Unleashing the Potential of Technology-Enabled Businesses in South Africa
South Africa’s landscape of technology-enabled businesses is brimming with exciting growth prospects for savvy investors. In 2021 alone, technology companies and startups in the country raised an impressive $168.6 million in funding. Despite facing challenges last year, which led to a decline in the number of startups receiving funding, the continent as a whole witnessed a remarkable surge.
According to Disrupt Africa’s 2022 African Tech Startups Funding Report, over 600 African startups collectively raised $3.3 billion in 2022, representing a substantial year-on-year increase of 55.1%. These startups captivate investors due to their innovative use of cutting-edge technologies such as artificial intelligence, blockchain, and the Internet of Things, demonstrating the potential to revolutionize entire industries.
One advantage that many South African companies hold is their ability to address socioeconomic challenges head-on. Spearheading technological development, these businesses drive progress in crucial sectors like healthcare, finance, education, and transportation. Investing in such ventures not only promises lucrative returns but also fosters overall technological advancement and economic growth.
While the potential rewards of investing in startups are enticing, it’s important to acknowledge the associated risks. Many startups fail to survive the initial stages of development, and even successful ones face fierce competition and rapidly evolving market conditions. Investors must be prepared to embrace these risks and weather the challenges that the market presents.
On a global scale, funding for startups has decreased following the high liquidity period of 2022 and global inflationary pressures. These factors have also affected potential exits. It is worth considering the risks associated with unrealistic growth projections and resource-intensive early-stage business management.
Despite these risks, emerging markets like South Africa offer significant traction, especially in the fields of health tech and fintech, where access and socioeconomic dynamics create vast opportunities. Forward-thinking investors can capitalize on these trends and reap significant returns in the future.
At Mineworkers Investment Company (MIC), we wholeheartedly embrace technology-enabled businesses and actively seek partnerships with startups that leverage technology for positive change. Our investments in edutech, health tech, and fintech reflect our commitment to leveraging technology for social and economic transformation.
Ultimately, technology-enabled businesses offer a world of possibilities driven by market trends, technological advancements, and evolving consumer preferences. Those willing to embrace the inherent risks can embark on a rewarding journey of growth and impact.
By Nchaupe Khaole, Chief Investment Officer, Mineworkers Investment Company
