Curious about South Africa’s startup ecosystem? 🇿🇦
You will find bellow our exclusive interview with Kenneth Kayser, Founder of Growthway Ventures & Chief Venture Officer: Aions
- Who is Kenneth and why is his insight valuable?
- Why is South Africa Startup ecosystem great to start a startup or expand to?
- What’s the most important thing (hidden rule) that founders should know?
- What’s the biggest challenge that founders are facing in SA?
- Who are the people & organizations founders should know in SA?
- What Kenneth is looking for?
Below is the full transcript of the interview
Welcome to our Startup Ecosystem Expert interview, today South Africa edition. The purpose of this interview is to enable our international audience to learn in an engaging and down-to-earth format about different startup ecosystems around the world. Today our focus is on the South Africa startup ecosystem together with Kenneth Kayser. I’m Jelte Wingender, CEO and co -founder of Founders Lair and I will be the host of today’s session. Today with me is Kenneth. Hey, Kenneth, do you shortly want to say hello to our audience?
Hi, good morning, good afternoon, and good evening from every part of the world where you might be dialing in or listening to today’s conversation. It’s a great pleasure being on this platform today to showcase and talk about South Africa’s ever-growing startup ecosystem. So it’s a real pleasure and honor to be here today.
Great. So first of all, let us get a little introduction about yourself and what you do in the South Africa startup ecosystem. Please go ahead and share your story.
Who is Kenneth and why is his insight valuable?
Sure, yeah, so I’m a tech founder. I’ve exited one fintech business, but I’ve also started a number of tech companies. I’m really passionate about startups, building startups, and also helping corporates build startups. I’m an investor. I’m invested in a number of local startups as well as startups on the African continent. And most recently also venture building, helping new startups grow and scale across the continent, and then researching. I’m currently completing my Ph.D., which focuses on startup ecosystems. So, yeah, I’ve got a bit of academic experience as well as practical experience as an operator building startups. And then also as an investor. As you can see, digital entrepreneurship is the lifeblood of any digital economy. And it’s the digital startups that are the ones that are going to be building the digital economies and ecosystems of the world. So it’s a passion. Startups are a real passion, a passionate part of my life.
Why is South Africa Startup ecosystem great to start a startup or expand to?
It’s really an honor to be here today with someone who brings actually all the different aspects of entrepreneurship, being an investor, being a founder, and also like a tech enthusiast. This is really great. Share with us, please. Why is South Africa a great place to start a startup?
Sure. As you can see the screenshot behind me, South Africa’s beautiful Cape Town. It’s a very beautiful country, very diverse in terms of culture and nature. But just to put South Africa into context globally in terms of where South Africa ranks. South Africa is currently ranked number 53rd in the world in the latest 2023 StartupLink report. And basically, that report ranks startup ecosystems, in terms of the business environment, and the quality of the startup ecosystem. So we’re one of the top, if not, Israel and UAE are ahead of us in the MANA region. But following that, South Africa is third on the list. So when it comes to the whole of Africa and the Middle East, we are third, and when it comes to the African continent, we still ranked number one.
And when it comes to support, in terms of supporting startups, South Africa’s got really good infrastructure and strong institutions. A lot of them are driven by the public sector, for example, a number of accelerators, and incubators that provide support for startups and also access to funding. We also have pockets of excellence in cities like Cape Town and Johannesburg. Cape Town is seen as the Silicon Valley of Africa. There’s a lot of tech innovation coming out of Cape Town and the Western Cape.
So we have these pockets of excellence, and then you combine South Africa’s natural beauty and very low cost of living, and that makes South Africa a place to start your startup. And also access to talents. As I’ve noted, we’ve got some really good and really strong educational institutions. So providing a good pipeline of talent is really key. And yeah, I mean, overall, it’s a good environment.
Look, it’s not perfect. We have our challenges, like most ecosystems around the world. When it comes to things like legislation and so forth. But I think South Africa is heading in the right direction, and we have what it takes to excel and move up further in the global startup rankings.
