Startup Guide Johannesburg: why some entrepreneurs call this South African city ‘JoHustleBurg’

Johannesburg is the Africa headquarters for many global businesses. A supportive ecosystem for entrepreneurs has also emerged in the cosmopolitan South African city, according to this new book.

18th Sep 2019
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The Startup Guide series of books, published by Sissel Hansen, covers cities such as London, Lisbon, Stockholm, New York, Los Angeles, Bangkok and Singapore (see our reviews of the guidebooks on Berlin, Munich, and Zurich).


Startup Guide Johannesburg is spread across 200 pages and makes for an informative and entertaining read, with profiles and photographs of startup founders, co-working spaces, and key ecosystem players.


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“Johannesburg – often known as Joburg or Jozi – emerged as a result of the gold rush in 1886 and has long been known as an international centre for finance and trade,” begins Sissel Hansen. It has been referred to as the “City of Gold” because it sits on the world’s largest known gold deposit.


It has both the highest concentration of high-net-worth individuals (HNIs) in the African continent and a leading economic engine, according to Lesley Donna Williams, CEO of the digital innovation district called Tshimologong Precinct. It was founded by Wits University in 2016, and is host to IBM’s Research Lab and Siemens as well as homegrown tech ventures such as Raphta and Technovera.

Overview

The book begins with an overview of Johannesburg facts and necessities such as population (cosmopolitan), bureaucracy (awful), nightlife (happening), transportation (costly, but there are ride-hailing apps), dining out (affordable), jazz clubs (world class), rents (from affordable to absurd), urban safety (high crime), and social customs (such as braai or barbecues).


Johannesburg’s population is about five million, with a total of 10 million in the greater metropolitan area. There are more than 220 programmes offering support to startups. Around 30 percent of the estimated 450 startups in the city are in the fintech space.


Milestones in fundraising and acquisitions have been recently reported by startups such as IoT.nxt (IoT specialist), Stokfella (fintech to modernise informal savings cooperatives), i-Pay (electronic funds transfer gateway), and Wumdrop (parcel delivery app acquired by local retailer Massmart).


Johannesburg is host to the annual Fak'ugesi Festival, a 10-day festival bringing together innovators at the crossroads of arts, culture, and technology. There are also regular events such as Impact Hub’s monthly F-Up Night, celebrating the lessons of failure, and open evenings on Tuesdays at makerspace House4Hack.


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Startup profiles

One section of the book profiles 10 startups based in Johannesburg. They include Fixxr (online platform connecting car owners to local mechanics for house/office visits), Syafunda (edtech content and learning platform used by around 50 schools in KwaZulu-Natal and Gauteng) and Tuta-Me (“Uber for tutoring,” used by students as well as corporates like Investec, Deloitte and Shell).


BrownSense Group provides Black-owned businesses with access to markets. Its initiatives include The People’s Fund crowdfunding platform, The People’s Stokvel (an investment society), The People’s Fund, and the BrownSense Foundation, which has played an instrumental role in disaster-relief initiatives.


EmptyTrips is an open marketplace that uses smart algorithms to match supply and demand for cargo transport. It enables carriers and shippers to book, auction, manage, store. and insure freight, including on rail services in South Africa, Zambia and Zimbabwe. Funded by Unicorn Capital Partners, it has registered more than 250 cargo shippers.


FinChatBot develops AI-powered chatbots to help financial service providers acquire and retain customers. It was launched by French entrepreneurs Antoine Paillusseau and Romain Diaz, with clients such as Fedgroup and Bidvest Insurance.


InvestSure is an insurance product that insures listed shares bought on participating trading platforms against losses arising out of the deceptive or misleading acts of management of the company.


Homefarm has developed a smart micro-greenhouse as an indoor-gardening and food-growing platform. It has been funded via an IndieGoGo campaign.


Kenai and Raphta are deep-tech startups with offerings like facial recognition technologies. Kenai’s solutions are used by clients such as RCS and Nedbank CIB, and improve security within corporate buildings. Raphta has developed a deep-learning Shuri platform, and its clients include mobile operator MTN.


Some of the above startups have been supported by corporate initiatives like IBM Bootcamp, Pearson Affordable Learning Programme, and Microsoft 4Afrika AI. Others have been supported by Hack.Jozi accelerator, and award money from a range of competitions.

