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Entrepreneurs flock to Cape Town, Africa's start-up capital

May 15 2018 08:00
Carin Smith

Cape Town is the continent's start-up capital, says Wesgro, the official tourism, trade and investment agency for Cape Town and the Western Cape.

James Milne, head of Wesgro’s investment promotion team, and Boitumelo Menyatswe, ecosystem manager at Silicon Cape, shared their insights with Fin24.

From across the globe, start-ups choose Cape Town for various reasons: lifestyle, community, access to funding, a culture of creativity, and available talent. The latter is due to many top tertiary institutions in the area.

Additionally, investors are drawn to the city, thanks to the range of quality start-ups, tax incentives and access to the rest of Africa.

The city also offers supportive infrastructure. Internet penetration in Cape Town is 63% and the city has one of the largest open access fibre networks in Africa, Wesgro says.

Further, Cape Town has more than 25 co-working spaces and more than 20 local and international accelerators. Examples of co-working spaces are the Khayelitsha Bandwidth Barn, the Woodstock Bandwidth Barn, Rise Cape Town, Workshop 17 and Work & Co.

Accelerators include VeloCiTi Entrepreneurial Development Programme, Grindstone, Startupbootcamp, Injini and Seedstars. It is estimated that accelerator programmes support between 10 and 15 start-ups in Cape Town each year.

The Cape Innovation & Technology Initiative (CiTi) is regarded as one of the oldest tech incubators on the continent. It has incubated more than 2 000 businesses and supported more than 3 000 entrepreneurs.

Digital and gaming innovations

The city has seen several digital and gaming start-ups. Local success stories in gaming include Triggerfish animation and Sea Monster animation and games.

In e-commerce, examples are Yuppiechef, Takealot.com and online fashion sites Zando.co.za, Superbalist.com and Spree.

The digital services category includes cleaning service SweepSouth, delivery service Wumdrop, home nursing service CareChamp and food delivery service OrderIn. The health and biotech sector includes HealthQ Technologies, Synexa Life Sciences, ArcAqua and RecoMed.

Cape Town has also seen the start of fintech companies like Yoco, wiGroup, SnapScan, Prodigy Finance, Zoona and Jumo, while edutech examples include GetSmarter, Siyavula and Teachme2. In travel tech, there is Travelstart, Timbuktu, Go2Africa.com, SafariNow and Gummie.co.za.

Milne and Menyatswe say globally, companies are increasingly leveraging decentralised structures that focus on ensuring key components of their business models are located in a region or geography that enables them to excel in specific objectives.

"In this regard, Cape Town is already being selected as a key location on the African continent for EdTech and FinTech start-ups – with a number of additional sub-sectors evolving," they explained.

"It is our view that countries, regions and cities that are not differentiating themselves in terms of focusing on certain areas of excellence, as well as offering an enabling climate for start-ups, will be left behind."

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