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- Many South African start-ups are heading overseas.
- Funding and regulatory issues can strangle South African start-ups, according to the acting deputy director-general of the Department of Small Business Development.
- He said it was important to provide the right conditions for start-ups to grow.
- For more stories, visit the Tech and Trends homepage.
South African entrepreneur Athi Rwexu founded her start-up locally, but it was in the United Kingdom that she found the support and investment she needed to grow and scale the mathematics application she had built.
Rwexu was speaking at the 15th annual GovTech event, hosted by the State Information Technology Agency, and caught up with News24 afterwards.
With a background as an actuarial analyst, she said she started developing Beta-SigmaX to help young people grasp mathematics.
Computer scientists, data analysts, and tech engineers of tomorrow will require skills in mathematics, she said.
"My passion as an actuarial specialist was to create something that could make mathematics accessible to children all across the world."
Rwexu explained that start-ups like hers require support and funding for things, such as prototyping, product development, and testing.
For her, that was more forthcoming in the United Kingdom than it was in South Africa.
READ MORE | 100 Young Mandelas 2023: Athi Rwexu, Innovation
"I felt that my start-up was actually embraced more in the UK than it was in South Africa," she said.
She ended up joining the Edinburgh business school's incubator.
From there, the platform has grown and it is being used around the world.
Rwexu was named one of News24's 100 young Mandelas this year.
A wider trend
She is not alone in her effort to grow her start-up, according to Mofalefa Mohoto, the acting deputy director-general of the Department of Small Business Development (DSBD).
He said conditions in many foreign countries were more favourable for start-ups than they wree in South Africa.
He said:
He added that South Africa's tax policy and regulations for businesses were "strangling the start-ups that are wanting to scale in South Africa".
The head of policy and regulatory affairs at the Southern African Venture Capital and Private Equity Association (Savca), said in the organisation's latest venture capital report, venture capital investment in South Africa decreased slightly in 2021 from highs in 2020.
Rwexu added that many start-ups headed overseas because the type of opportunities afforded were more realistic in other countries.
She said that South African financial institutions generally want a track-record of returns before they are prepared to invest, which start-ups often cannot provide.
Optimistic
The DSBD has formed strategic partnerships to form a "start-up act movement" to be able to deal with the regulatory mechanisms that "are actually strangling the start-ups", Mohoto said.
"We should be able to have high-tech start-ups that can grow into big companies as we can see happening in Silicon Valley and other places."
Rwexu said she was optimistic that the discussions surrounding start-up support in South Africa were encouraging and said that she was optimistic about the future of the sector in South Africa.