Startup ecosystem

Two sections of the book profile the support system for startups, ranging from coworking spaces to accelerator/incubator programmes. For example, the Seed Academy and the WDB Growth Fund have a range of programmes including a three-month, fully funded business accelerator for women.


AlphaCode is a club for fintech startups, launched by financial services investment company Rand Merchant Investment Holdings. It offers grant-funding and mentorship, and has Merrill Lynch South Africa and Royal Bafokeng Holdings as partners for its twelve-month programme.


Creative Enterprises Hub offers a development programme for creative entrepreneurs, such as graphic novelists, videographers, furniture designers, jewellery designers, mural artists, actors, musicians, and graphic designers. It is structured around short events called #Huddles for groups of 20 people.
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Endeavor South Africa’s chapter was founded in 2004. The global network was founded in 1997, and is a support network for entrepreneurs in the scaleup phase. It offers mentorship and connects to international business schools such as Harvard, Stanford, and MIT. There is also the Endeavor Catalyst Fund, a co-investing “harvest fund”. Graduated entrepreneurs give back a small financial contribution and mentorship support.


The science and tech park Innovation Hub has three in-house incubator programmes and one external programme (eKasiLab). They are structured as Factory Programme (early-stage) and Core Programme (revenue stage).


An Africa-first, the JamLab (The Journalism and Media Lab) accelerator is a six-month programme for digital entrepreneurs. It has accelerated twelve startups since its inception in 2017, with standout companies being Volume News and Media Factory. There is also an accredited, three-month media entrepreneurship course offered by Wits University.


Raizcorp calls itself a “prosperator” and offers development programmes that guide entrepreneurs to profitability. It is currently supporting 500 businesses at its 12 incubators in South Africa, Angola, Tanzania, and Zimbabwe. Since its launch, Raizcorp has incubated over 13,000 businesses. Its Partner Elite division offers advanced support in exchange for equity.


The Riversands Incubation Hub acts as a bridge between small businesses and corporates in South Africa. It connects over 160 workshops, factories and offices, and offers services for marketing and PR as well as introductions to supply-chain opportunities with corporates.


Sw7 is an ‘always open’ acceleration platform for startups and scaleups. It has accelerated over 200 tech businesses through programmes in Johannesburg and Cape Town. It helps them expand overseas as well, thanks to partnerships with corporates such as Microsoft and Standard Bank.


J&B Hive Accelerator was launched with the backing of J&B Scotch Whisky in 2015. Its vision is to develop and inspire creative entrepreneurs.


There are a range of coworking spaces and makerspaces accessible in Johannesburg, such as Workshop17 West Street. JoziHub was launched in 2013, and runs more than 350 workshops and events for its community each year.


22 ON SLOANE is the largest startup campus in Africa, launched in 2017 by the Global Entrepreneurship Network (GEN) Africa. GEN operates in 42 nations on the continent, and gives startups access to tech labs and 3D-printers (there are also rooms for prayers and siestas).


Impact Hub Joburg launched in 2010 as part of a global network of over a hundred hubs in 50 countries. “We firmly believe that changing businesses and society to create real positive impact requires inclusive and collective action,” says CEO Thandi Dyani.


Tshimologong Precinct (which means “new beginnings” in Setswana) is a central coworking space and tech hub founded in 2016 by Barry Dwolatzky, Director of the Johannesburg Centre of Software Engineering at Wits University. Its makerspace has VR and AR capabilities, 3D printers, and laser cutters.


There also profiles of the “Face of the Space” managers of these facilities, such as Natalie Makgamathe (formerly a stage performer and puppeteer), Charl Ochler (previously a radio presenter), and Gamuchirai Mutezo (referred to as “the oil that makes the gears turn”).


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Capacity building

A number of educational initiatives provide capacity-building support for entrepreneurs. These include the University of Pretoria’s Gordon Institute of Business Science (GIBS), whose Entrepreneur Development Academy (EDA) offers a year-long Social Entrepreneurship Programme.


The University of Johannesburg Centre for Entrepreneurship enrols 400 students a year, and is funded by the Raymond Ackerman Academy, Thebe Foundation and Shell Downstream South Africa. It has a Small Business Enrichment Programme for more established SMEs.


