What challenges do Cape Town’s tech entrepreneurs face?

Colin Timmis, general country manager, Xero SA


Written by Colin Timmis, general country manager, Xero SA

Cape Town has a thriving technology scene. A recent report from the Cape Innovation and Technology Initiative found that the greater area (including Stellenbosch) employs over twice as many people in technology roles as in Lagos or Nairobi.

Here in Cape Town, there are 450-550 tech firms with a collective staff of 40 000 to 50 000 people; while some 3 per cent of these companies have already reached scale. Drilling down further, the report found that cinema and theatre technology is becoming particularly prevalent – with special-purpose LED screens, Virtual Reality (VR), and other innovations leading the way to a bright future.

It’s clear that Cape Town is one of Africa’s leading technology hubs. But, all is not plane sailing. Based on interviews with over 150 local entrepreneurs and research into more than 450 local founders and their companies in the area, the businesses operating in this area are still faced with a number of obstacles.

If you’re an entrepreneur in Cape Town, here are just a few with advice on how to overcome them:

Securing finance 

If a would-be entrepreneur doesn’t have abundant reserves of capital at their disposal, it’s not always easy to secure funds. Overall, 85 per cent of those startups surveyed claimed to be self-funded. For many entrepreneurs with savings built up from past careers, or families willing to help, this is a great path. But they’re not the only ones with good ideas, and those who will need outside funding may find themselves discouraged.

They shouldn’t be. Finding the right level of funding for your business can be difficult, but it is achievable.

Start by having the right systems and processes in place before you approach investors. A working business plan and a great team are obviously necessary, but a solid grasp on the financials is all-important: hiring an accountant or bookkeeper to manage your tax requirements, speaking to business advisers, consulting with the Chamber of Commerce and seeking other local enterprise resources are all good steps to take.

It’s also worth sourcing some intuitive, user-friendly accounting software: it’ll go some way towards simplifying the process of crunching the necessary numbers and dotting the necessary i’s. There are several out there, so do some research into the various solutions available.

When you have these systems and controls in place, it’s time to show potential VCs and angel investors what you’ve got. They’ll want to know who your leaders are and what their experience is, how you intend to turn a profit, and how many customers you have. If you have any impressive results to demonstrate, don’t keep them under wraps: a great idea will more easily attract investment if it seems like a sure thing.

Finding and keeping the right talent

Finding the right talent is a persistent challenge for entrepreneurs – whether you’re hiring one, two, or fifty employees. Finding the right mix of experience, skill sets, attitudes, and personalities can be difficult, and strategies will necessarily vary according to your requirements.

And sometimes your requirements are less obvious than you might think. A startup might – by simple virtue of being ‘one of the new kids on the block’ – assume that it must necessarily skew younger when it comes to hiring. But useful as the youthful exuberance of a fresh graduate can be, an experienced hand with a background in your industry can be a key player in the early stages of a business’ existence. After all, you can’t very well disrupt a space without knowing the space itself.

Beyond hiring, it’s necessary to think about company culture and team cohesion. Get them involved as quickly as possible, and make sure to acknowledge their successes. When you’ve assembled a full team, they also need to have a full understanding of your current plans, where you’re headed in future, and what kind of environment they should expect to work in. Plant these seeds early, and they’ll bear fruit in the long-term.

Building a customer base

Marketing is often difficult to successfully deploy. Often a startup simply won’t have the funds to launch, sustain, and optimise big campaigns. It’s most likely that in smaller organisations, the person in charge of these campaigns is also answering phones and coming up with PR campaigns.

But that doesn’t mean you can’t launch an effective campaign – on the contrary. You just need a modest budget and an understanding of what you can and can’t do on it. An SEO campaign, for example, can often be as simple as searching for the right long-tail keyword and creating content around it. Writing useful ‘How to’ blogs and promoting them on social media can be similarly effective.

But ultimately, your marketing strategy will come down to understanding your target audience – and knowing how they’re most likely to interact with you. That might be search engines; it might be your website; it might involve social media, direct marketing, email marketing, or something else entirely. Most likely, it’ll be some combination of the foregoing.

Either way, it needs sustained attention and effort – as well as the correct allocation of resources. In this respect, it’s much like any other business challenge. A cinema or theatre technology business may find it intimidating – or even insurmountable – in and of itself. But if you marshal the forces at your disposal and point them at your problem, you’ll soon find it’s more easily handled than you thought. You just have to find the courage to face it.



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