Cape Town

This Is What You Need to Know about Cape Town: Africa’s Most Innovative Startup Ecosystem

Cape Town is fast cementing itself as the biggest continental hub for tech startups […] The Mother City is rightfully living up to monikers such as “The Silicon Cape” and the “Digital Gateway to Africa.” – Jacques Coetzee, ventureburn

Cape TownCape Town, South Africa has historically been known as an attractive tourist destination, and it’s quite easy to see why: excellent food, beautiful topography, and friendly people are among the reasons why this South African city is on the bucket list for many avid travelers.

The city, however, is garnering a large amount of attention for another reason: it has quickly established itself among Africa’s most advanced startup ecosystems. Many factors contribute to this: a large talent pool, solid academic institutions, and a great infrastructure, among others.

This article analyzes the emergence of Cape Town as Africa’s leading startup ecosystem from various angles, including the perceived advantages of being a startup there. Why do more South African startup companies settle in Cape Town than any other region in the continent? How has the city become Africa’s prime locale for startups?

We support this rationale by describing four components that are crucial for budding businesses, and how Cape Town measures up.

Access to Venture Capital

It takes a special kind of investor to commit significant sums of money to an unproven business. To do so is often perceived as highly risky among many in the investment community. This is where venture capital (or “VC”) comes into play.

Venture capital can be defined as “Startup or growth equity capital or loan capital provided by private investors (the venture capitalists) or specialized financial institutions…for a new or growing business.” It turns out that Cape Town has plenty of these vital individuals.

According to various studies, South Africa is the continent’s most abundant nation in terms of available VC, with Cape Town repeatedly cited as the prime locale for VC activity. Funding and finances are among the top concerns for startups, as a sizeable period of time is usually required to realize profitability.

As such, VC support makes it more likely entrepreneurs will “make the leap” into becoming a startup. VCs such as AngelHub, Venture Capital for Africa (vc4a), Knife Capital, and other reputable VC firms make the daunting process of establishing and maintaining startup operations a bit easier.

Good Business Infrastructure, Including IT

A good infrastructure is essential to business operations. This does not necessarily refer to the well-established modes of communication, transportation, utilities, water, and sewage – which are, by the way, often underappreciated elements of conducting business successfully.

Rather, infrastructure refers to  internet and IT infrastructure, both of which are world-class in South Africa, and Cape Town specifically. In 2011, the city finished an optic fiber network that spans 500 kilometers, making fast web connection both more ubiquitous and less expensive. Additionally, Cape Town is home to the most IT-based companies on continent.

Patricia de Lille, Cape Town’s mayor, states the importance of business infrastructure to the city: “We believe that we are becoming a center for global business that stretches beyond old boundaries. We seek to position ourselves as a place where the world can access Africa and Africa can access the world, providing sophisticated tertiary services, reliable infrastructure and advanced commercial and banking practices.”

An Educated Workforce, Excellent Academics

Solid academic institutions seem to permeate startup ecosystems around the globe, and Cape Town is no exception. Indeed, it is often within these very institutions where innovators build their own success stories, as Mark Zuckerberg did at Harvard.

And Cape Town – specifically, the Western Cape – is the location of some of the top universities, both in South Africa and the world. Within just a 60-kilometer radius, four such schools are present: Cape Peninsula University of Technology, University of Cape Town (UCT), University of the Western Cape, and Stellenbosch University (SU).

Both SU and UCT produce a large number of patents each year, with 59 and 52 patent applications in just the last six years, respectively. These patents are referred to as South Africa for Patent Cooperation Treat (PCT) international registrations. PCT’s are notoriously difficult to get, and are regarded as a crucial step in the commercialization of an invention that is adopted on an international scale.

A City That Appeals to Innovators

As mentioned, Cape Town is considered one of the world’s leading tourist destinations. The landscape is adorned with beaches, forests, mountains and other geographical treasures.

Besides the beauty that is Cape Town, its environment is incredibly attractive to innovators and entrepreneurs. Paul Graham, founder of the highly-successful company Y Combinator, says the following: “Most nerds like quieter pleasures. They like cafes instead of clubs; used bookshops instead of fashionable clothing shops; hiking instead of dancing; sunlight instead of tall buildings.”

