Cape Town is a leading African digitech hub, home to almost two-thirds of all start-ups in South Africa. We have many support structures in place to assist and encourage entrepreneurship.
With an internet penetration of 63%, one of the largest open-access fiber networks in Africa, and a bustling community of investors, Cape Town is home to almost 60% of South Africa’s startups. The city also has the continent’s highest number of accelerators, with more than 20 programs and 25+ co-working spaces. Both the local and national government is dedicated to further growing the area’s ecosystem. The Digital Economy unit at the Department of Economic Development and Tourism collaborates with the Western Cape Government, City of Cape Town, Wesgro, and various ecosystem organizations such as CiTi, Silicon Cape, LaunchLab, and Startupbootcamp, to launch initiatives aimed at positioning Cape Town as Africa’s Tech Capital. The University of Cape Town, Stellenbosch University, CPUT, and the University of the Western Cape, in addition to six TVETs (Technical and Vocational Education and Training) in the region supply growing companies with a pipeline of talent. Cape Town is home to over 30 venture capital firms, including Naspers, one of the world's top tech investors, as well as an active community of angel investors. Naspers Foundry is a $100 million fund to support South African startups. The Technology Venture Capital (TVC) fund set up by the Department of Trade, Industry and Competition (DTIC) and managed by the International Development Corporation (IDC) provides support and seed capital for the commercialization of innovative ideas. Cape Town attracted $88 million in VC funding in 2020.
Ecosystem by the numbers
The acquisition of GetSmarter by 2U Inc in 2017 catalyzed the growth of the Edtech sub-sector in Cape Town. Local success stories include talent development and e-learning company Groundfloor Labs and Construct Education, a US-based Edtech company designing learning material for the local market. The University of Cape Town recently partnered with Valenture Institute to deliver South Africa’s first accredited online high school. Edtech startup iXperience raised a US$2.5 million Series A funding in May 2021.
Reasons to move your startup to Cape Town
The corporate tax rate in South Africa is a flat 28%, below the average for Africa. Special dispensations are provided for companies in mining, oil and gas, and agriculture. Non-South African residents are only taxed on income from a South African source, making Cape Town a popular hub for digital nomads.
There are 4 world-class universities, 2 globally recognised business schools,research councils and private and public coding schools within a 50km radius of Cape Town. Together they produce more than 12,000 STEM graduates and more than 500 coders a year. Software developers in Cape Town are 40–80% less expensive than in developed markets.
Key Economic Zones
Cape Town has identified 2 key economic zones for development. The Atlantis Special Economic Zone (ASEZ) is dedicated to supporting green and circular economy businesses in renewable energy, recycling, and waste management, transportation, and smart agriculture. A second zone in Philipi supports agricultural activities in the area and includes business incubation and skills development programs.
Silicon Cape is a non-profit, community-driven initiative that supports and catalyses the creation of a vibrant, sustainable tech and entrepreneurial ecosystem in South Africa. The vision is for Silicon Cape to develop the Western Cape as an innovation hub for Africa and the world by fostering an inclusive ecosystem for tech enabled start-ups in the region. This by connecting stakeholders to resources and each other for mutual benefit; curating cohort communities and networks; amplifying the stories from within the community for peer learning; and by advocating on behalf of the collective.
Are you interested in diving deeper into this ecosystem? Drop us a message. Our Ambassadors and Partners can plug you in.