South Africa

Cape Town

MEMBERS:
City of Cape Town WESGRO Silicon Cape

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.

Alderman James Vos
Mayoral Committee Member for Economic Opportunities and Asset Management.
#1 African Ecosystem: Knowledge
#1 African Ecosystem: Talent & Experience
#3 African Ecosystem: Performance

Highlights

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

TOTAL EARLY STAGE FUNDING
$105 m
GLOBAL AVG.
$431 m
ECOSYSTEM VALUE
$1.2 bn
GLOBAL AVG.
$10.5 bn
MEDIAN SEED ROUND
$140 k
GLOBAL AVG.
$494 k
MEDIAN SERIES A ROUND
$3 m
GLOBAL AVG.
$2.7 m
SOFT. ENGINEER SALARY
$32 k
GLOBAL AVG.
$42.1 k

Sub-sector Strengths

Fintech

As the home of some of South Africa’s largest financial institutions, Cape Town is a natural choice for innovative Fintech companies within the country. Payments startup Yoco has raised a total of $106 million over 5 rounds, including a Series C in July. Mobile financial services platform Jumo has raised $156.7 million over 11 rounds. Their latest round was a $55 million Series C in February 2020.

Edtech

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

Tax Advantages

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.

Educated Workforce

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.

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