Entrepreneurship Industry News

Global tech startup report reveals SA performing well, but still lags far behind key global standards

800px-Johannesburg
South Africa’s top tech startup ecosystem hubs, Cape Town and Johannesburg are fairing well in terms of growth, but still lag quite far behind in areas such as funding and value, according to the Global Startup Ecosystem Report 2017.

The Global Startup Ecosystem Report (GSER) is produced by Startup Genome in collaboration with the Global Entrepreneurship Network (GEN), featuring 10 000 founders across more than 100 cities and 50 countries who took a survey.

The report also ranks the top 20 cities for startup owners based on a number of factors including funding, startup experience and employee skills.

Silicon Valley in the US was ranked the best among 100 cities, followed by New York and London in second and third place respectively. No African country features in the top 20.

Cape Town

According to the report, Cape Town is home to the most IT-based companies in Africa, including an estimated 700 to 1 200 currently active tech startups.

The value of the Cape startup ecosystem is $172 million, while the global median is $4.1 billion.

Early stage funding averages $20 200 compared to the global average of $252 000. It also scored lower than the global average with regards to how much software engineers are paid ($20 000), compared to the global average of $49 000.

It however performed well in the number of women startup founders it has (17%) compared to the 16% global average, as well as in the number of experienced software engineers (76%), 4% above the 72% global average.

“Cape Town is an emerging city that is not yet plugged into the global ecosystem and its fluid exchange of resources. However, above average Startup Experience, low cost of Engineering Talent and relatively solid Funding factor in the regional comparison are bright spots to build upon during the next years to come,” the report suggested.

Johannesburg

“As of today Johannesburg is already home to an estimated 200-500 currently active tech startups. Johannesburg’s rapidly growing tech scene had over 180 startup events last year, while the city’s combined financial resources infused funding of nearly $252 million for its most promising companies. The high concentration of talented people in the area helps new startups move quickly,” the report states.

Joburg performed lower than Cape Town, in terms of average early-stage startup funding ($10 400), but had a much higher startup ecosystem value ($1.36 billion).

It also outperformed Cape Town in the number of women founders (25%) and number of experienced growth employees, but performed only 1% below the Mother City with regards to the number of experienced software engineers (75%).

The City of Gold had an average of between 200 and 500 currently active tech startups operating in the city.

Greater connectedness is needed

The Global Startup Ecosystem report suggests that greater connectednes between startups across the world is needed for better performance.

“Greater Global Connectedness leads to higher performance for startups and their ecosystems. Establishing more relationships between founders and executives in other parts of the world brings in more ideas and more innovation, resulting in faster startup growth and more vibrant ecosystems. Startups thrive on relationships and the exchange of ideas—with customers, investors, corporations, and, especially, other startups. The broader those connections are, the better the growth outcomes will be for startups and their ecosystems,” it said.

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