Tech Safari in South Africa 🇿🇦

Inside Africa's Oldest Tech Ecosystem

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Excited for this one on South Africa’s startup ecosystem. I’m in Cape Town at the moment and loving it (as you can tell below).

As much as I’m enjoying Cape Town, you can rest assured Nairobi is still the home base.

ICYMI - on Thursday we are hosting a Tech Safari Mixer in Cape Town with our friends at Stitch, FDC, Infobip and Raise.

It’s full for now, but we will increase capacity soon so join the waitlist to be next up. Link to RSVP here.

Alright, let’s go!

Last month, the Springboks took home the Rugby World Cup for the fourth time.

This makes them the most successful national rugby team ever.

But their home turf South Africa is more than just rugby.

African music fans rate it as the home of Amapiano.

History nerds hold it close for giving us Mandela.

And it’s a long-awaited travel destination for a Tech Safari.

But before I let you in on what I’ve been up to while here, let’s first glean over what this country has to offer.

 Welcome to South Africa

Cape Town’s Bo-Kaap neighborhood

The Rainbow Nation.

South Africa is home to more than 62 million people, one of Africa’s largest countries.

Its colorful mix of 11 major ethnic groups has earned it the tag “Rainbow Nation.”

They speak English as an official language, along with 11 native languages and sign language

But since gaining freedom in 1994, South Africa has tried hard to pull itself back together.

It’s economy is solid proof.

Africa only has seven countries that qualify as upper-middle-class, and South Africa is easily the largest.

The country flexes Africa's second-largest economy after Nigeria. Last year, it clocked in a GDP of about $405.8 billion.

What’s making South Africa’s economy hum?

South Africa is a mining country: with 80% of the world’s platinum reserves. It's also the 8th largest global gold producer and the 7th largest coal producer.

Last year, mining made up 7.56% of South Africa’s GDP, employing 475,561 people.

Mponeng: One of South Africa’s deepest gold mines

But they’re not just digging up minerals; they’re minting money too.

South Africa's financial sector is flexing as the strongest on the continent right now.

It's the proud home of the Johannesburg Stock Exchange (JSE) Africa's big daddy of stock exchanges, and 17th in the world.

Worth $1.356 trillion, this exchange plays host to some of Africa's corporate heavy-hitters, including MTN Group, Naspers, Vodacom, and Woolworths.

And when it comes to banking, South Africa skips over the ‘unbanked’ African reality.

84% of South Africans have a bank account. And of the five largest banks in Africa, four are South African: Standard Bank, FirstRand, ABSA, and Nedbank.

And these banks are really turning things up.

Like Standard Bank.

They’re not just Africa's biggest lender, but also Africa’s largest bank by assets and profits.

As of last year’s rankings, this bank was sitting on almost $170 billion in assets.

And when there’s a flow of capital like this, it becomes a strong force that lifts other sectors, like:

South Africa’s Startup Ecosystem

When you talk of Africa’s big four tech ecosystems, South Africa is right up there.

From January 2015 to May 2022, 357 South African startups collectively raised nearly $994 million in funding, second only to Nigeria in the same period

And South Africa stands out from the other four ecosystems for a few reasons.

Foreign VCs are not a lifeline here.

And we’re not throwing shade here, promise.

But South Africa’s local investor ecosystem is ahead of its peers.

South Africa has a tight-knit network of angel investors and VCs making deals, with high-net-worth folks and companies jumping on board.

And to show you how solid this network is, let’s use these guys - Knife Capital.

Founded in 2010, they're a big name in South African VC.

Just two months back, they unveiled their $50 million Knife III fund.

This new fund is all about backing South African startups raising Series B and beyond.

Standard Bank came on board as an investor (see how that flow of capital is coming back around?)

But even before sealing the fund last year, Knife Capital had already made their first move, leading a $10 million round for DataProphet - a South African AI startup.

It’s an ecosystem where money is raised locally and (often) invested locally.

Other local VCs in South Africa include 4Di and MyGrowthFund, plus venture studios like The Delta and Specno.

