launched Voices Club at the Taj Hotel! Founder Shelley Webb wanted to create a space where smart and motivated women could come and work on their projects all the while being able to interact with like-minded female entrepreneurs. From PR to Media and Tech, the diversity of the members make this spot a great place to network and exchange ideas.
Cape Town Garage Co-Working Space
‘What Women Want’ campaign launch by the Voices Club
South African Startups
Even though South Africa is still in its early stages of growing successful startups, there are already some success stories to speak of. Gyft, a mobile app that allows you to buy, save and redeem gift cards using your mobile phone, was co-founded by Vinny Lingham and sold for USD 50 million. WooThemes is another South African hit. Recently acquired by Automattic, it designs and develops cutting-edge commercial themes and plugins for WordPress. Then there are the promising ventures that have yet to take off. One such project is RecoMed, an e-platform that allows you to find and book health appointments 24/7. The venture is spearheaded by Springlab, a tech incubator and venture builder based in Cape Town. Sheraan Amod, one of the Managing Partners, explains that their motto is not just to invest, but to invest and get involved in order to help the company grow. Mentoring by a highly qualified team, modern co-working spaces, hands on investors… This of course comes at a price! Amod and his team usually ask for a 30% minimum stake in the company. But they are on board 100%, which is not negligible. It isn’t easy to find invested investors these days!
Eugen Petersen and Sheraan Amod, the two Managing Partners of Springlab
So all in all, Cape Town is a tech hub that is gaining in traction and drawing attention. Due to its geographic location, easy lifestyle and positive entrepreneurial mindset, the South African city could very well become the new Silicon Valley. And one aspect that they seem to get right is the necessity to be tech savvy in this day and age. As Justin Stanford says: “Coding will be to the 21st Century what reading and writing was for the 20th Century.” Right on.
