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Everything you wanted to know about South Africa’s startup ecosystem

E27.CO: With all the attention on Asia from investors, sometimes people forget there are other markets like South Africa doing interesting things

Startup life isn’t as glamourous as it’s sometimes made out to be, according to a new survey by Ventureburn. Employees and founders of startups are often paid below-market salaries, get close to zero benefits and are subject to high-pressure environments. Moreover, just 17 per cent of startups are profitable, with only three per cent of those making it to the sought-after venture capital investment stages.

But this begs the question: why is creating and working for startups an increasingly popular option? Although entrepreneurs will make it big if their startup succeeds, making money doesn’t appear to be the primary driver for many of them. The survey reveals that entrepreneurs are generally driven by the need to “innovate,” “be a pioneer,” or for reasons of “personal development.” Many also start their own fledgling companies because they have spotted a “gap in the market.”

These are the findings of a new Ventureburn survey, which aims to reveal the “true picture of South Africa’s startup landscape.” The survey also reveals a marked change in the SA startup landscape, with a surge in black entrepreneurs, more than that recorded by any other startup survey to date.

The Ventureburn Startup Survey partnered with First National Bank (FNB), investment advisory firm Clifftop Colony and analytics company Qurio to poll just under 200 tech startups. Each of the startups were asked 42 questions, ranging from funding, the profile of their founders, to their revenues and the everyday challenges they face.

The survey defines a tech startup as a company with annual revenues below 20 million South African Rand ($1.6 USD) and staff numbers of anywhere between one and 100. The survey sample size assumes a population of 5,000 tech startups in South Africa, with a 95 per cent confidence level and a seven per cent margin of error.

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