What about sectors or industries? Does South Africa or some of the main cities that you mentioned, do they have specific focuses? What is South Africa strong at?
So South Africa traditionally because of its very strong financial services sector, what you’ve actually seen is FinTech being a massive startup segment with a lot of entrepreneurs and across the spectrum, from payments, infrastructure, etc., and right within the financial services value chain. So FinTech is definitely one of the largest.
We have a growing EduTech sector as well, educational technology companies. I think a couple of years ago, one of our Cape Town-based EduTech companies, GetSmarter was actually brought out by a US company. But it just talks about the quality of our EduTech sector.
South Africa is blessed with an abundance of natural resources and agriculture. So agriculture tech is another growing industry. And then you have the mining industries as well. There’s a lot of innovation happening there when it comes to mining tech.
Overall South Africa is a well-diversified economy. And offers startups and startup founders both access to a developed economy and also a developing economy. And I think it’s that dynamic that makes it really appealing for a lot of startups to use South Africa as a launchpad into Africa and focus on both the developed markets and the developing markets because South Africa has that dynamic at play.
As I’ve noted, we have our hubs. Our regional hubs are Johannesburg, Cape Town and Durban. CapeTown is hitting the pack when it comes to, you know, a starting base for a number of startups to set up. As I’ve noted, there’s a natural beauty, there’s access to talent and so forth. And actually what you’re seeing is, a couple of months ago, there was a Canadian startup that decided to choose Cape Town as its head office. So you can see international companies deciding to set up shop in South Africa for development purposes to access talent and have the dev teams here because of the low cost of living and access to talent. And yeah, so those are the regional hubs and also the main sectors where startups are actually really blossoming.
What’s the most important thing (hidden rule) that founders should know?
This is a lot of great insights. So happy to hear that South Africa is not just a great place to start your startup, but it’s also a great place to expand actually your startup too. So can you share please with us what’s the most important thing or hidden rule that founders should know if they want to build a startup from scratch in South Africa? So more the internal view or for the international startups that want to expand to South Africa?
Sure. I think the ones that want to expand to South Africa, I think you know where the world finds itself right now. I mean South Africa is pretty much in the middle aligned with and part of the G20 nations which gives us access to those markets and we’re also part of BRICS and gives us access to those markets. So for those founders wanting to globally expand, South Africa is aligned on both sides, if I can put it that way. So I think it gives you access to those markets but also you know some of the hidden secrets of the South African ecosystem.
As I’ve noted, it’s a very affordable place to live, also to set up your startup and you know access to talent as well and it’s a beautiful place. So I think any startup wanting to start off and launch a startup in South Africa, you will find comparatively speaking it’s a really cheap place to actually get going and access talent.
Look, I know legislation that is still falling behind the rest of the continent and the world. I mean one thing that comes to mind is the Startup Act. South Africa has a framework around a Startup Act and the whole thinking is how do we make it easier for startups to be set up and get going in South Africa. That covers a whole lot of elements around regulation and visas and so forth. You know our Startup Act at the moment has not become an act of parliament, it’s still at the review stage with the government. So I think from a governmental perspective, if we start seeing traction on that side in terms of getting that Startup Act legislated, then I think things will also become and move much faster.
But you know South Africans are very tenacious you know within our culture, within our diversity and we really get things done. I mean we really you know there’s a saying in South Africa, it says aboer maak a plan and what that means is that you know South Africans under challenging conditions will always make a plan.
So I think you know startups wanting to set up in South Africa, you’re going to get a great bunch of access to people and talent that’s quite diverse and diversity is really key when you’re building your startup. But then also it’s a great place and environment for you know for you to build your startup and yeah I think those are and then asI’ve noted you know we’ve got our you know access to the various African marketsG20 as well as BRICS.
What’s the biggest challenge that founders are facing in SA?
Let’s come a bit more to challenges. So what’s the biggest challenge that founders are facing in South Africa?
