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Cape Town

Located between Africa’s most southern tip and the picturesque Table Mountain, Cape Town has no shortage of activities for those who like the outdoors. This makes the city home to more entrepreneurs and innovators than Johannesburg, the country’s corporate magnet. Stellenbosch University and the University of Cape Town are Africa’s premier technical universities and produce excellent talent, such as the central team responsible for developing an integral part of Amazon Web Services. The Silicon Cape Initiative, a local NGO, has gained significant traction in recent years for its efforts to connect investors, entrepreneurs, and hosting events startups in Cape Town. The recent merger of Takealot and Kalahari into one eCommerce powerhouse shows that eCommerce in Cape Town is definitely one of the city’s strong suits, despite the country’s challenging logistics. However, the risk averse nature of South Africans and the subsequent lack of capital as startups scale create hurdles in the Cape Town ecosystem.

In This Market

These businesses offer industry expertise and are a source of startup talent and potential customers. They help fuel the local startup community.

Opportunities

  • The excellent climate and abundance of outdoor activities attracts talent from all over the country.
  • A more “rebellious” and innovative atmosphere than other major cities in South Africa means Cape Town is more adept at innovating.
  • The most active early stage startup scene in Africa, as measured by the number of startup-related events held.
  • Software developers are significantly more affordable than in other cities.
  • Plenty of problems that need to be solved.

Risk Factors

  • The slow and unreliable internet makes it difficult for startups to scale, and for consumers to access products.
  • The conservative investing climate hinders growth for startups. In many instances, startups have to leave to receive capital from foreign entities.
  • Logistics in the country makes performing everyday tasks very difficult.
  • The weakening of the South African Rand in relation to the dollar makes it more expensive for startups to scale globally.
  • Severe income inequality in South Africa means that consumption is limited to the minority who can afford the goods and services provided.
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