Start ups

Cape Town among top cities to establish tech start-up

Read time 3min 30sec

Cape Town has been rated among the top 75 cities in the world that are most suitable to establish a technology start-up or digital venture, ranking at number 51.

This is according to a report conducted by relocation firm Movinga, titled: “Best Cities for Tech Entrepreneurs 2019”, which reveals the best cities for entrepreneurs moving abroad to start a business.

Movinga uses data analytics to determine the best cities to find new business opportunities abroad, focusing on three main categories: opening a new restaurant, launching a tech start-up, or expanding an import/export business into new markets.

According to the report, the Mother City scored 43 out of 100 for being well-established for starting a tech start-up or digital venture, and scored 34 for being among the best cities to establish a restaurant. In terms of its ranking for starting an import/export business, it ranked at 60.

San Francisco is rated as the best city to launch a tech start-up, attributed to its flourishing tech ecosystem, large access to talent and venture capital. London and New York take second and third place, respectively.

“Firstly, Cape Town has very low incorporation costs, as the fifth least expensive city in the study, meaning that entrepreneurs can set up a new business at relatively little expense,” comments Marta Blanco Amez, VP of marketing at Movinga.

“The cost analysed all procedures officially required or commonly done in practice, for an entrepreneur to start up and formally operate an industrial or commercial business. It also scored well for the cost of real estate (93 out of 100), ranking number 22nd in the world for the low price of rentable restaurant space. This, combined with its available technology and hospitality workforce, makes Cape Town attractive for restauranteurs and tech enthusiasts.”

Cape Town, according to the report, also ranked at 20 for the overall cost of transporting and storing goods (scoring 95.8), meaning the city provides low logistics costs for import/export businesses.

“The main industries for growth in the tech/digital venture category is one of the most interesting datasets in this study. With artificial intelligence taking top spot and blockchain making a noticeable appearance, digital entrepreneurs are clearly leveraging future-facing technologies more than ever,” adds Amez,

“What those planning to launch their own business need to decide, is do they go with a city containing an established network of people in the same field, or do they go where there’s less competition?”

Despite its relatively high rankings across the board, Cape Town ranked last out of the 75 cities for the number of days required to set up a business, at 40 days, followed by Warsaw, Poland at 37 days, and Bucharest, Romania at 35 days.

“The length of time it takes to set up a business in SA negatively affected Cape Town's score in the study. Arguably, this may be a deterrent to new entrepreneurs who may not have the capital to wait so long to start operating,” continues Amez.

“Cape Town ranked 72 out of 75 overall for venture capital opportunities, meaning it has low amounts of publicly available funding for technology-related and digital start-ups, as well as an average digital business ecosystem (score 41.4).”

Earlier this year, Cape Town was rated as the best tech city in Africa, making its way onto the Top Tech Cities report compiled by global property firm Savills.

The study ranked Cape Town in 30th place and it was the only city on the continent to make the list.

Another study, titled “Evaluation and Network Analysis of the Cape Town-Stellenbosch Tech Sector”, conducted by Endeavor Insight, identified the greater Cape Town area, including Stellenbosch, as the most productive technology sector in Africa, employing up to 50 000 people.

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