SA’s start-up ecosystem achieves major milestone

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba
Johannesburg, 29 Jun 2021

Boosted by a thriving tech ecosystem in the Western Cape, SA has become the first African nation to rank in the global top 50 of countries in terms of start-up ecosystems.

Compiled by StartupBlink, a start-up ecosystem map and research centre, the 2021 Global Start-up Ecosystem Index Report ranks the start-up ecosystems of 100 countries and 1 000 cities.

StartupBlink uses multiple sources of data to build its index, including, but not limited to, governments, economic development agencies, start-up-related entities, as well as global data partners such as Crunchbase, SEMRush and Meetup.

This year’s findings show SA’s start-up ecosystem ranking increased by four spots to 48th globally, from the previous ranking of 52 in 2020 and 51 in 2019.

“South Africa has had a great year on all fronts,” notes the report. “Firstly, the country has maintained the rank of first in Africa, increasing by four spots to 48th globally, becoming the first country in Africa to reach the global top 50 since the start of the rankings in 2017.

“The South African start-up ecosystem is one of the most promising in Africa. With economically successful cities like Cape Town and Johannesburg, South Africa is a vibrant, private-sector-led start-up ecosystem. There has also been massive growth in available funding for early-stage investment thanks to forward-thinking public initiatives.”

In the Middle East and Africa region, South Africa’s start-up ecosystem achieved a number three ranking, after Israel and the United Arab Emirates.

The report notes that with companies like Naspers investing heavily in South African tech entrepreneurs, and venture capitalists committing to funding start-ups, SA has seen much growth in the local start-up ecosystem.

“South Africa still faces a number of challenges, including a lack of angel investors. Going forward, South Africa’s start-up founders and entrepreneurs need to focus on creating scalable business models that target the international market.”

The 2021 national and global ranking of cities in SA

In terms of city rankings, the report indicates that “tech hub” capital Cape Town increased its ranking by one spot to 145 globally and the third highest ranked city on the African continent.

According to Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape, the Cape Town-Stellenbosch corridor contains 450 tech firms and employs more than 40 000 people, making the ecosystem bigger than Nairobi and Lagos combined.

Cape Town is also home to tech heavyweights such as Naspers, Takealot, Aerobotics, Clickatell, GetSmarter, Yoco and Sweepsouth, to name a few.

The start-up ecosystem index highlights that the Western Cape capital city excels in education technology, software and data, and transportation technology, ranking in the global top 100 for all three industries.

Turning to the city of gold, the report highlights that Johannesburg is a fintech hub that ranks second nationally and fourth regionally, after jumping eight spots to 152nd globally.

Gauteng capital city Pretoria has seen a significant increase of 11 spots to 490th, in terms of city rankings.

New to the rankings is KwaZulu-Natal’s Durban, which ranks at 568th, bringing the total number of South African cities ranked in the index to four.

“With this new entrant, South Africa is continuing a positive trend of spreading innovation across the country, adding a new city to the global top 1 000 for three years in a row,” states the report.