In a nutshell...
The concept of having a Startup Act in South Africa was birthed at the AfricArena Conference in November 2020. The months following the conference saw the formation of
the Startup Act Steering Committee aimed to guide the process toward a Startup Act.
SiMODiSA was selected by the ecosystem to be the secretariat of this endeavor.
Desktop research and focus groups were carried out by the researcher Stephan Lamprecht and supported by associated members of the entrepreneurial ecosystem to understand the constraints experienced by entrepreneurs and their suggestions on solutions. This phase of the research was funded by The World Bank where the outcome was a Draft Position Paper, released in September 2021.
The first major milestone was reached and it was the invitation of the Steering Committee members to meet with President Cyril Ramaphosa to discuss the progress of the movement toward a Startup Act at that point, to understand the entrepreneurial ecosystem and its challenges and constraints.
The second milestone was with the recent sponsor, being the UK SA Tech Hub coming aboard to continue the work toward attaining a Startup Act in the South African environment.
Previously, in September 2021, a Draft Position Paper was unpacked by Stephan Lamprecht and the Steering Committee members to the ecosystem through an ecosystem webinar hosted online where it was well supported with around 108 people in attendance.
Read more below.
In September 2021, the Digital Collective Africa working group for SA Startup Act published a position paper.
The paper presents gathered over the past six months via desktop research, focus groups, and research contributed by the World Bank (one of the main sponsors of the research), provide a holistic overview of the problems affecting the ability of startups to establish, grow and scale in South Africa.
The findings suggest that innovation-driven startups with a turnover of less than R100 million be exempted from the limitations of existing policies and the red tape that constrains their growth as well as their ability to contribute to job creation.
Doing so will accelerate the socio and economic spillover of such startups to the rest of South Africa.“
The vast majority of new small and micro business enterprises that exist beyond the first three years of operations do not grow. Rather, it is the remaining balance comprised of a tiny portion of startups that are responsible for creating a disproportionate number of jobs.
Such firms, with their high-growth potential, are the intended beneficiaries of the proposed South African Startup Act,” explains Stephan J Lamprecht, Founder of VS Nova, a Southern African-based management consultancy that has been appointed by the SA Startup Act Steering Committee to provide research and advisory services.
The Steering Committee is comprised of representatives from Digital Collective Africa; AfricArena, Endeavor South Africa, i4Policy, Loudhailer, the Southern African Venture Capitaland Private Equity Association (SAVCA), Silicon Cape, SiMODiSA, and Wesgro.
Case Studies on the Regulatory impact on South African Startups
The SA Startup Act Movement, with support from FSD Africa, conducted interviews with high-growth startup leaders to understand their experiences with South Africa’s regulations affecting the growth of their businesses and the startups they support. The in-depth results are creatively published in our “Case Studies on the Regulatory impact on the growth of South African Startups.”
The case studies identify the negative impacts of current policies affecting the growth of startups and promote the positive impact that addressing the policies can have on the economy.
The case studies primarily focused on expanding the policy recommendations that were outlined in the SA Startup Act Position Paper 2021:
Provide tax breaks and incentives to encourage investment in Qualifying Startups.
Remove barriers that inhibit access to skilled talent in the form of employment flexibility and special skills visas
Address Exchange Control Limitations: Remove inhibiting regulatory barriers that hamper globalisation and investment into qualifying startups.
Automatic Level 1 BBBEE status for procurement and supply chain grading: A qualifying startup to be exempted from preferential procurement limitations.