WeThinkCode_ trains 300 coders per year, and partners with corporates to offer students free tuition in digital skills. It has teamed up with Ecole 42, based in Paris and Silicon Valley.


The University of the Witwatersrand (Wits), a leading research institute, offers a Master’s of Management in entrepreneurship and new venture creation.

Investors

One section of the book profiles angel networks and institutional investors. For example, Edge Growth funds growing SMEs. Kalon Venture Partners has invested in startups like Flow, FinChatBot, i-Pay, SMEasy, and Snapnsave. It aims to be “the entrepreneurs behind the entrepreneurs.”


Jozi Angels is a network of 24 investors who have made a combined 36 investments. It is affiliated with the South African Business Angel Network (SABAN) and the African Business Angel Network (ABAN).


Funded startups include fitness solution FitKey, edtech offering Hippocampus, and experience-booking platform Tour 2.0. Jozi Angels aims to expand to 50 angels this year to drive the startup wave in Johannesburg, which it regards as one of the top tech hubs in Africa.


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Expert insights

One section of the book provides expert tips from accelerators and startup consultancies in the region. The advice covers customer engagement, marketing, innovation, and sustainability.


“Ensure that your innovation fulfils an important need,” advises Nothile Mpisi, General Manager of eKasiLabs, an initiative of the Innovation Hub science park. Its aim is to translate indigenous knowledge systems into market-ready innovation. “You should also be willing (and even excited) to work with others in the entrepreneurial landscape,” Nothile adds.


“Think about what differentiates your product or service from what’s already out there in this space,” advises Shawn Theunissen, Founder of Property Point, funded by real estate investment trust Growthpoint Properties.


Since Property Point’s launch in 2008, over 170 businesses have graduated from its two-year accelerator programme. Entrepreneurs receive training in frameworks like ‘The Three Rs’ – risk, reputation and relationship, and how they impact the trajectory of a business.


“What’s unique to Johannesburg is that many accelerators and incubators focus heavily on education and skills development,” according to Cathy Smith, Managing Director, SAP Africa, and Kwena Mabotja, Sub-Saharan Africa Director, SAP Next-Gen. The MNC has partnered with Wits University’s Tshimologong Precinct.


“Link your startup to one of the UN Sustainable Development Goals. Take your idea and find a way to turn it into a business that can expand across boundaries because that’s one way to get investors to pay attention,” they add. SAP recently teamed up with the Women in Data Science (WiDS) initiative in the city.

Founder advice

The last section of the book interviews five startup founders (more could have been featured), tracing their entrepreneurial journeys, advice received, lessons learnt, and tips for the next wave of aspiring entrepreneurs.


Beth Malatji is the founder of ReBeth Wines, author of The Bootstrapper’s Lifesaving Hacks, and chapter director of Startup Grind Johannesburg. She earlier launched Wealth Ladder magazine, an online publication focused on entrepreneurial success stories. ReBeth sources artisan, organic and biodynamic products from traditional family farms for sale to a wider market.


“Mentors have the potential to be very important for a small business. But entrepreneurs must be able to articulate their business in such a way that they’re not wasting their mentors’ time,” advises Beth, who likes to surround herself with industry thought leaders and be active in entrepreneur networks.


She loves the vibrancy, buzz and diversity of the local entrepreneurial ecosystem in the city. “It is like any startup cannot afford to sleep. It’s called JoHustleBurg,” she jokes.


“Building a business brings lots of unexpected twists – people quit, products fail, you burn out. It’s not about getting it right the first time but getting it right eventually,” Beth emphasises. She has also learnt the importance of business model articulation and time management.


“Your time is the greatest resource and one thing you can’t get back. To execute at the top level, you have to understand the full gravity of time,” Beth cautions.


Mpumelelo Mfula (popularly known as “Frypan”) is the founder of the online store RHTC (“Returning Home To Create”), which aims to connect African streetwear brands with customers across the world. His other ventures are The Playground (affordable furniture) and Let’s Play Outside (agency for the youth market space).


His creative initiatives include designing a mobile stall for a pop-up tour, and The Let’s Play Outside festival, organised by more than one hundred youth street artists in Johannesburg.


