Disrupt Africa’s datasets, skills, and networks are used in the South African Startup Ecosystem Study 2022, the company’s 17th publication and second country-focused report, to detail what startups are doing in the country, who is investing, and who is providing ecosystem support. It also contains the whole list of startups studied for the report.
The SA SME Fund, a partnership between the South African government and CEOs to stimulate the economy and create jobs by investing in funds that support and develop entrepreneurs, and Nedbank CIB, the corporate and investment banking division of leading African bank Nedbank, have collaborated to make the report available for free. Newtown Partners, the Cape Innovation and Technology Initiative (CiTi), and Quona Capital are the other partners.
The study will be a deep dive into the South African startup environment, utilizing Disrupt Africa’s information, experience, and networks to chronicle what companies are doing in the country, who is investing, and who is supporting the ecosystem. It begins with a list of 490 South African IT businesses for which sufficient data is available.
Fintech is a big driver of activity in the South African startup industry, according to the research, with 30% of companies involved. In fact, there are nearly three times as many fintech companies in South Africa as there are in any other industry. E-commerce and retail technology are other important areas.
A disappointingly low 14.3% of these firms have at least one female founder, indicating that the space still has a diversity problem, although more than 25% of the tracked companies have gone through some type of accelerator or incubator. They employ around 11,000 individuals between them.
In terms of funding, South Africa is on pace. According to the research, 357 individual South African digital firms raised a total of US$993,684,600 between January 2015 and May 2022, a figure only surpassed by Nigeria. Funding has risen year after year, particularly in the last three years, and 2022 is on track to be a record year for South Africa in both metrics.
South African startups are by far the most successful when it comes to successful exits, even though the other members of the “big four,” Egypt, Kenya, and Nigeria, compete for funded ventures or overall capital. Since 2015, 35 South African tech firms have been purchased, accounting for one-third of the continent’s acquisitions in the last 7.5 years, according to Disrupt Africa.
In terms of acquisitions, the country ranked first in 2019, 2020, and 2021, and it appears that it will do so again in 2022. Fintech is increasingly driving this, with fintech companies accounting for over half of all South African startup exits in the last 18 months.
“South Africa has established itself as one of Africa’s most important startup ecosystems, leading the way in M&A activity and the establishment of local support networks. This study illustrates that story, and it’s an excellent starting point for any entrepreneur or investor – or anyone else! – interested in getting engaged in the local startup environment,” said Gabriella Mulligan, Disrupt Africa’s co-founder.
“It is important to our identity as a company that we provide active and aspiring entrepreneurs with critical information, resources, and chances to help them scale their enterprises. We greatly appreciate the cooperation of the SA SME Fund, Nedbank CIB, Newtown Partners, CiTi, and Quona Capital in ensuring this study reaches as many people as possible,” stated Tom Jackson, co-founder of Disrupt Africa.