Despite a slight slip in the global start-up ecosystem rankings, SA maintained its standing as the only African country to rank among the top 50 start-up nations.
This is based on StartupBlink’s Global Startup Ecosystem Index 2022, which shows SA’s ranking declined by one spot this year to 49th globally.
In comparison, the country ranked 48th in 2021, which was an improvement from the previous ranking of 52 in 2020 and 51 in 2019, the report previously noted.
Released annually since 2017, the ecosystem index details information on the global start-up scene of 100 countries, as well as insights on their most innovative 1 000 cities.
StartupBlink uses multiple sources of data to build its index, including governments, municipalities, economic development organisations, start-up-related entities, as well as global data partners, such as Crunchbase, SEMRush and Meetup.
Even with the decline to 49th this year, SA keeps its position as the first and only country in Africa in the global top 50 since the first release of the index in 2017, states the report.
“The South African start-up ecosystem is one of the most promising on the continent,” it indicates. “With economically successful cities like Cape Town and Johannesburg, South Africa has a vibrant, private-sector-led start-up scene.
“With Naspers investing heavily in South African tech entrepreneurs, and VCs like Knife Capital committing to funding start-ups, South Africa has seen much growth in its start-up ecosystems.
“The Silicon Cape Initiative, Endeavor South Africa and Digital Collective Africa have been some of the main enablers and promoters driving this growth.”
Despite the strides the country’s start-up ecosystem is making, the StartupBlink report cautions that SA still faces a number of challenges, including a lack of angel investors and the brain drain.
“Going forward, South Africa’s start-up founders and entrepreneurs need to focus on creating scalable business models that target the international market,” it notes.
Cities stumble
According to the report, the ranking results for cities in Africa and the Middle East were less positive, as the number of cities representing the region decreased to 57, compared to 74 cities last year.
In the top cities ranking results, only Lagos managed to get into the global top 100, making it the only African city to ever reach this rank. The Nigerian capital city scored the 81th spot.
In the case of SA, the two major start-up cities – Cape Town and Johannesburg – have shown negative momentum this year, reveals the report.
Cape Town, which usually emerges as the tech hub within the Sub-Saharan Africa region, decreased by two spots to 147th globally. Last year, the Western Cape capital city’s ranking was 145 globally.
Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape, previously stated the Cape Town-Stellenbosch corridor contains 450 tech firms and employs more than 40 000 people, making the ecosystem bigger than Nairobi and Lagos combined.
Cape Town is also home to tech heavyweights such as Naspers, Takealot, Aerobotics, Clickatell, GetSmarter, Yoco and Sweepsouth, to name a few.
Even though its city ranking declined, Cape Town moved up to the second highest ranked city in Africa at the expense of Nairobi.
The report says: “Cape Town has attracted direct foreign investment as well as talented workers from around the country. It is easily Africa’s biggest digital nomad hub, and there has been massive growth in available funding for early-stage investment thanks to forward-thinking public initiatives.”
South Africa’s economic hub Johannesburg declined by six spots to 158th globally. In 2021, the city jumped up eight spots to 152nd globally.
Johannesburg ranks second nationally and is climbing to third position in Africa, also profiting from Nairobi's decline.
“Both Cape Town and Johannesburg are South Africa’s first-tier cities, with Cape Town over-performing in edtech at 58th worldwide, and Johannesburg ranking in the global top 100 for software and data.”
According to the report, South Africa’s second-tier cities declined as well.
“Pretoria has seen a significant fall of 170 spots to 660th, with Durban taking its place as the country's third ecosystem after falling nine places to 577th.
“After Nigeria's representation in the global top 1 000 dropped from seven cities to three, South Africa displaced Nigeria as the country in Africa with the highest number of ranked cities at four.”
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