I think some of the biggest challenges are access to finance. I think our financial system is not as sophisticated when it comes to funding startups. All you need to do is just look at the stats, right? In terms of VC funding for startups. And you’ll find that even though Africa is growing as a continent, it’s still lagging behind most parts of the world. And South Africa is no different, right? So access to financing is definitely a challenge. You know, you’re still finding a lot of the traditional financiers are very risk averse. We are trying to grow our angel networks because we do believe that within the financial system and funding startups, you need a variety of stakeholders. So our angel investor community is still growing. But yeah, I mean, it is a bit of a challenge, but I think, what you will find is a lot of guys that are setting up in South Africa are from day one also looking at how do you attract investment from other parts of the continent, like Europe and US. So access to funding is something that we’re still working on. It’s not perfect. And I think hopefully with the South African Startup Act coming into effect, it addresses some of those issues around access to funding, making it easier for investors to invest in South African startups. And yeah, so I think that’s one of the one of the main things.
I think also when it comes to our e -visas, our startup visas in particular, that is something that’s been on our government radar. So that is in progress. It does come with its challenges, and that’s why I know that. But I think that is something that the government is trying to address. But I think, yeah, those are the two main ones that I think stand out.
I can’t mention South Africa without mentioning load shedding, you know, which is essential, you know, having issues with our electricity supply. But, you know, within that comes an opportunity for clean tech and startups to come and come to our country and come up with new innovations when it comes to renewables. But yeah, just top of mind, those are the ones that that worth mentioning.
But I think overall, if you look at the challenges and you weighed them up against the positives, I definitely think the positives outweigh the challenges in terms of opportunities for startups to get going in South Africa.
Who are the people & organizations founders should know in SA?
Yeah, I love actually how you say this challenge about like that sometimes electricity is gone, that this is an opportunity for entrepreneurs to actually bring in their innovation. I love this actually. I think coming from a European background, we are always complaining about things, but we’re not seeing actually the opportunity in all the things that are like this. So this is great. Great. Let’s talk about people. So you mentioned some hubs. Who are the people that you would recommend for anybody to know if they want to start a startup or expand their startup to South Africa, besides yourself of course? That can be people from accelerators, serial entrepreneurs, or anybody who’s like super helpful towards founders and who you would recommend.
Yeah, on the top of my mind, there are some wonderful entrepreneurs doing some wonderful things. You know, there’s a venture builder Aions Creative Technology You know, it’s a hub in Johannesburg a venture builder. There are many like them around, you know, the country is a grindstone in Cape Town when it comes to accelerators. And then if you look at investors, there’s the Launch Africa that comes to mind. They’re one of Africa, not just Sout h Africa, but one of Africa’s most active VC investors, especially when it comes to pre-seed. And then you find also there are several institutions like the South African Startup Act Organization. There’s also Silicon Cape Town, Josie’’s Angels. These are really good. And then also lastly, the Startup Club ZA®, which is the most recent system builder that’s come to the fore. So I think South Africa definitely has a variety of organizations across the spectrum from incubators, accelerators, investors, and ecosystem builders that all play a key role. And yeah, just to name a few, those are the ones that come to mind.
short break here. So this is great, we will take this.The question is actually aimed for people. So just imagine if someone asked me,who would you recommend to talk to in South Africa? And I would say Kenneth, right? And the question is more targeted towards your top three to five peoplewhere you would say those people you should talk to. The reason here is it brings alot of traction to the video and the content that we create because you give creditto other people as well. So is it okay I ask you the question again and then youname some people and which organization then they belong to. So just like Tony,Sabrina, whatever and then of this and this organization why they are great. Sure,yeah I know. Okay, then let me ask you the question again, then we can cut it easiertogether.
This was great insight. Now coming to some people. So who are the peoplethat you would recommend to anybody who’s looking on South Africa?
