South Africa is the second-largest economy in Africa. Its location in Africa and strong connections with Europe and the US makes it an ideal access point for services targetting low-income populations.
IT infrastructure is underdeveloped and it makes difficult to scale up for tech or digital-focused startups. However, it also provides an untapped market for infrastructure investments.
Gauteng Province, which includes Johannesburg and Pretoria, and Cape Town are the two main hubs for the country’s startup ecosystem and venture capital industry.
Startups in Johannesburg mostly rely on government-backed or government-directed funds while in Cape Town they rely on more traditional private venture capital funds.
South African government launched 12J program which provides tax relief for investments in qualified venture capital companies to prop up funding.
Edge Capital, 4Di Capital, Omidyar Network, Capital Networks are the major venture capital firms and Jozi Angels is the most prominent angel investor network in the country
Startups that had significant exits are cybersecurity firm Thawte, education company GetSmarter, fintech startup Fundamo and cloud computing provider Nimbula.
Major private equity investors are Medu Capital, Ethos Private Equity, African Rainbow Capital Investments among others.
Private Equity investments reached almost $2.5 billion in 2018. They had around $12 billion in assets under management by the end of 2018.