UK-SA Tech Hub to Provide Second Round of Funding for South African Startups Group
The UK-SA Tech Hub, an initiative of the British High Commission in South Africa, has announced that it will be renewing funding for the Startup Act Movement (SUA) in South Africa. The SUA is a grouping of South African startup incubators, accelerators, founders, and investors, with the objective of removing governmental red tape and policies that hinder the growth of emerging businesses.
The UK-SA Tech Hub’s role is to support South Africa’s high-growth startups, whether in the tech industry or by enabling small and medium enterprises (SMEs) in rural and township communities to become tech-enabled businesses. This support aims to maximize the value and impact of these startups on the South African economy and job creation.
The SUA, founded in 2020, is led by a steering committee composed of prominent members of the South African entrepreneurship development sector. It has garnered support from the World Bank, Financial Sector Deepening Africa (FSD Africa), and the UK-SA Tech Hub.
The UK-SA Tech Hub recognizes the need to drive policy reform and facilitate the growth and expansion of emerging businesses within the local tech landscape. South Africa’s policy framework currently lags behind that of other African countries such as Kenya, Nigeria, and Tunisia.
Several challenges hinder the growth of local startups in South Africa. One challenge is the restrictive and expensive intellectual property (IP) legislation that limits the overseas transfer of IP. These transfers are crucial for local startups to access investment from the global venture capital market.
Exchange control restrictions also pose obstacles when a startup establishes its global head office. These restrictions are cumbersome and costly, hindering South African startups from attracting global venture capital investors.
Moreover, the capital gains tax in South Africa is triggered before a startup reaches its full potential in a future liquidity event. This taxation makes developing a startup in South Africa more expensive compared to other countries.
Additionally, South Africa needs to introduce a Startup and Remote Worker visa to attract founders of high-growth startups and allow local entrepreneurs to employ highly experienced foreigners. This visa reform is essential for knowledge-sharing and driving the growth of South African enterprises.
While the need for visa reform has been advocated since 2014, President Cyril Ramaphosa recently announced plans to introduce new visa categories for startups and remote workers in April of this year.
The UK-SA Tech Hub is dedicated to supporting the development of South Africa’s tech entrepreneurship ecosystem and addressing gaps within the market that require support. By renewing funding for the SUA, the UK-SA Tech Hub aims to play a vital role in policy reform and the growth of high-growth startups in South Africa.
We believe the country has the potential to cultivate the emergence of the next unicorn on the continent, and through this second round of funding, look forward to being part of these important efforts, says SUA Chairperson Matsi Modise.
With the support of the UK-SA Tech Hub, the SUA is well-positioned to drive policy reform, remove barriers to growth, and foster a thriving SME ecosystem in South Africa.
