We’re halfway through July here at the Barclays Accelerator, Powered by Techstars in Cape Town, which means that the 2017 class of FinTech startups have less than 3 weeks left before they stand on stage at the annual Demo Day.
These 10 startups will be representing their companies as capable, forward-thinking visionaries, setting a path to the future of financial technologies.
Although likely not at the forefront of the founders’ minds, their efforts through the program will further solidify Cape Town as a nascent startup ecosystem on the brink of massive expansion.
Investors and potential partners from across the world will be looking eagerly to see the opportunities coming out of the Barclays Accelerator, Powered by Techstars in Cape Town.
By the time Demo Day comes, the Techstars team will have spent the past three months in closed quarters, getting intimately acquainted with these teams and their companies.
These 10 startups have been selected from a global network that spans far outside of just Cape Town. In fact, 40 percent have relocated from across the world, mostly outside of Africa, to take part in the hands-on accelerator programme located in the buzzing Techstars corner of Barclays’ Rise office space.
When creating global businesses, why relocate from a first world America, or Israel, both of which are renowned for their tech entrepreneurship ecosystems?
It’s no secret that Cape Town’s tech scene, while having the continent’s strongest funding landscape, is still considered “emerging,” at best.
Or is it?
More importantly, is an “emerging” ecosystem any less empowering for local and global startups than a Silicon Valley, or do some startups thrive globally even more in these emerging ecosystems?
Regardless, these international startups have officially been welcomed with wide open arms by the local startups in the class, to work together as ambassadors of a startup ecosystem rooted at the tip of Africa.
Local “Activation” Initiatives
Many cities across the world have initiatives to represent their city as buzzing tech cities worthy of the world’s attention. London has Silicon Roundabout, and here in Cape Town, we have Silicon Cape. This is an initiative that I’ve previously been part of driving, in collaboration with some of Cape Town’s most prolific internet companies, VC’s, and government representatives.
This and similar initiatives, as their names suggest, are primarily focused on getting locals to rally behind creating a more supportive environment for technology-based startups in their backyard.
However, with the focus on creating a local community brand, it’s not always the case that these types of initiatives achieve much success and ensure the creation of more or better startups.
So, what does?
The Startup Genome, through their Global Ecosystem Report, believes they have anecdotally uncovered what does, as they define startup ecosystem life cycles and maturity in four phases, the first of which is “activation.”
This phase is focused on removing barriers and attracting resources – a key responsibility for initiatives such as Silicon Cape, who look at how to promote investor and founder appeal by addressing any government regulations around financial or IP issues.
South Africa also provides a great economy for international businesses to open an office and access a talented local workforce.
Local Funding Landscape
According to South African Venture Capital and Private Equity venture capital survey, the Western Cape has emerged as the center for venture capital activity in South Africa.
The majority of the country’s startups are based here, and 75 percent of venture capital deals were concluded in this province. Some of the largest tech exits have also stemmed from the Western Cape, with the most recent being the $100 million sale of GetSmarter to 2U in May 2017.
Despite the relative maturity of the funding landscape in Cape Town in comparison to the rest of Africa, it still pales in comparison to international benchmarks.
Access to tech startup seed funding in particular is extremely limited, with companies like Yoco, a thriving mobile card payments platform, having raised their initial round from dozens of angel investors, mostly from outside the country.
However, looking forward, cryptocurrency disruption may transform the financial venture capital industry, drastically improving access to capital, irrespective of what corner of the world a business operates.
Companies, including two within the the current Techstars class, can now look to raise millions of dollars directly from a crowd of investors through an ICO — Initial Coin Offering — which often sells out within a matter of hours.
In their report, Startup Genome outlines what they have identified as the next phase of ecosystem development after activation: “based on rigorous analysis, we deﬁnatively ﬁnd that globally connected startup ecosystems grow faster and perform better than less-connected places.”
So while Cape Town is a far distance away from most of the world’s major cities (it’s historically known as “The Cape Of Good Hope” as European explorers discovered the city in the first successful attempt to establish direct trade between Europe and the Far East), it is a highly desirable destination.
In today’s startup world it also reinforces the idea that entrepreneurship and being part of innovative startups allows you to live your dream, and work from wherever you choose.
Cape Town has consistently been ranked highly in the top 10 travel and culinary destinations in the world, receiving the spot of number one city on the Condé Nast World’s Best Food Cities list.
Members of the 500 Startups “Geeks on a Plane” trip through Africa have cited this as a reason that Cape Town is compared to the lifestyle fueling the San Francisco startup culture and dubbed Africa’s Silicon Valley.
Just a few hours outside the city, the Cape Town community even has it’s own version of the Burning Man festival — Afrika Burn. The original event started in San Francisco, and accordingly to Elon Musk, who came up with the idea for SolarCity while at Burning Man, Burning Man is synonymous with Silicon Valley.
Elon Musk is one of the highest profile tech entrepreneurs, who also happens to be South African. As is his colleague from PayPal, Roelof Botha, well known for leading investments at Sequoia Capital into Youtube, Tumblr, and countless others.
On European soil you’ll find SA expat Saul Klein, previously with Index Ventures and co-founder of Seedcamp, an early stage investment company that has invested in over 200 tech startups.
Afrika Burn took place just before the accelerator program kicked off, noticeably bringing in high profile tech entrepreneurs such as Brock Pierce, co-founder of Blockchain Capital, the first VC fund dedicated to Blockchain ecosystem.
Brock would later be found walking around the co-working space, inspiring entrepreneurs with the belief that every industry will eventually be disrupted by blockchain technologies.
Local Startup Communities
Cape Town also has the highest number of accelerators (20+) and coworking spaces (25+) on the African continent.
Rise, where Techstars is hosted in Cape Town, is a network of coworking spaces spread across four continents, an initiative in partnership with Barclays to support a community “working together to create the future of financial services.”
Right now, it’s easy to consider Rise as one of the most powerful hubs in the Cape Town tech startup community, albeit only primarily focused on financial technology startups.
Through a careful curation of community, Cape Town’s ecosystem is tightened locally through a common goal, and expands its reputation globally through connected communities like Rise. Of course, there’s also the Techstars community, who eagerly support their fellow entrepreneurs coming out of the Cape Town program, and other programs across the world.
On the surface it may appear to be an extremely exclusive privilege to have access to the Techstars community, who have been primed to “Give First” to each other, but in truth that privilege is very naturally extended to second and third degrees outside of the Techstars worldwide network.
The presence of strong global goodwill networks like Techstars, Rise, Silicon Cape, or other entrepreneur support programs plays a huge role in enabling startups across the world to thrive, in a world that is becoming increasingly globalized.