While Graham may be overgeneralizing, most of the “nerds” that he is referring to will probably agree with most, if not all, of these observations. Those in Cape Town will probably state that the beautiful city offers these things and many more.

african children

This is How E-Learning Education Startups are Making a Difference

Africa’s young people are our future leaders and will be the driving force behind sustainable growth across the continent. Investment in education and training is essential in building an educated and skilled workforce and to encourage innovation. – The Africa-America Institute

Many African nations are on the brink of becoming something incredibly special. Of the world’s 10 fastest-growing economies, seven are located in Africa. As a result, the middle class is expanding at a rapid pace, making it even more exciting to watch what develops within Africa in the next five, 10, 20 years and beyond.

Education, of course, plays an important role in economic development. Better-educated citizens translates to a more productive workforce, and a more productive workforce translates to the surfacing of bright, innovative entrepreneurs and companies. This means more job creation, better-paying job, increased cash circulation, expanded opportunities, and a rise in living standards.

Education has made some recent strides in Africa. This is particularly true for secondary education (i.e. “high school) and post-secondary education (i.e. “college” or “university”), where enrollment has increased – in some cases dramatically.

For example, in sub-Saharan Africa, enrollments for secondary education had the greatest gains in the world between 1999 and 2012, with approximately 49 million students as of 2012. Still, far too many students are out of school. In a study conducted by the Africa Learning Barometer, nearly one out of every 10 school-aged children never attend.

As African nations continue to make their presence felt in the global economy, expanding and improving education will be critical. The continent is currently the world’s youngest, with 50 percent of the population under 15 years of age, making it all the more crucial to emphasize and insist on a quality education for all.

Fortunately, many African “e-learning” (i.e. online learning) education startups are making a positive impact on the scene. As we’ll see here, some of these companies have achieved success through belief in purpose, innovation, continued improvement, and dedication.

Here are five such startups:

  1. Ubongo – Tanzania

ubongo“Increasing access to smartphones presents a great opportunity for delivering information learning content to learners of all ages,” says Nisha Ligon, the Chief Executive Officer (CEO) at Ubongo.

Ubongo’s primary focus is to teach mathematics and science via interactive games that are heavy on animated content. Children access the content through cell phones, answer multiple choice questions via text, and even receive feedback from their favorite cartoon characters.

Ubongo introduced Ubongo Kids to widespread acclaim. Its chief product, Ubongo Kids is a daily occurrence on televisions throughout Tanzania. In keeping with its “cartoony” feel, the broadcast implements songs and animation to teach math and science.

  1. Samaskull – Senegal

samaskull logoSamaskull is a welcome addition to this list. The Senegalese startup designs interactive, open and free courses called Massive Open Online Courses (MOOCs), similar to the hugely-popular Coursera in the United States. MOOCs are poised to be a significant part of the African learning experience, as the platform directly caters to low-income students who are eager to learn.

In addition to various MOOCs, Samaskull also offers Small Private Online Courses, called SPOCs, for learners wish to engage one-on-one with educators.

  1. Sterio.me – Nigeria

steriome logoSterio.me, a Nigerian-based e-learning company, relies heavily on SMS texting for just about everything. Students can access materials, lectures and lessons anywhere, anytime.

Instructors can pre-record lectures, send materials, grade assignments, and give more feedback all through mobile phone. It’s a win-win scenario for teacher and pupil alike. Even better: the platform does not require internet access or a smartphone.

Sterio.me recently announced a partnership with Tutor.ng – another popular Nigerian startup – that complements the learning models of each. The strategic partnership is expected to make a significant impact that further benefits students.

  1. MEST – Ghana

mest logoThe Meltwater Entrepreneurial School of Technology (MEST) is a seemingly-perfect manifestation of Africa’s budding startup scene. MEST focuses exclusively on the “training, investment and mentoring for aspiring technology entrepreneurs,” with a mission of “creating globally successful companies that create wealth and jobs locally in Africa.”

MEST implements a 12-month program, fully-sponsored, to achieve the ambitious goal of cultivating Africa’s future entrepreneurs. “Entrepreneurs-In-Training” (EITs) are comprised of the top graduates from Ghana, Kenya, Nigeria and South Africa. Subjects taught are broad in nature, and include: computer programming, product management, and software development along with business-oriented processes such as finance, marketing, and sales.

  1. BRCK Education – Kenya

BRCK EducationPerhaps the most unique addition to the list, BRCK wasn’t initially designed to be an e-learning company, either in whole or in part. Current products and services span from cloud software to medical device programming, and of course, e-learning services. Because of its great success, and opportunities in the market, BRCK launched a subsidiary unit appropriately-named BRCK Education.

