As much as there is a boom in tech start-ups in South Africa, there is a complimentary boom in the related ecosystems.
Last year there was US$185m (R2.7bn) in funding for some 125 African tech startups, mainly in solar, fintech and ecommerce, according to the African Tech Startups Funding Report 2015 by Disrupt Africa. South Africa led the way with $54.5m (R802m) and was the most favoured destination (36%). Nigeria was second ($49.4m/R727m and 24%) and Kenya third ($47.3m/R696m and14.4%).
Meanwhile, big-name United States tech incubators have become looking towards Africa for its innovative potential. Last week alone there were two major announcements from significant US accelerators, as these firms are known as they help these fledgling businesses get their good idea into a workable business plan. Both said this is the first time their programs are being run in Africa.
On Tuesday, Techstars, the well-known incubator, announced the first 10 businesses for its first 13-week program launched in Cape Town with the Barclays Accelerator. All 10 focus on financial inclusion (or fintech) and were chosen from 450 applications from 45 countries.
“Typically Techstars companies go on to raise between $1m to $3m in venture funding on completion of the program from primarily UK and US-based investors,” said Techstars Cape Town MD Yossi Hasson.
“Having a Cape Town office extends the reach of these companies so that they can benefit from the Techstars network for both access to funding, markets and talent. The programme itself focuses on the African continent rather than just South Africa but ultimately all companies selected will have to relocate to Cape Town for the 13 weeks, extending the reach and scope of Cape Town as a global player in the startup ecosystem.”
Hasson, who sold his email start-up Synaq to Dimension Data and has returned to helping other entrepreneurs, adds: “Techstars is significant as it has been working with early stage technology businesses since 2006 and has invested in over 828 companies who have gone on to raise over $2.2bn dollars in funding. 90% of companies that have been through a Techstars accelerator are still alive today or have been acquired (a significant difference to the 10% success rate most startups achieve).”
Then on Thursday last week, local scientist Nick Walker was the first winner of the first Global Impact Competition held in South Africa by the Singularity University (SU). They partnered with Rand Merchant Bank (RMB) on Johannesburg. Co-founded by X-Prize creator Peter Diamandis, SU aims to find ways to get the tech advances of the last few decades to help humanity at large.
Walker, who was chosen from 10 finalists, is looking at how new advances in gene mapping and stem cell bank technology can help find the still-hopeful cure for HIV/AIDS. He will travel to Silicon Valley later this year for a SU program that brings together all the winners of this competition held around the world and SU’s smart global alumni network.
It’s a vote of confidence that global organisations like Techstars and SingularityU have opened up shop in South Africa, and are opening the doors for African start-ups to get access to the US funding and expertise. A cynic might say such exposure is self-serving for these organisations and venture capitalists looking for new markets. This is as true as the benefits the local start-ups receive themselves; while the exposure to the much bigger US markets allow these firms to scale their offerings. It’s a point frequently made by Vinny Lingham, a South African innovator who has done extremely well in his new home in San Francisco home and nearby Silicon Valley.
All these start-up initiatives are helping African start-ups grow their expertise and spread their offerings. African ingenuity is world-renowned. As it should be.
This article first appeared on Financial Mail