Source: Ephraim Modise/ Techcabal
The University of Cape Town has produced the most CEOs of tech startups in Africa. TechCabal asked alumni and industry experts about the institution’s secret sauce
According to Africa: The Big Deal data, the University of Cape Town (UCT) leads the continent’s tertiary institutions regarding alumni who became CEOs of African tech startups. The Cape Town-based institution has produced 74 CEOs, followed by The American University in Cairo and the University of Oxford.
Of the top 12 universities to produce the most CEOs, only 42% were African institutions, with the majority comprising US schools, followed by the UK and France. Some of these US institutions include Stanford, Harvard and MIT.
Understanding the trend
According to Thando Hlongwane, co-founder and CEO of fintech startup Lipa Payments and an alumnus, UCT provides access to startup ideation initiatives, incubation facilities, and connecting students with the broader Cape Town startup ecosystem. Hlongwane added that ideation initiatives such as UCT Flux allowed students to build new startups using a design thinking methodology.
“UCT had an enabling environment [for building tech products]. The information systems department had an innovation lab I was a part of. We had access to 3D printers, virtual reality machines, and a whole lot of other tech, which allowed us not only to ideate but also create,” Hlongwane told TechCabal. “The alumni ecosystem of the school was also quite supportive, and through it, I met Jason Basel, founder of Akro, who today remains a mentor of mine and helped one of my other startups, Zaio, raise its first round of funding.”
Anda Ngcaba is the innovation director at UCT’s Financial Innovation Hub, and a crucial part of his job is leading the hub’s innovation activities and pre-incubation programs. Students are given bursaries to cover living expenses and incentivise them to focus on building their startups. The hub also puts the startups in touch with their network of investors.
“We have about five research work streams ranging from blockchain applications to financial inclusion. I work hand in hand with the students to help them find ideas within their research and commercialise it. We either try and prepare the students that come out of the course for entrepreneurship or if we see that this person isn’t very entrepreneurial driven, we then try to find them a spot in one of our startups or in the broader ecosystem,” Ngcaba told TechCabal. Seven startups from the hub have raised R16 million in grant and equity funding in the last three years.
More entrepreneur development initiatives
UCT Flux is another entrepreneur-development initiative by the university. Flux is an entrepreneurial business game hosted by UCT Careers Service (CS) with the help of its employer partners. It allows students from all degrees and years of study to compete in teams to solve real-world challenges and practise their strategic-thinking skills. It uses the growing trend of gamification to help teach studentpreneurs the skills involved in business planning and how to pitch an idea.
During the full-day challenge, teams receive advice from experts in Strategy, Marketing, HR and Finance. They then compile a business strategy and solution, which they pitch to a panel of judges. Three teams are chosen as finalists and square off in a final 90-second elevator pitch, after which the winner is chosen.
“[FLUX] encourages [students] to think about questions such as, ‘Where is the funding going to come from?’ or ‘What are the business’s fixed costs?’. Although they have great business ideas, these are some practical questions that many students have never even contemplated. This makes the event an amazing learning opportunity,” said David Buckham, co-founder of Monocle, one of the event’s sponsors.
There’s still room for improvement
Despite producing the most CEOs, South African institutions like UCT still have some way to go. According to data by Statista, Nigeria has the most number of startups on the continent, with 3,360 entities, followed by Kenya with 1,000 and South Africa with 660.
South Africa also lags in attracting venture capital [pdf], drawing $550 million in funding in 2022 through 78 startups. This figure is dwarfed by Nigeria’s $976 million from 180 funded startups, Egypt’s $812 million from 131 startups and Kenya’s $574 million from 90 startups.
According to Clive Butkow, CEO and partner at Kalon Ventures, a Johannesburg-based venture capital firm, the South African startup ecosystem would benefit significantly from founders who are apt at the technical and business aspects of running a startup. Butkow believes South African universities produce the continent’s brightest technical and engineering talent. However, to supplement this, he believes there needs to be more emphasis on teaching students entrepreneurship so that their solutions become scalable and fundable startups.
“I receive numerous pitch decks from student-founded startups, and what is constant in these is the lack of clarity on how exactly the product would make sense business-wise,” Butkow told TechCabal on a call. “To build a venture capital attractive startup takes more than just writing code. Universities must also enforce unit economics, accounting and other aspects in their course outlines. Combining top-tier engineering and top-tier business talent would elevate the South African startup ecosystem to another level.”
This view is shared by Ndabenhle Ntshangase, an alumnus of UCT and co-founder and CEO of AirStudent Travel. Students can make travel bookings together and access group rates on this group booking platform.
“My course gave me foundational skills of building a technology product, but what also matters, and perhaps was not fostered enough, are in-depth skills on the technical and business side of building a startup,” said Hlongwane to TechCabal.
Hlongwane cites aspects like business development, marketing, and sales as areas that the school’s curriculum could better address. With entrepreneur support structures like the Financial Innovation Hub and Flux, it should not be surprising why UCT leads the way in churning out tech CEOs. However, challenges like a lack of support for non-technical aspects of tech entrepreneurship still need to be addressed. These challenges limit the institution’s true potential in producing CEOs in terms of quality and quantity, a hurdle which, if removed, would further propel the institution ahead of its peers on the continent.
Source: Ephraim Modise/ Techcabal
