By The South African
A stagnate job market and an expected growth of less than 2% does not seem extremely glamorous upon first glance to potential investors. Yet, South Africa may prove to be the pinnacle of hope if we are to have any confidence at all. The startup climate in both Johannesburg and Cape Town are starting to restore confidence in an otherwise upsetting battle. For example, Silvertree Capital has already pledged to invest $10 million dollars in South African startups. The company’s founder, Manuel Koser says he’s making this pledge due to the fact that he sees the enormous market potential in the South African economy. He’s betting on the country’s middle class’ increased buying power. Yet, South Africa tends to be overlooked in favor of Lagos and Nairobi. However, things seem to be improving in the last couple of years. Even last year, South African startups raised nearly 55 million dollars according to reports by Disrupt Africa.
Additionally, the country has produced some real contenders in the startup world. For instance, startups like WhereisMyTransport, VIGO, and SweepSouth have attracted a lot of attention. Perhaps, the most notable company is Knife Capital, a venture capital firm. Just last month it has reported a revenue of almost ZAR 60 million. One of its accelerator programs, Grindstone has already taken ten plus businesses under its supervision and by doing so it has created nearly 100 jobs in the 1 year. Grindstone reports its portfolio to be growing at 70% consistently on a year-on-year basis.
However, Vasiliy from the cloud backup business CloudBackupRobot.com feels uncertain about South Africa’s ability to appeal to western markets with the Rand. But proponent of the startup culture, Roger Norton from the Silicon Cape Initiative says that he believes that startups thrive in times of struggle. He remains hopeful that startups will revive local markets and put innovation of the forefront. He believes that both the number of VC funds and the number of new startups are increasing in recent years. Silicon Cape Initiative is one such organization that work with early stage startups closely to get them connected with angel investors. And there are more organizations trying their best to positively impact the entire ecosystem. Norton believes that this means nothing but good for the future of South African startups in the years to come.