“Starting is the most important step. Also, focus on the bottom line,” Frypan advises. He also views entrepreneurship as a political tool to bring justice in the post-apartheid years.


His entrepreneurial leanings started early. “I was that kid who sold sweets in primary school,” he jokes. Lessons learned along the way include staying focussed on core business needs, and not on the founder’s popularity.


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Musa Kalenga, born in Zambia, is the co-founder of Bridge Labs. It builds tech products for SMBs and startups, and strives to support “digital invisibles.” He is also ‘Chief Future Officer’ at the House of Brave Group, where he advises on future-fit business strategy.


Though Musa worked in the corporate sector for a while, he saw better opportunities as a value creator by being an entrepreneur. His startup’s products include an online education platform called Clock, and a second-hand car dealership CRM tool called Traction.


“We have many African engineers in one place, solving for African problems,” Musa explains. In two years, he launched four products in adtech, edtech, online retail and automotive.


He urges entrepreneurs to have focus and the right priorities. “In terms of mistakes, at times we bite off more than we can chew, so we overextend ourselves,” he recalls. Though incubators offer founder support, Musa cautions against being over-reliant on them as a “crèche for startups.”


“If you can put them in front of customers who are willing to pay for their services, that’s the kind of support entrepreneurs need in order to thrive,” he advises heads of incubators and accelerators.


“At no point will you have all the answers or all the boxes ticked, but you have to just start,” Musa advises aspiring founders.

 

Palesa Sibeko and Vincent Hofmann are Co-founders and Directors of SiGNL, which offers digital design solutions bridging IoT and creative experiences. They earlier founded digital consultancy Inquisition (now a work-design company called BetterWork). Their clients include museum founders as well.


Clients just hear all these “sexy things from places like Singularity University and so forth” that may not be practical or relevant to their context, cautions Palesa. Staying focussed and coherent makes it easier to connect to clients.


“One of the biggest mistakes we made early on was saying our time was cheap and our curiosity and passion for the work were fulfilling enough to undercharge and try to overdeliver. It took us almost a year to rebound from all our yes’es,” Vincent recalls.


The startup has drawn heavily from the open-source and maker movements, and follows their ethics and policies. “Focussing on understanding how people are going to use your technology is way more important than what you end up building,” he advises.


“People are turning to innovation and to young designers to tackle some of the social challenges that our state doesn’t want to address,” he observes, calling for a larger focus on the use of design in resource-scarce African contexts.


“Also, entrepreneurship is really hard. I hate it when entrepreneurship is presented as an attractive escape from the nine-to-five slog without also highlighting the trade-offs you have to make,” cautions Palesa.


“Entrepreneurs shouldn’t just sit quietly in their own basement trying to make things. Go out and see who else in the ecosystem can complement the work you’re doing,” she adds. She sees “hope and resilience” in Johannesburg’s ecosystem.


‘Foodpreneur’ Sinenhlanhla Ndlela is the CEO of Yococo, which produces and sells dairy-free ice cream. Though she studied media, she switched industries and says she is now “serving love.”


She bootstrapped her startup. “Funding can help but also it takes away from learning your business inside and out, which is really important for any entrepreneur to do. If you get funding, you’re going to miss so many steps,” Sinenhlanhla cautions.


She also faced a number of obstacles due to race and gender but stayed the course. “All the women in my family are very strong and really driven. That’s something I’ve always seen growing up,” she recalls.


“Entrepreneurs are meant to solve problems, and if you’re not solving a problem and you’re not making money, then you don’t really have a business,” Sinenhlanhla advises.


The book ends with a directory of useful resources for startups, including the Ventureburn news and intelligence website. The Southern Africa Startup Awards is a circuit of the Global Startup Awards (GSA) in 64 countries.


See also my write-ups on Extensia’s Innovation Africa Digital Summit and the Africa4Tech Summit; interview with Design Indaba founder Ravi Naidoo; and book review of Success in Africa: CEO insights from a continent on the rise.


In sum, the book shows how Africa’s most cosmopolitan city is home to a growing and thriving startup ecosystem. It also provides a useful framework for other cities to reflect on and improve their own startup ecosystems.



(Edited by Saheli Sen Gupta)




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