tech startup scene in South Africa

The tech startup scene in South Africa: Cape Town vs Joburg

If you’re a South African tech entrepreneur, what’s the South African startup scene like? Should you be opening your new business in Cape Town or Joburg? Where are you most likely to encounter success? Here are the key trends on the tech startup scene in South Africa.

 

Gauteng winning

At first glance, it seems that Gauteng has the upperhand. It appears to be the most popular province in which to run a tech startup in 2018, according to the Ventureburn Tech Startup Survey. Check out the below graph, which shows 55% of the 153 tech founders questioned in an online survey operate in Gauteng compared with the next highest contender at 37% in the Western Cape. The data also indicated that the rise in Gauteng startups is driven by an increasing number of black tech entrepreneurs.

tech startup scene in South Africa

Img Source: http://ventureburn.com/2018/11/gauteng-top-2018-ventureburn-survey/

 

Western Cape still popular for tech entrepreneurs

However, even though most tech startups begin their journey in Gauteng, here’s an important addendum: the more successful startups tend to be Western Cape based. 36% of startups in the Western Cape report making a profit whereas the figure in Gauteng sits at a lower 23%. Of those surveyed, only 21% are turning over R1 million per annum. 27% generate between R100 000 and a million per year. According to Stephen Timm, editor of Ventureburn and reported in ITWeb, the key reason “behind this success is the higher prevalence of venture capital (VC) funding in the Western Cape.”

 

Behind the startups

What kind of people are involved in tech startups? And what is the nature of the businesses? Let’s look at who is behind the tech startup scene in South Africa.

The biggest driving force behind tech startups tend to be men between the ages of 25 and 50. 65% of tech startup founders are male. The three most popular areas for startups are SaaS (Software as a Service) at 19%, fintech and insurtech at 18% and the media, advertising and marketing sector, which sits at 13%. Here’s a graph indicating the various sectors within the tech startup environment.

tech startup scene in South Africa

Img Source: http://ventureburn.com/2018/11/gauteng-top-2018-ventureburn-survey/

 

Now for some good news: about a third of the respondents began their startup in the last year. Remember, it’s never too late to begin a new tech venture or career in tech. In fact, according to the 2018 Stack Overflow report, a full third of professional developers only learned to code within the past five years. Moreover, almost 12% of developers who work in the industry only learnt to code in the past two years.

And some more good news about the tech startup scene in South Africa: only a quarter operate from the office. The overwhelming majority work either from home or remotely. (If you want to read more about remote development work, check out these tips.)

 

Black tech entrepreneurs: problems encountered

It’s not all roses, however. Startups begun and run by black tech entrepreneurs struggle more than their white counterparts, although, as mentioned earlier, there are an increasing number of black tech entrepreneurs. Only 7% of black-owned tech startups are turning a profit compared with 15% of startups begun by white entrepreneurs. Also, the financial position of black startups is more dire than for white-owned new businesses: 28% of white founders have three or fewer months left of funds whereas the equivalent situation for black tech startup founders is 51%. The reason for this appears to be that white tech startup founders have greater access to capital, skills, experience and productive networks, which obviously has a knock-on effect.

 

In closing, the tech startup scene in South Africa seems to be shifting to Gauteng, although companies in Cape Town enjoy greater success. If you’re got a killer tech idea, consider a startup, particularly if you would enjoy remote work. To brush up on your coding skills, think about enrolling on a HyperionDev online bootcamp in Full Stack Web Development, Data Science or Software Engineering. You can also trial one of these courses for free. If online learning is not your thing, you could enrol for an immersive, face-to-face Web Developer or Software Engineering course in Cape Town or Johannesburg.

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