Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      World Bank set to back South Africa’s big energy grid roll-out

      20 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Sita hits back at critics, promises faster, automated procurement

      20 June 2025

      The transatlantic race to create the first television

      20 June 2025

      Listed: All the MVNOs in South Africa – 2025 edition

      19 June 2025
    • World

      Watch | Starship rocket explodes in setback to Musk’s Mars mission

      19 June 2025

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » News » Gauteng challenging W Cape for tech start-up supremacy

    Gauteng challenging W Cape for tech start-up supremacy

    By Staff Reporter23 November 2017
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Gauteng is challenging Cape Town as the epicentre of the technology start-up scene in South Africa, according to new research. There has also been a jump in the number of black entrepreneurs, though they are not yet as successful as their white counterparts.

    Ventureburn’s Tech Startup Survey for 2017 has found that although the Western Cape is still the most popular region in South Africa in which to run a start-up, the province is fast losing ground to Gauteng.

    Forty-four percent of 260 founders surveyed as part of this year’s Ventureburn study said they operated in Gauteng, behind the Western Cape’s 47%. That’s a sharp rise for Gauteng, where two years ago it was less than 30% versus Cape Town’s almost 60%.

    While 16% of start-ups founded by white entrepreneurs are turning a profit, a mere 4% of black-owned tech start-ups are doing the same

    There has also been a surge in black entrepreneurship, with 50% of founders counting themselves as black African, “coloured” or Indian/Asian, up from 26% in 2015. Whites made up 44% of the total. However, the tech start-up ecosystem remains male dominated at 78%, up from 68% two years ago.

    Just 4% of black tech start-ups turn a profit, versus 16% of their white counterparts, the study found. The majority of black-led start-ups (53%) list Gauteng as their base, with 42% saying the Western Cape is their home.

    Other key findings of the research are: more than a quarter of start-ups plan to raise angel or VC funding, but only 8% receive such funding; almost a third say they pay market-related salaries, but pay is the top reason for employees leaving; and successful start-up founders are most likely to be white males from the Western Cape.

    Worryingly, only 10% of the tech start-ups surveyed are turning a profit, down from 17% in in 2015.

    Struggling

    Black tech start-ups, in particular, are struggling. “While 16% of start-ups founded by white entrepreneurs are turning a profit, a mere 4% of black-owned tech start-ups are doing the same,” the researchers found.

    “Most worrying is that 61% of black start-ups have yet to generate an income because they are still working on their concept or are still in the seed stage. This compares to 30% of white start-ups.”

    Only 9% of black-owned start-ups (and 4% of black African start-ups) generate a revenue of above R1m, compared to 29% of their white counterparts.

    Where are South Africa’s tech start-ups located? Image c/o Ventureburn

    In all, white start-ups accounted for 59% of all start-ups that reported having tapped angel funding, while 24% of white start-ups reported having raised R1m or more to fund their businesses, compared to just 8% of black start-ups (and 2.5% of black African founders).

    “It suggests better-resourced white start-up founders, who often have access to more capital, skills and experience, and better networks, are able to outperform black start-ups.”

    White start-up founders are significantly older than black founders. Over a quarter (26%) of white founders are 40-plus, compared to just 13% of black founders.

    It suggests better-resourced white start-up founders, who often have access to more capital, skills and experience, and better networks, are able to outperform black start-ups

    Almost three quarters of black founders are 35 or younger, compared to 62% of white founders located in this age band.

    “This raises various questions as to what is driving more middle-aged white founders to start up their own business and whether employment equity is behind this or not,” the researchers said.

    “In addition, it might also explain why so few black start-ups are making a profit compared to white start-ups. Older founders are usually more experienced, better networked and have more capital than younger entrepreneurs.”

    Some 27% of all South African tech start-up founders believe they will grow their businesses by securing venture capital or funding from angel investors — yet only about 8% report ever having been able to secure such funding. Just 9% of those looking for angel investing and just 20% seeking VC funding have firms that are growing or turning a profit.

    The majority of South African tech start-ups use their own cash to fund the business (40%), followed by loans and grants from friends and family (23%).

    When they are able to get funding, most start-ups receive very little. In all, 42% of start-ups reported getting less than R50 000. Only 16% received R1m or more (the value at which angel investors and VC funding usually starts). The remainder (42%) received between R50 000 and R1m. — (c) 2017 NewsCentral Media



    top Ventureburn
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleUber faces wide probe into hacking cover-up
    Next Article Bleak Black Friday start for Takealot

    Related Posts

    18GW in unplanned breakdowns cripple Eskom

    2 November 2021

    Nersa kicks the Karpowership can down the road

    13 September 2021

    If you think South African load shedding is bad, try Zimbabwe’s

    13 September 2021
    Company News

    Making IT happen: how Trade Link gears up to enable SA retail strategies

    20 June 2025

    Why parents choose CambriLearn for online education

    19 June 2025

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.