Tech startups in South Africa enjoy one of the most vibrant ecosystems on the continent. The startup scene here boasts numerous regional and global exports. Despite the shortfall in VC funding in recent times, the tech industry here continues to thrive.
The past year has seen many funding breakthroughs, phenomenal growth records, hordes of new entrants breaking in, and many incumbents cementing their prominence in their space.
In the following paragraphs, we’ll spotlight the tech startups in South Africa leading the charge in their space. We’ll also take an eagle-eyed view of the latest startup trends and stats. For more context and actionable insights, we’ll explore the cities and sectors at the heart of the action.
Let’s get started.
South Africa’s startup scene is one of the continent’s leading frontiers of tech innovation. Despite a spate of challenges, from a looming recession to energy insecurity and issues at the country’s ports, South Africa’s innovative spirit continues to thrive. The country remains a top destination for foreign investment in the African startup ecosystem. Players across both public and private sectors are collaborating to create a highly favourable policy and operational startup environment.
Venture capitalists like Knife Capital are making big moves, and initiatives like the Silicon Cape Initiative and Digital Collective Africa are promoting growth. Founders Factory Africa is also behind a long roster of successful new entrants in the past year.
In 2022, South African tech startups secured record-smashing financial support. However, the funding lull of 2023 only helped prove the startup industry’s resilience. Despite dwindling financial support, the industry still witnessed a high influx of new entrants. Moreover, the country boasts the highest success rate of startup exits across the African market.
All of this further fuels the prospects of South Africa’s startup scene as a reliable investment vehicle.
Now, let's take a closer look at the numbers. After the lull of 2023, South African startups are experiencing a funding renaissance. Startups in sectors like fintech and healthtech are expanding at an unprecedented rate.
The following stats encapsulate the dynamic journey of South Africa's tech startups:
In the year 2023, South Africa experienced a swing in funding dynamics. As per the Big Deal’s annual report, African startups accumulated $2.9 billion in 2023, a more than 50% drop from the $4.6 billion raised in 2022. However, Southern Africa was the only region to record positive growth in funding, with South Africa dominating the pack as the destination for over 97% of the funding.
South Africa’s startup ecosystem boasts nearly 500 active startups. A significant percentage operate in fintech – 40%. Other key sectors are edtech, agritech, foodtech, and digital health startups. Together, these have a combined workforce of 11000+.
The recent surge in activities in the startup space has had a far-reaching effect, bringing tech closer to people's daily lives across the country.
Publicly available stats show that LaunchLab is currently leading the pack of regional startup investors based on the number of investments. Notable international players like Facebook, MTN, and PayPal are actively shaping the ecosystem by investing in companies like Hyperion Development, Travelstart, and Stitch. Founders Factory Africa and Knife Capital also lead the funding fray.
In 2023, South Africa witnessed 56 acquisitions. Although a significant decrease from the previous year’s 89, it still reflects the ongoing evolution and consolidation within the startup ecosystem.
The most significant acquisitions include CMC Networks and Prime Financial Markets, SEACOM, Local Knowledge, and 24 Bit Games. The IPO landscape also declined, with just one IPO in 2022 compared to three in 2021.
South African startups contribute significantly to job creation, with 68% of ventures generating employment. This significantly contributes to the country’s economy, especially amid the looming recession and global economic challenges.
Now, let’s look at the sectors currently witnessing the largest volume of activities. These are the sectors driving innovation and leading growth in South Africa’s startup scene:
South Africa’s Fintech startups are redefining the financial landscape, from mobile banking digital solutions to blockchain tech. Pioneering startups like Luno, Yoco, and Jumo have disrupted the money transfer marketplace and gained recognition globally. However, regulatory complexities, tech skills gaps, and the need for widespread digital literacy are some long-standing impediments. Efforts are underway to bridge the knowledge lapses and foster growth.
E-learning platforms were thrust into the limelight during the pandemic as movement restrictions forced people to consider alternatives to traditional learning. Even before then, edtech was already garnering a lot of attention. And after the lockdowns, the sector is still going strong.
