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Silicon Cape’s Startup Capital Status Threatened by Rise in Black Entrepreneurs in Gauteng

  • Gauteng is home to 44% of new tech startups while Western Cape is 47%
  • The percentages of startups who are blacks have jumped from 26% to 50% in 2015 to 2017 respectively.
  • Only 3% of black tech startups record better profit compared to their white counterparts who stand at 16%.
  • About a third of them say they pay the actual market-related salaries but employees are leaving because of pay issue.

The Western Cape is a known place in South Africa where a lot of tech startups are based. Unfortunately, it is losing its place as SA’s number one tech startup destination to Gauteng. Gauteng, South Africa’s richest province is about to overtake the Western Cape according to a survey. Also, the population of black tech startups is also increasing in numbers.

In this year’s edition of the Ventureburn Survey for Tech Startups organized by Telkom Futuremakers – a figure of 44% of 260 founders that were surveyed reported that they have their base in Gauteng.

The figure as of 2015 when 197 founders where surveyed was 29%. But that has increased drastically now.

The main reason for the rise in tech startups in Gauteng is due to the increase in the number of black tech entrepreneurs in the area – which comprises of Chinese or Indian South Africans, black Africans, colored. These set of black tech startups make up 50% of South Africa’s tech startup founders which indicates a sharp increase from the 26% recorded in a 2015 survey.

In another survey conducted, 53% of the black startups mention Gauteng as their main base while 42% said their home remained Western Cape.

Black Startups are struggling

Startups, especially the blacks are struggling to make a profit; while sixteen percent of white startups are making profits, only four percent of black tech startups hold the same record.

The most disturbing part is that about 61% of these black startups are yet to generate income because they are either in the seed stage or working to grow their concept compared their white counterparts that are just 30%.

Challenges with getting VC and Angel Funding

Being funded by VC or angel investor is what many startups need but only a handful of them actualize this dream. Over 27% of tech startups in South Africa believe they will secure funding from VC’s or angel investors but only 8% have reported secured such funding according to a new survey.

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