A community of living organisms in conjunction with the nonliving components of their environment, interacting as a system.
The ecology of an ecosystem moves far beyond living organisms – abiotic and biotic components exist in the Startup world too. But maybe lets revert to the beginning when I decided to write a newsletter and what led me to it. First, I will ask you to forgive my grammar and sentence constructions my mind tends to escape my writing I admit to being a mediocre writer who tends to focus on substance over form. My intention is to open this world to talented people and hopefully drive the curiosity of others to actually make the leap and just start.
Let me introduce myself, my name is Ububele, I consider myself a generalist with a background in Finance & Economics from Wits University & Wits Business School. I’ve worked for two-tier 1 corporates in South Africa, spent some time at an NPO trying to do good and until recently assisting in the international expansion of a South African FinTech company. So, general stuff.
Who I am doesn’t matter in this context, what matters is expanding my curiosity of South African startups, their founders and the ecosystem that enables them to succeed. I only hope you allow me a bit of your time so we can investigate this together.
Right! the Ecosystem, what is it? who is it? and why is it?. We know of an ecosystem as a community of living organisms in conjunction with nonliving components of their environment, interacting as a system. For any Startup to thrive it needs an ecosystem that functions and helps it reach the unique heights of extraordinary success. A well-known Startup ecosystem is what happens in Palo Alto, California, the birthplace of the monolithic IC chip, startup capital of the world, Silicon Valley.
Now the question should be what is South Africa’s startup ecosystem? what does it look like? who are the players?
Startups: Founders & their teams
The ecosystem starts with the most important players: The startups, founders and their teams. Think about it like a sports team, everyone plays their role, the sport’s organization, the support staff, the stadium but none are more important than the players on the field who entertain the fans (customers). But organizations win championships, not players alone, that’s why a vibrant ecosystem is important for the success of startups. In the context of what I’m writing about A startup can be defined as a company that is in search of a defensible business model designed to be repeatable and scalable, often categorized by the nature of it tapping into a new market concept using technology and being high growth. Cape Town is seen as the hub for startups, but Johannesburg & Stellenbosch hold their own. We have some world-renowned technology companies in South Africa i.e Aerobotics, Pineapple Insurance, RapidDeploy, Skynamo, Luno, Entersekt, SweepSouth and many more. I hope we can uncover them together.
Grants, Angels & VCs
Most startup ventures are pure speculations and are born out of the curiosity of their founders. For some of them to realize their dreams they need capital and lots of it – this is where grant funds, angel investors and venture capitalists come in. In South Africa, we don’t have a vibrant funding market but some immaculate people are trying to change that with their funds. Keet van Zyl’s Knife Capital has been around for years, some thanks to one of the country’s best-known entrepreneur, Mark Shuttleworth and also their ability to find exit options for their portfolio companies. There are some angel investors; driven to the market by the polarizing former CEO of FNB Michael Jordaan; who also want to find their own rain or BankZero. In general, angel investors aren’t easily accessible in South Africa and the best chance for Startups to bridge the gap between ideation and product/market fit is, unfortunately, navigating their own pockets, FFF & grant funds from foundations. It should be noted that a lot of foreign capital is available to South African founders; those who choose to find it.
Incubators, Accelerators & Co-working spaces
I’m not quite clear on the usefulness of accelerators but incubators are important to a certain extent, in conjunction with co-working spaces, a lot of startups have come out of various incubators; the most prominent ones being Alphacode’s Incubate program, Startupbootcamp, Stellenborsch University’s LaunchLab and fringe players being the Tshimologong precinct & 22 on Sloane. Co-working spaces like Workshop 17 & WeWork have afforded pre-seed startups space to validate their ideas with a partnership with various ecosystem players to help them along the way. The most important partnerships these incubators afford startups, I believe, is the access to cloud credits, access to other startups, large organizations as well as mentors.
Service Providers: MTN, Vodacom, Telkom, AWS etc.
No technology business can function without access to the interweb, service providers that allow for that access are imperative, the likes of Telkom, MTN & Vodacom. Cloud infrastructure companies such as AWS, Google Cloud & Microsoft’s Azure have focused on helping startups get to market faster by being agile, these companies with continue to be important to the ecosystem.
The government, controversial one, but go try and start a company in South Sudan and tell me how it works out. The government has worked hard to make it easy for businesses to be started in South Africa, It takes 20 minutes to register a company on Bizportal. Yes, the government is imperfect but entrepreneurs have it good in South Africa compared to other nations. Sorry, South Sudan.
Universities, WeThinkCode, Hyperion Dev, Code X etc.
Technology companies are built by technologists. Startup founders must find talented individuals to help them realize their dreams. Currently, there is an oversaturation of talented engineers working for corporates and a scarcity of talent building the future. CompSci majors are in high demand and often they choose the comfort of a high paying job over the struggles of start-up life. The people at Offerzen play an integral role in being matchmakers, with skills development organizations such as WeThinkCode, CodeX playing their part in educating people and helping them to become proficient software devs.
It is highly unlikely that Startups would succeed without corporates in South Africa. Corporates form the LP base for most VC firms, corporates drive the B2B space, and selling to these corporates is the likely exit strategy for most startups in South Africa because frankly, it is improbable that most will reach IPO stage.
That being said, I need to reiterate that the founders, their startups & their teams are the most important people in this value chain, they should be commended and this newsletter-blog is about those who dare to dream about the future and make it happen.
Thanks for reading. Please feel free to comment and please stick around for the next one.
By Ububele Kopo
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