Platforms like Paper Video have revolutionised exam preparation. GetSmarter and Siyavula are expanding free access to educational resources for everyone. However, accessibility and affordability for all learners continue to pose challenges, especially for learners in rural areas.
South Africa's healthtech startups are cleverly leveraging technology to enhance healthcare accessibility. Telemedicine, health monitoring apps, and diagnostics aided by artificial intelligence are at the heart of the digital healthcare platforms revolution.
But while healthtech has made strides in innovation and expansion in the affordable healthcare marketplace, the major impediments are socio-cultural, beyond technology. For example, people tend to trust traditional healthcare solutions – a real appointment with a doctor, visiting a pharmacy, etc., more than a medical technology company.
Rural South Africa has not missed out on the tech revolution, thanks to agritech solutions that are cheap and easily accessible to farmers across fields and plains of the country. Companies like Aerobotics, FarmRanger, FarmSol, and others are driving efficiency and sustainability in agriculture.
However, adapting technology to suit various farming contexts and putting them within the reach of farmers and African businesses are ongoing challenges.
Many startups stole the headlines in 2023. They broke boundaries, raised sizable funding, introduced cutting-edge technology, and facilitated skills development programs.
These 10 startups were poster kids for tech success in 2023:
Founders: Alex Thomson, Sumarie Greybe, Ernest North
Founding Date: 2016
Funding Raised: $11 million
Naked revolutionised the insurance sector with digital innovations. The wild success of their digital platform has been mostly thanks to a customer-centric approach that leverages technology to simplify and improve transparency in insurance processes. The founders' background in finance and technology has been pivotal in navigating challenges and building a customer-trusted brand.
Founders: Daniel Levy, Gil Sperling
Founding Date: 2017
Funding Raised: $1.74 million
Flow is transforming property discovery by leveraging the vast user bases of Facebook, Instagram, and LinkedIn. The platform’s technology creates dynamic ads and automated listings, revolutionising how estate agents and developers connect with prospective buyers. Their aim is to streamline the property market, incorporating speed and efficiency into the search process.
Beyond property searches, the platform integrates various services, including home insurance, contents insurance, mortgage origination, deposit loan solutions, furniture sourcing, appliance maintenance, and legal services.
Founders: Marcus Swanepoel, Timothy Stranex, Pieter Heyns
Founding Date: 2013
Funding Raised: $13.8 million
Luno is a cryptocurrency exchange platform bringing cryptocurrencies closer to the everyday lives of South Africans. The startup's emphasis on excellent customer service, security, and regulatory compliance has been critical to building trust and gaining widespread adoption. Their astronomical growth in recent years has contributed to the broader conversation around the impact of digital currencies on traditional finance and the cybersecurity industry.
Founders: Benji Meltzer, James Paterson Founding Date: 2014
Funding Raised: $11 million
Aerobotics monitors crop health by analysing data from aerial imagery. They assist farmers in optimising agricultural practices, detecting diseases, and improving yields through data-driven decision-making. Aerobotics offers a range of precision agriculture solutions, including drone and satellite-based monitoring, tree-counting algorithms, and pest and disease detection.
Aerobotics' success extends beyond South Africa. The company is gaining global recognition for its innovative approach to agri-tech. The company's solutions have the potential to address challenges faced by farmers worldwide, fostering a more resilient and productive agricultural sector.
Founders: Paul Maree, Christopher Mills
Founding Date: 2014
Funding Raised: $818.3K
Noticing a gap that often leaves students lagging in studies, Paper Video is ramping up access to educational resources. Their digital platform offers curriculum-aligned content to supplement traditional education methods. By promoting an interactive and immersive learning experience, Paper Video allows students at all levels to learn at their own pace, reinforcing concepts through video lessons that align with curriculum requirements.
