Western Cape on track to become the ‘Silicon Valley’ of Africa

Globally known for its serene natural beauty and cultural diversity, the Western Cape is on track to becoming more than just a tourist destination. The region, renowned for its robust entrepreneurial activity, is fast establishing itself as Africa’s ‘Silicon Valley’, a region in California which is home to some of the world’s largest technology companies, as well as many entrepreneurial ventures.

This is according to Stuart Forrest, owner of Triggerfish Animation and 2012 winner of the Sanlam / Business Partners Entrepreneur of the Year® competition, who says that the easy accessibility of technology and lower costs for business startups encourages more individuals within the space to undertake entrepreneurial ventures.

He says that the consistent growth of small tech-focused businesses in Cape Town and the accessibility of educational institutions continue to create fertile ground for entrepreneurial activity within the region.

Kobus Engelbrecht, spokesperson and co-sponsor of the Sanlam / Business Partners Entrepreneur of the Year® competition, is of the same opinion. “Due to the city’s entrepreneurial culture, Cape Town has seen an influx of IT and tech startups. By attracting the best entrepreneurs, technical brains and foreign direct investment, Cape Town is quickly becoming a local ‘Silicon Valley’.”

Forrest says that because of the industry growth the provincial government and the City of Cape Town have invested over R150m in Cape Town’s broadband infrastructure project. While delivering his provincial budget speech MEC Alan Winde said the project would also receive approximately R500m over the 2013 medium-term expenditure framework.

Engelbrecht says that other influential players such as Vinny Lingham and Justin Stanford – both local tech entrepreneurs – have recognised the Cape’s great potential for fostering entrepreneurship in the IT and technology space. In 2009, the two entrepreneurs launched Silicon Cape, a local high-tech innovation hub based on the international concept of Silicon Valley and aimed at attracting top technical talent and entrepreneurs to the Western Cape, ultimately creating an environment for local IT and tech companies to compete with similar hubs around the world.

“Initiatives such as this will generate seeds for a successful entrepreneurial ecosystem in Cape Town and positively contribute towards economic growth and development within South Africa.” says Forrest.

He adds that from a skills perspective, the formation of a local version of Silicon Valley will also succeed in keeping some of our brightest tech entrepreneurs in the country. “You only have to look at people such as Elon Musk who left the country for Silicon Valley and duly co-founded a globally influential service such as PayPal.”

Forrest confirms that growth companies in the IT and telecoms industries have proven to generate significant positive cash flow and profitable reinvestment opportunities for its retained earnings. “High growth companies are also responsible for innovation, which is necessary for the development of any country, but in order for the industry to truly be successful we require investment.

“One of the major obstacles hindering the growth of the IT and telecoms industry within the Western Cape is the absence of risk capital. Investors in South Africa are very risk averse. To date, we have been a resource driven country with a history of investing in fixed assets and manufacturing businesses.

“The success and growth of Silicon Valley in the United States has proven that investors need to sometimes take a calculated risk and step out of their comfort zone in order to create a globally-influential technology hub,” concludes Forrest.