AS MUCH as there is a boom in tech startups in SA, there is a complementary boom in related ecosystems.
Last year US$185m in funding was made available for some 125 African tech startups, mainly in the areas of solar, financial technology and e-commerce. This is according to Disrupt Africa’s “African Tech Startups Funding Report 2015”. SA was the most favoured destination, with $54.5m, followed by Nigeria ($49.4m) and Kenya ($47.3m).
Meanwhile, big-name US tech incubators have come to Africa looking for innovative potential.
There were two major announcements from significant US accelerators last week alone. Both announcements are from incubators that help fledgling businesses develop their ideas into workable business plans. And both say this will be the first time that their global programmes will be run in Africa.
Last Tuesday Techstars, a globally known incubator with an office in SA, announced the 10 businesses selected to take part in its first 13-week programme, which was launched in Cape Town with the Barclays Accelerator. All 10 concepts focus on financial inclusion, or fintech as it's called. They were chosen from among 450 applications from 45 countries.
“Typically Techstars’ companies go on to raise between $1m to $3m in venture funding on completion of the programme from primarily UK and US-based investors,” Techstars Cape Town MD Yossi Hasson says.
“Having a Cape Town office extends the reach of these companies so that they can benefit from the Techstars network for access to funding, markets and talent.
“The programme itself focuses on the African continent rather than just SA, 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 e-mail startup, Synaq, to Dimension Data in 2011 and has returned to help 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 [that] have gone on to raise over $2.2bn in funding.
“Up to 90% of companies that have been through a Techstars accelerator are still alive today or have been acquired.” That is a significant difference from the 10% success rate most startups achieve.
Then, on Thursday, local scientist Nick Walker was named the winner of the first Global Impact Competition held in SA by the Silicon Valley think-tank and incubator Singularity University (SU), in partnership with Rand Merchant Bank.
Co-founded by X-Prize creator Peter Diamandis, SU aims to find ways to use the tech advances of the past few decades to help humanity.
Walker, who was chosen from 10 finalists, is looking at new advances in gene mapping and stem-cell bank technology that may help find a cure for HIV/Aids.
He will travel to Silicon Valley later this year for an SU programme that brings together all the winners of the global competition and SU’s smart global alumni network.
It’s a vote of confidence that global organisations such as Techstars and SU have opened up shop in SA and are opening the doors for African startups to get access to 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 startups receive. And the exposure to the much bigger US markets allows these firms to scale up their offerings.
It’s a point frequently made by Vinny Lingham, a local innovator who has done extremely well in his new home in San Francisco, near Silicon Valley.
All these initiatives are helping African startups to grow their expertise and spread their offerings. African ingenuity is already world renowned. As it should be.