Sure. I think it’s always good to connect with former co-founders that have both startups in South Africa that have exited and are giving back to the ecosystem. A gentleman that comes to mind is Mitchan Adams. He’s the founder of a business called Aions Creative Technology up in Johannesburg. So he’s a guy. And then there’s also a really innovative financier, Zachariah George. He is the co-managing partner of Launch Africa Ventures. I think they’re probably Africa’s largest active pre-seed investor. And then there’s the Silicon Cape. There’s a gentleman, I think it’s the chairman, Vusi Thembekwayo. He’s quite known in the ecosystem as a good businessman and also an advocate for startups and SMEs. Those are the ones that come to mind. Those three, I would definitely say to get onto your to-do list.
What Kenneth is looking for?
That’s definitely already a great start, having those three. And yourself, of course, as one of the people knowing the South Africa startup ecosystem so well. We’ve picked your brain today, learning a lot about South Africa, but we also want to return the favor. How can actually the global community help you? Is there anything where we can support you?
Sure. Look, come and visit our country. Come and connect with me. There are lots of opportunities across the spectrum. We’re finding a lot of startup founders from across the world are coming, visiting South Africa, coming just as a tourist, and finding out there’s more to South Africa than just a beautiful country. But we have a thriving tech scene. I mean, Elon Musk is from South Africa and there are a number of innovators globally that are doing some really wonderful things. So I would say, come and visit the country, come and connect with me, come and connect with us. We’d love to collaborate with other ecosystems and try and see how we can support each other, how we can give you access to South Africa’s ecosystem, but also the African ecosystem so it can become a launchpad. So whether it is startup founders, whether it is investors, whether it is governments wanting to collaborate, you know, or even universities on the research side. So yeah, so that would be my call to action. We’re definitely open for business and collaboration.
Yeah, great points here. So put South Africa on your bucket list, visit South Africa. I have not been there. Now it’s on my top list. I definitely wanna go there and hopefully, we can meet there next in person. Thank you so much for being here today and sharing all your insights and yeah, have a good one.
You’re welcome. Thank you. Cheers to everybody, bye.
About Kenneth Kayser
Founder of Growthway Ventures, Chief Venture Officer of Aions Creative Technology
Innovative thought leader with experience building ecosystems and transforming businesses across the startup and corporate domains.
*Developed successful tech startup & scale up ventures in Africa and the US.
*Co-founded an AI driven digital bank called Envel which was acquired by BankMobile (NYSE listed entity).
* Lead the digital transformation of an historic brand (Yellow Pages) into a market leading digital e-commerce platform marketplace called Yep with revenues and customer growth.
* Helped MTN develop & launch a digital platform startup venture called Chenosis as part of its evolution from a Telco to TechCo.
* Global thought leader in the field of digital platforms and ecosystems. See latest PhD research paper published: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4331766
*20 years experience across multiple industries: FinTech, banking, insurance, mining, government & telecommunications.
* International qualifications in business & technology from global universities like Harvard and an MBA from the University of Liverpool. Completing a doctoral PhD degree in Digital Transformation at the Johannesburg Business School (UJ).
* Innovative leader: Experienced innovative thought leader, helping build strong teams across different geographies.
*Digital Start Up Tech Founder, Investor & Executive Advisory Board Member: Founder & Investor in FinancialTech, MedicalTech, EducationTech, AutoTech & PropertyTech start ups.
Kenneth has won a number of international and local awards for developing innovative businesses and digital products from the likes of Gartner and Accenture.
He founded a successful investment portfolio company called Growthway Ventures to consolidate all of his startup investments while also helping businesses like Aions Creative Technology as Chief Venture Officer investing and building startups.
Kenneth is a global thought leader in the startup domain due to his experience building, investing as well as publishing research on startups. It’s this experience across multiple startups domains that’s sets him apart as a global leader.
About Start Ecosystem Expert Interview
Founders Lair is conducting a series of interviews where we go pick the brilliant brain of startup ecosystem builders on our platform to share their valuable insights about the startup ecosystem they are in.
We hope this personal observation from startup veterans can prepare global startup enthusiasts with the mindset that they need when entering that market.
You will be able to learn
- Why is that region great to start a startup or expand to?
- What’s the most important thing (hidden rule) that founders should know?
- What’s the biggest challenge that founders are facing in that region?
- Who are the people and organizations that founders should know in that region?