“Quantum shift” needed if SA to produce unicorns

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South Africa’s startup space needs a “quantum shift” if it is to speed its development and produce its first unicorn, according to a new report.

The report, which is entitled ‘Unicorns, Gazelles & Leapfrogs: Fast-tracking the South African startup ecosystem’ and is available here as an e-book, looks at recent successes but also analyses negatives. It is based on interviews with 36 players in the South African startup ecosystem.

Author Jason Levin says there is progress and a will to succeed within the ecosystem. There is also momentum, as well as resources, with over 300 incubators and entrepreneur development organisations and and SME Fund.

However, South Africa still has not produced a unicorn – a startup valued at over US$1 billion, with the report looking at why and attempting to identify an accelerated path for improvement – what it calls “leapfrogs”.

The most notable issue is a deep skills deficit resulting from an education system largely ill-equipped to produce entrepreneurs of calibre. Levin says the country has to plough through those obstacles, but progress will be slow and fraught.

The report has four key recommendations aimed at creating a “quantum shift” within the South African startup space. Firstly, it recommends developing South Africa as a resource hub, redeploying the large number of entrepreneurs coming out of incubators and using them to power local and international startups rather than run them.

Secondly, it says the country should set itself up as an impact investor haven, while it also calls for more access to public investment funds. Finally, it recommends vertical, sector specialisation, which would see South Africa take a cue from Poland and other Eastern European markets and focus on two or three verticals, such as fintech, medtech and renewables.

“These four recommendations possibly put the thinking on a new track for debate and input. If a more lateral thought plan could be agreed and actioned, there is a belief from those canvassed that the impact could be great,” said Levin.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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