Searching for Africa’s San Francisco

Introducing Cape Town to the world

It’s no surprise that lekker Cape Town is an epicenter of commerce. It’s been that way since the advent of ships and the Dutch East India Company began running trade routes along one of the busiest South African port cities hundreds of years ago.

More recently though, there’s something different. It’s a newfound technology industry in Cape Town. Startups are becoming more commonplace with entrepreneurs solving problems in ways that only a local would understand.

“I think it’s important to note that South Africa has unique issues that are best solved by local entrepreneurs and in close collaboration with local groups,” Aisha R Pandor, co-founder and CEO of SweepSouth, a Cape Town headquartered startup, explained to me.

“Most of the startups that are doing well here are solving issues that don’t exist (at least not to the same degree) in San Francisco or other developed markets.”

SweepSouth is a tech-driven platform and marketplace that is transforming the way domestic cleaners (of whom there are over 1.2 million registered in South Africa alone) are accessing work opportunities in middle income households.

“This may not seem like a dream job at first,” says Alen Ribic, co-founder and CTO of SweepSouth, “but it’s consistent income that can actually be counted on that most of our mainly female SweepStars have not had in years. Seventy-four percent of are primary breadwinners, so SweepSouth gives them independence and a means to support their families.”

This need speaks to the sky-high 26.6% unemployment rate in South Africa where consistent paychecks are hard to come by. It also is prompting a fast transition from text-based Nokia phones to smartphones and apps with adoption speed in South Africa leading the continent.

When you look at how the jobs are being added it makes sense. Tech companies like SweepSouth are often mobile-first and in order to get the work, you need the tools.

SweepSouth isn’t the only VC-backed startup in Cape Town doing well either.

Zando has raised $25M in total. TravelStart has raised another $40M.

WooThemes built WooCommerce and recently sold to Wordpress.

iKubu, a radar system for bikes, was bought by Garmin.

CSense, a platform to troubleshoot enterprise process improvements, was bought by GE.

SnapScan was acquired by Standard Bank.

Yoco is the Square of South Africa.

Wyzetalk is the Yammer. And the list goes on.

In total, Crunchbase lists another 471 startups based in Cape Town in its database and Silicon Cape reports 1190 unique investors.

Compare that to the rest of Africa and South Africa leads all countries in investments. Compare that to Johannesburg, the largest city in South Africa, and Cape Town has 58% of the VCs and 75% of the VC investments.

By no means is everything set and ready either. There is a very short list of local angels and VCs. Investors are still learning the ways of Silicon Valley and the high risk, higher reward mentality.

There isn’t a $1B winner (yet) like Atlassian in Australia or Xero accounting app in New Zealand. And the government still needs to funnel more money into developing the innovation ecosystem for long-term sustainability.

But there are glimmers and sparkles. SweepSouth is one. University of Cape Town and University of Stellenbosch are another two (of the top 3 universities in Africa). There’s Elon Musk. Singularity University is opening up a chapter in Cape Town. IP regulations are opening up. Local hero Naspers is the largest company in Africa and the seventh largest internet and media company in the world with a $66B market cap.

International corporates are also taking notice. Amazon has had a presence in the city since 2005, and, most notably, Amazon’s EC2 was created in Cape Town and built the foundation for Amazon Web Services (AWS), their most profitable business line. Then the founders of AWS EC2 started Nimbula, which Oracle acquired 18 months later for $110 million.

The cycle hath begun.

And Cape Town even looks and feels like San Francisco (just add mountains). The warm African sun shines down during the day. Nature hikes and urban parks abound. The temperature picks up as you move toward Stellenbosch and Fransch­hoek, Cape Town’s wine country.

As night falls, epic Tycho-ian sunsets arise and bring with them a cool, crisp breeze into the city. And the beaches, oh my.

The quality of life is on par with the the best cities in the world. In fact, Cape Town was rated the best to visit by Travel & Leisure in 2014.

It won’t be long before it’s rated the best place to live.

At the end of the day, many of the problems being solved in Cape Town and South Africa aren’t new, but the solutions require different thinking. And harder problems mean stronger demand for change.

With more startup ecosystem partners eyeing Cape Town, including 500 Startups, Geeks on a Plane, Silicon Cape, Microsoft + Startups, AWS Startups, MEST Africa, ABAN, Global Entrepreneurs Network, Startup Grind, and many more, there’s a tech sunrise coming quickly.

Sawubona Kaapstad 🇿🇦