Founders: Jessica Boonstra, Paul Galatis, Brett Barlow
Founding Date: 2017
Funding Raised: $870.3K
On the foodtech scene, Yebo Fresh leverages technology to give people access to fresh food supplies on demand. They connect customers directly with local suppliers, giving local businesses access to the market while providing users a convenient and reliable grocery delivery service.
Their focus on community impact and sustainable practices has resonated well with users.
Founder: Victor Chaitezvi
Founding Date: 2022
Funding Raised: $1.8 million
Tripplo is on a mission to revolutionise the efficiency and transparency of the African long-haul trucking industry. The founders’ motivation was the logistics challenges of the day, including slow delivery times, lack of transparency, and uncertainties. Tripplo optimises trucking operations across Africa through cutting-edge technology – mostly automation and analytics. Their online platform enables efficient fleet information management, detailed trip planning and tracking, real-time insights, and post-trip analytics.
Founding Date: 2014
Founders: Aisha Pandor, Alen Ribic
Funding Raised: $3 million
Even the domestic services sector is a fertile ground for great startup ideas, as SweepSouth has demonstrated. SweepSouth's success lies in its commitment to empowering domestic workers while providing users with easy access to domestic services. The platform connects homeowners with reliable and vetted cleaning professionals, streamlining the process for providers and users.
Founders: Matthew Elan Smith, Marnus van Heerden, Ndabenhle Junior Ngulube
Founding Date: 2017
Funding Raised: $20 million in funding
Pineapple Insurance introduced a peer-to-peer insurance model heavily built on transparency and community engagement. Those two elements are not the norm in the industry. Pineapple’s offerings include a user-friendly app, fair pricing, and a collaborative approach to risk management.
Founding Date: 2012
Founders: Dinesh Patel, Elio Mondello, and others
Funding Raised: $8 million
OrderIn has emerged as a leader in the food delivery service space. Not only has it transformed how South Africans experience food delivery, but it’s also brought a new wave of business to the local restaurant industry. The platform connects users with a diverse range of restaurants, optimising the food ordering experience.
It's only natural for tech innovation to converge in certain cities or regions. Most activities on the tech scene have occurred in certain hubs in the country, although the trend is rapidly spreading to other places.
Let’s take a peek at these tech hubs:
Johannesburg boasts a robust blend of financial infrastructure and tech. The city was already the capital of the traditional finance industry and now houses top financial institutions with investment platforms, tech giants, and startups.
The main attractions for startups here are a highly trained pool of experts to fill any tech skills gap and access to collaborative and innovative partners.
Cape Town is a hotbed for edtech and medical services startups. The city’s affinity for natural beauty also makes it one of the most accommodating spots for tourism tech, cleantech, and sustainability ideas in Southern Africa.
Pretoria, the administrative capital, is a hub for research and development. The city's academic and administrative infrastructure provides a conducive tech research and development environment. Key players here include tech research institutions, startups, and government-driven initiatives. Startups and governmental bodies collaborate regularly here.
Yes, South Africa offers a dynamic environment for startups. With a growing tech ecosystem, access to funding, and a diverse market, it's an attractive landscape for entrepreneurial initiatives.
Access to funding remains a significant challenge. While the ecosystem is evolving, startups often encounter hurdles in securing sufficient capital for growth and innovation. Trust and mainstream adoption are also imminent challenges.
Consider market research, legal compliance, and understanding the local business culture. Networking is crucial, and navigating regulatory frameworks ensures a smooth business launch.
Failure rates vary based on factors like industry and age. On average, 90% fail within a few years, and only 5% survive for more than a decade.
The narrative of potential and breakthroughs continues to dominate South Africa’s startup ecosystem. Areas primed for high-volume growth include fintech, agritech, healthtech, edtech, and green tech. E-commerce is also gearing up for continuous expansion.
Challenges abound, but they're also fueling the innovative spirit here. Entrepreneurial ingenuity is reshaping consumer behavior. From all indications, South Africa's tech startups will continue to serve as a beacon of innovation and growth on the regional and global stages.
Need more guidance to navigate South Africa’s startup ecosystem? Talk to seasoned experts at Founders Factory Africa.