Unlike other startups on this list, BRCK implements an array of products to expand educational access and improve quality. Its most popular product used in classrooms, the “kio kit,” includes 40 tablets, a BRCK (a wi-fi and battery extender unit), and a lockable case that is both water and damage-resistant. Such products are critical for expanding education to rural areas, in particular.

startup work

A Look at 5 of South Africa’s Most Innovative Startups

But in the midst of all the economic dreariness and bad news, the local startup scenes of Johannesburg and Cape Town in particular have kept ticking along and might even play a role in reinvigorating investor confidence in Africa’s most advanced economy.

Quartz Africa

Africa is home to some of the most innovative tech startups in the world. Perhaps there is no place more indicative of the continent’s burgeoning tech industry than the nation of South Africa.

South African startups have made considerable contributions to various economic sectors, but perhaps no more so than in the areas of science and technology. Several scientific and technological innovations heralded around the world have originated from Africa’s most southern nation.

The impact that startups have had in South Africa cannot be overestimated. The country recently experienced economic stagnation, with many experts stating the country was in a recession in the early months of 2016. However, the economy has lately rebounded, with many emphasizing the important impact of startups in the turnaround.

This post focuses on five of the most innovative startups in South Africa. These young companies have the potential to make considerable noise in their respective markets, and may eventually become industry leaders.

  1. HealthQ

HealthQ LogoTechCentral said recently of a trip to HealthQ: “You could be forgiven for thinking you’ve wandered onto the set of Star Trek when you visit the offices of HealthQ.” Others have touted the company as a South African manifestation of Silicon Valley. Indeed, innovation seems to be programmed into HealthQ’s DNA.

HealthQ has focused its business model around designing and engineering proprietary fitness software technology. Utilizing biomathematics and high-tech sensors, the company markets its platform to other firms intending to bring fitness products onto the market.

According to the company’s website, the aim of their designing processes is “to give people deep insights into their health and fitness…then use these insights to make better choices about lifestyle, diet, exercise, and even medication.”

  1. GUSTpay

Gust LogoGUSTpay is a mobile payments solution company with a twist. With apps available in both the Apple and Android stores, GUSTpay offers a digital event ticketing solution that’s integrated with near field communication (NFC)-enabled wristbands for “Shorter queues…(and) fast and efficient entry.” Partnering with a number of merchants throughout South Africa, GUSTpay also enables users to purchase products or services from their virtual accounts, rather than having to use cash.

Understanding the vital nature of social media, GUSTpay allows its users (with merchant approval) to check-in and interact with their online networks. Merchants who wish to integrate events with social media can also enable Wi-Fi access for their customers via their NFC wristbands.

  1. Domestly

Domestly logoDomestly is an actual online marketplace where people can request the services of local cleaning professionals on-demand. It’s a bit like Uber, but for home cleaning services. The platform also allows cleaners to capitalize on their good name via a ranking system, which they can leverage to set their own rates.

Individuals can order cleaning services via the website or the Domestly app, available via Apple’s App Store and Google Play. Clients have ability to choose a half-day (4 hours) or full day (8 hours) cleaning session. To date, over 500 “trusted and peer reviewed cleaners” are registered on the site.

  1. WhereIsMyTransport

where is my transport logoWIMT has developed its business model around optimizing public transportation systems through the power of data. To accomplish this, WIMT has developed a “single data platform for the public transport ecosystem.” The data is collected from transit operators and fed into a single, central platform. Operators can distribute the information and update it in real time for end-users of transit systems, and over time, cities and transit operators can use the data to assess the effectiveness of systems and plan improvements.

  1. Tuluntulu

tuluntulu logoThis once-small mobile streaming service has since been heralded by numerous tech outlets as the most innovative startup company in Africa. As an app available on both Google Play and Apple’s App Store, Tuluntulu gives its customers the convenience of accessing their favorite television channels 24/7, with “no buffering or waiting.” The app works even on mobile devices with low-bandwidth connections.

Recently, Tuluntulu eclipsed the previous record for the most downloads on a Video-on-Demand (VOD) platform. The app recently exceeded over 500,000 downloads.

The company’s widespread and ever-expanding user base is attributed to a couple of key factors. First, the app uses far less data than other services—estimated at just 50 megabytes per hour of usage. Second, streaming content available on the service has a uniquely African focus, with channels like Africa4U, which offers programs that showcase African culture, innovation, and lifestyles; Nolly4U, which features Nigerian movies; and Mafrik, which is wholly devoted to West African music videos. Tuluntulu enjoys a reputation as THE go-to media streaming service in Africa, similar to how Netflix is perceived in the United States and other markets. Best of all, it’s free to download the app, and there are no subscription fees.

website coding

African Tech Startups: Raking in the Money

“The market in Africa is relatively unique in the sense that there are two major motivations. Investing in a market which globally has the largest growth potential is a huge draw, but so is the opportunity to have a significant positive impact, and accelerate the rate of development in countries which need it the most.”