And beyond venture building, South Africa has a connection between the established and the up-and-coming.

And it starts with the story of..


Naspers started way back in 1915 - a traditional media company that sold newspapers.

Their name literally meant 'The National Press Limited.'

They quickly became South Africa’s largest publishing company - dominating newspapers, magazines, and books across the country.

Koos Bekker - CEO of Naspers

In 1997, when Koos Bekker became CEO, things started to change for Naspers.

Bekker introduced Pay-TV to South Africa, making Naspers the first company to launch Pay-TV outside of the United States.

Revolutionary at the time.

Naspers tried to replicate its success in other emerging markets - starting in Africa and then expanding to China.

But in 2001, after burning nearly $100M trying to enter China, Naspers was ready to leave Beijing.

That’s when Bekker came across an opportunity: A small, loss-making Chinese company called Tencent.

Learning from their failed China entry, they invested $32 million for 46.5% of Tencent in 2001

Then they took their hands off to ‘let the local entrepreneurs grow the business.’

A young Ma Huateng - CEO of Tencent

That one, rogue, bet changed Naspers’ trajectory entirely.

Today, their wealth comes from that one big bet. Tencent represents 76% of their investment portfolio - of over 90 BILLION dollars.

Today, they’re Africa’s most valuable company.

And Naspers has used their winnings to repeat the success of Tencent and invest in South African companies.

In 2018 Naspers bought - South Africa’s biggest e-commerce company.

And in 2019, Naspers kicked off Naspers Foundry - a $77 million fund for South African startups.

Naspers Foundry shut down earlier this year, deploying half of its fund into companies like Naked Insurance, Planet42,, and Sweep South.

South African startups are an investor magnet.

On top of a big market, the ecosystem has earned a label:

The 👑 of startup exits in Africa.

One out of every three startup exits in Africa happens in South Africa.

Since 2015, 35 South African tech companies have found a buyer.

This makes up one-third of all acquisitions across the continent in the last 7 years.

And last year alone, these exits, brought in $17 million in returns, serving up a 3X return for investors.

And fintech took the front seat at the M&A table in South Africa:

Fintech is the busiest bee in South Africa’s ecosystem. There are three times as many fintechs as any other vertical in South Africa.

And one fintech you should keep your eye on are these guys.


This company started as a ‘Venmo for Africa.’ Now, they’re a South African payments giant.

Four years ago, Stitch started by building an app to make peer-to-peer payments easier in South Africa.

But as they were building, they hit a speed bump.

For the app to work, it had to be integrated with all the banks customers would want to send money from.

Connecting apps to banks was expensive and took months.

And there were over 20 banks to connect to in South Africa alone.

That’s when Stitch realised there was a bigger opportunity: catching customers’ financial data and connecting that between banks and financial institutions.

Stitch got down to whipping up an API that helped make it easy for businesses in South Africa to talk to banks.

And in late 2019, Stitch started to come to life.

From collecting all of this financial data, in late 2021 the team saw there was an even bigger problem to solve for: Payments.

Businesses still struggle to make easy, efficient payments - and that’s where Stitch went next.

Stitch got to building. Today, they’re a full payment service provider that lets companies accept payments, make payouts and reconcile payments.

And on top of that, they do this thing called ‘payment orchestration.’

Most businesses use different payment providers and platforms - which makes tracking and managing money a major headache.

With Payment Orchestration, a business can manage everything payments through one dashboard.

Stitch has had a big year.

They closed a mega $46 million series A between 2022 and now. And they’re using that to double down on payments.

Two months ago, Stitch launched WigWag - which lets companies accept payments just by sending a link.

This is a game-changer for merchants in South Africa’s booming online SME market who don’t have access to developers and tech teams.

Stitch is one of South Africa’s startup gems and one to keep an eye on.

South Africa has some valuable startup lessons for the rest of Africa:

  • The relationship between the up-and-coming (startups) and established (institutions) to build the tech ecosystem

  • The value of a strong, local investor network.

What do you think of South Africa’s tech ecosystem? Let me know here.

And that's a wrap for this week!

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