South African entrepreneurs primarily launch startups in response to gaps in their own environment, but struggle to reach the scale of employing other people, according to the results of the Seed Academy Startup Survey.
Disrupt Africa reported in March Seed Academy launched the section edition of its South African startup survey, aimed at obtaining a picture of the country’s startup sector and the challenges it faces.
This year, startups were offered the chance to win prizes in return for completing the survey; resulting in nearly 1,500 South African entrepreneurs responding to the survey.
The survey results released today found that nearly 50 per cent of respondents said they launched a startup based on an idea that came to them from the environment in which they live, work and play.
Only four per cent of respondents started a business because they were unable to find a job.
This statistic is mirrored by the fact the survey found startups do not perform well in terms of job creation, with only four per cent of respondents able to employ more than 10 staff; while 38 per cent of entrepreneurs said they do not employ anyone.
“Job creation should be a key outcome of entrepreneurial activity, yet a large portion of our entrepreneurs have no employees,” said Donna Rachelson, chief executive officer (CEO) of Seed Academy.
The Startup Survey also revealed businesses are taking a long time to gain traction, with some respondents owning businesses five years and older but still not making sales.
The majority of survey respondents – 59 per cent – reported being sole founders; while the demographic breakdown of entrepreneurs displays disparity as compared to South Africa’s population.
“Female entrepreneurs remain in the minority and that the ethnic footprint of entrepreneurs does not mirror SA’s demographics – black startup entrepreneurs are underrepresented,” Seed Academy reports.
Responding to the survey results, Rachelson recommends entrepreneurs starting a new business to do so in parallel with full time employment; and she also advocates for more internships at startups and small businesses.
“ […] with 50 per cent of South Africa’s youth […] currently unemployed, there is a dire shortage of opportunities for them to gain work experience. Innovative ways to provide our young people with work experience need to be found. To develop skills and business acumen, we should be considering interventions such as entrepreneur shadowing or on-the-job training at an SME,” says Rachelson.