– Simon Bransfield-Garth, CEO of Azuri

In 2015, African-based tech startups set a new record by amassing over $185 million in investor capital. According to various sources, tech startups in 2016 are on pace to eclipse this amount.

Many international investors are excited about the promise of smart and savvy tech companies on the continent. In fact, technology leaders such as Microsoft founder Bill Gates; Facebook founder and CEO Mark Zuckerberg; and Steve Case, the cofounder of America Online (AOL), are all joining the rush to stake a claim in this sector.

There are numerous reasons why industry giants such as Gates, Zuckerberg, Case, and others are attracted to Africa’s tech startups. This article explains three of these reasons behind this phenomenon and presents two examples of the continent’s thriving tech markets.

  1. Significant return opportunity

businessmanOutside of a small minority of charitable investors and benefactors, people invest in Africa to realize significant returns. To this end, Africa provides numerous profitable investment opportunities.

Many of Africa’s countries (for example, Nigeria and Kenya) are home to the fastest-growing economies in the world. These nations’ current economic expansion is being fueled directly by a proliferating middle class, who have seen their job prospects increase and their disposable incomes rise.

Africa’s large, young, and tech-savvy demographic is also driving its economic expansion. Both Bill Gates and Mark Zuckerberg have cited Africa’s young and educated citizens as a primary motivating force behind their investments.

  1. Social impact

While numerous African countries are privy to their homeland’s fast-evolving economy, a disproportionate number of African citizens must confront daily social ills. Some prominent investors are reportedly investing in the continent to help alleviate these omnipresent problems.

Such investors, including both Zuckerberg and Case, see their investments as not only a keen business decisions, but also potentially life-changing actions. Financial technology and alternative energy solutions are two startup sectors that are highly attractive to investors; this is partially due to the enormous difference that success in these industries can make in the daily lives of many African citizens.

  1. A “final frontier” marketplace

Africa is one of the last remaining places of economic significance that has not yet achieved widespread technology adoption. Consequently, enormous growth potential exists in multiple technology spheres.

Emerging African economies are spearheading a shift in investor attitudes—an observable shift away from the traditional, saturated market playbook of “low-risk, low-return,” to one of higher-risk but much higher return. Furthermore, many African nations have made notable progress in one area very important to investors: business-friendliness. Insiders state that reducing red tape and improving transparency has helped stimulate startup growth.

Startup Case #1: Off-Grid Electricity

solar arrayPerhaps no other economic sphere encompasses the aforementioned market advantages of Africa more aptly than off-grid electricity. With over 600 million of Africa’s citizens lacking a source of power, investing in off-grid electricity startups can lead to potentially-massive returns while achieving a massive social impact.

African innovations, including “pay-as-you-go” electrical services, have enticed many foreign investors into committing significant amounts of startup capital. This investment capital is being dispersed to various energy startups using a number of different technologies.

Solar startups are the recipients of more than one-third of all energy startup capital. One former startup that has witnessed remarkable success is M-KOPA Solar, a solar energy firm based in Kenya that many credit with popularizing pay-as-you-go electricity throughout the nation. Founded in 2011, the company has since expanded the sales of its home solar systems beyond Kenya to Tanzania and Uganda. According to the company’s website, M-KOPA has connected over 400,000 households.

Startup Case #2: Financial Technology

Second in total investment funds only to off-grid electricity, financial technology, or “fintech,” startups offer a compelling case for investment because they provide sizeable potential returns and create a positive social impact. Another trend inviting additional startup capital is mobile phone adoption. In Sub-Saharan Africa in particular, “mobile money accounts” are quickly gaining popularity, thereby allowing many Africans to access financial services for the first time.

Citing Africa as an example in the organization’s 2014 Global Findex database, World Bank Group President Jim Yong Kim stated: “Access to financial services can serve as a bridge out of poverty. We have set a hugely ambitious goal . . . But we can do it, and the payoff will be millions of people lifted out of poverty.”

entrepreneur

3 Ways the US Supports Promising African Entrepreneurs

“I’m here because, as the world gathers in New York City, we’re reminded that on so many key challenges that we face – our security, our prosperity, climate change, the reduction of conflict – Africa is essential to our progress. Africa’s rise in not just important to Africa, it’s important to the entire world.”

