South Africa's innovation sector remains stifled as the number of entrepreneurs sourcing funding lags behind the country's African peers. This situation is set to impede an already-pressurised economy even further.
Although SA has grown some heavy-hitters - such as Mark Shuttleworth and Vinny Lingham - others are battling to make it onto international platforms, a situation Silicon Cape is working to address.
Countries such as Kenya and Nigeria have far more projects on the go than SA. Numbers from Venture Capital 4 Africa (VC4A), which tracks start-ups across the continent and matches them to funders, lists 339 investment opportunities from Nigeria, 303 from Kenya, but only 161 in SA.
South Africans are innovating, but are not making a huge dent in the international sphere because inventors are not able to take their idea to the funding stage, says IDC analyst Mark Walker.
Peer ranking
VC4A's March report on the state of start-ups in Africa - the bulk of which are ICT-related - notes Nigeria has the most start-up investments by volume while, overall, the total amount of money pumped into Kenya's innovation sector is the highest among African countries. South African ideas attract the biggest amounts of money per idea, it adds.
Alexandra Fraser, vice-chairperson of Silicon Cape, says the country is innovating, but these opportunities need to be out on the world stage. She notes there are 1 600 businesses registered with Microsoft SA's BizPark.
Fraser adds there are innovative local companies that have exited SA through international buyouts, such as Garmin's purchase of local start-up iKubu in January. She also notes SA has a more mature ecosystem than Kenya and Nigeria, and VC4A plays a role in helping such countries get new ideas noticed.
According to the 2014 Global Innovation Index, SA ranks 53 out of 143 countries, although Walker suspects the methodology may be skewed as Switzerland comes in at top spot. He adds SA does well when considering innovative use of tech in banking, transport, healthcare and sport, among others.
Walker notes for local companies to move from the stage where they have bootstrapped an idea, to one in which they can look at commercialising it, they need to give away "most of the company" to get funding. He notes South Africans are reluctant to do this, either because of greed, or because they are na"ive as to how the system works. "We've got the ideas, but we don't want to share."
Although there is a small pool of funding available locally, it is not easy for innovators to access, Walker notes. He adds Elon Musk and Shuttleworth had to take their ideas overseas to get the funding they needed.
Stagnating economy
There is a funding hole, which leads to missing rungs in the ladder to go from a great idea to getting products on international shelves, says Walker. He notes in Silicon Valley, for example, there is a logical route for inventors to follow, which is not the case locally.
The consequences of this gap in the process means SA will stagnate as its mining and manufacturing sectors, traditional economic bedrocks, are not sufficient to give the economy the boost it needs, says Walker. The country will survive, but it will not become one of the top nations of the world, with a consequential failure to create many more jobs, he adds.
"If we don't innovate, we will stagnate, and if we stagnate, we will die."
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