–  United States President Barack Obama

Many African countries are experiencing tremendous economic growth, and while more work remains to be done, the future seems promising. One factor that has contributed significantly to Africa’s success is the number of bright, hardworking entrepreneurs on the continent. These entrepreneurs have successfully launched startups in a number of economic sectors, including finance, financial technology, solar and alternative energy, education and training, and many others.

Leaders of nations around the world understand and appreciate the importance of an economically-viable Africa. As such, these countries have committed significant resources to stimulate an African economy brimming with potential.

This article examines three of the organizations the US government has established to help buttress Africa’s growing economy. In particular, it discusses a number of commitments made to assist African entrepreneurs.

  1. YALI and the United States African Development Foundation

YALI logoIn December 2013, President Obama started a program called the Young African Leaders Initiative (YALI) to “provide virtual resources and vibrant physical spaces to equip young African leaders with the skills and connections they need to foster change in their communities and their countries.” Members of YALI have access to virtual training in leadership and entrepreneurship, as well as a Facebook group, through which they can connect with other young leaders.

In August 2016, the United States African Development Foundation (USADF) awarded 50 African entrepreneurs from 20 countries a total of $1.25 million. These new business owners will use the money as seed capital for growing their respective companies and social ventures. Since 2014, USADF has awarded more than $2 million of grant funding to 95 YALI entrepreneurs.

  1. African Women’s Entrepreneurship Program

Women comprise a significant number of Africa’s entrepreneurs and business leaders. To empower this important demographic, the Obama administration designed and implemented the African Women’s Entrepreneurship Program (AWEP). The rationale behind the initiative’s founding is that, while African women provide a disproportionate AWEP logoamount of the continent’s labor, they often lack or are denied access to the necessary resources needed to drive economic growth. Furthermore, while Africa’s female entrepreneurs have made significant contributions, they remain economically disenfranchised in several areas, such as Sub-Saharan Africa.

To counteract the obstacles to African women’s full economic participation, AWEP establishes networks of women entrepreneurs. Through these connections, women business owners can grow their companies, increase trade, improve the business environment, and give voice to important issues in their communities. Entrepreneurial sectors represented by AWEP include agri-business, fashion, food processing, and home décor and textiles.

  1. United States Agency for International Development

The United States Agency for International Development (USAID) focuses its efforts on “expanding and deepening partnerships with African governments, businesses, universities, and civil society— as well as with the new generation of African leaders, thinkers, entrepreneurs, and innovators, who are leading the transformation of their USAID logosociety.” Currently, USAID supports a variety of African energy entrepreneurs, particularly those who aim to provide electrical power to Africans who are off the grid.

In August 2015, President Obama announced the awarding of up to $100,000 to 11 energy companies from Ethiopia, Ghana, Kenya, Nigeria, and Tanzania. Via a collaborative partnership with General Electric (GE) Africa and the USADF, USAID has committed to supporting novel energy solutions with the goal of expanding access to affordable, reliable, and sustainable power sources.

Entrepreneurs benefitting from the funds are working on a number of energy solutions, such as home solar systems, solar-powered mini-grids, and micro-financing of assorted energy technologies, predominantly for rural communities. Of the projects that received funding, five specialize in solar systems, three are biogas regeneration projects, and one is constructing a small hydro-electricity power plant. As these firms complete their projects, nearly 10,000 Africans will gain access to electricity and power for the first time.

Future US Commitments in Africa

President Obama spearheaded all three of the abovementioned organizational mechanisms supporting African entrepreneurs. Because the President is nearly at the end of his term, it is difficult to predict whether or not such efforts will continue after he leaves office.

Fortunately, the administration has been working closely with the private sector in efforts to keep the projects funded. The Overseas Private Investment Corporation (OPIC), for example, plans to contribute $200 million as part of a $450 million loan from Equity Bank Group to small and medium-sized African enterprises focused on young people and women over the next four years.

In collaboration with Deutsche Bank, USAID undersigned $25 million of the $50 million to be distributed to social enterprises in developing nations around the world, including Sub-Saharan Africa. According to the White House website, these funds will be used to support entrepreneurs in the energy, financial services, and health sectors.

At the Global Economic Summit (GES) of 2015, the President reemphasized the importance of private sector leaders supporting entrepreneurs around the globe, including in Africa. At the conclusion of GES, it was revealed “private sector companies…committed to train and mentor over 1 million burgeoning entrepreneurs and pledged nearly $700 million of capital.”