The top 5 South African startup sector developments of 2020

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Though other ecosystems have caught up in recent years, South Africa remains one of the most developed markets when it comes to tech, startups, and investment.

It was a year of highs and lows for the country, especially given the COVID-19 pandemic, but the ecosystem can look back on another developmental year.

But what were the major developments and landmarks over the course of 2020? Here are Disrupt Africa’s choices.

Skynamo raises a mega-round

South African field sales app and management startup Skynamo got the year off to a belting start in January, announcing it had raised a US$30 million Series A funding round. Formed in 2012, Skynamo is used by representatives and their managers to improve insights into field sales activity, reduce administration, and create coaching opportunities that lead to higher sales.

Having scaled to the United Kingdom (UK) and the United States (US), the startup raised the sizeable round from leading US-based software investor Five Elms Capital, and said it would use the investment to accelerate adoption of its field sales mobile app and cloud-based management platform, while scaling up operations to improve service to its rapidly growing customer base in the US, UK and Southern Africa. 

Naspers gets busy

South African firm Naspers, one of the largest technology investors in the world, launched Naspers Foundry, a ZAR1.4 billion (US$96 million) fund to help South African tech entrepreneurs grow their startups, in October 2018, and  invested in SweepSouth in mid-2019, but it was only in 2020 that it got really active in the local scene.  

Investments in Aerobotics, Food Supply Network and The Student Hub made the firm one of the most active VCs in South Africa over the course of the year, at least by total funds disbursed, and really signalled a growing commitment on the part of Naspers towards investing in South African innovation.

Over acquired by GoDaddy

Over launched in Cape Town in 2012 and began life as a simple “text over photos” app for sharing goals and inspirational quotes.  However, it developed into a multifaceted tool that allows businesses to easily create photos and videos to post on their social media platforms, used by more than one million people, and in January was acquired by American publicly-traded internet domain registrar and web hosting company GoDaddy for an undisclosed amount.

The startup’s 76-person team joined the US-based company, and added to GoDaddy’s recently relaunched website-building tools. Matt Winn, co-founder and chief executive officer (CEO) of Over, said the acquisition was a “huge moment” for the company, especially as it was being acquired by a firm with a vision the same as its own – to empower entrepreneurs.

Custos and HAVAÍC row, then reconcile

A bad news story that worked out in the end. In April, South African blockchain startup Custos was sued for US$4.45 million in the Western Cape High Court by local VC firm HAVAÍC, which claimed the startup backtracked on an investment agreement. HAVAÍC claimed Custos agreed in writing to take on ZAR3.5 million (US$186,000) investment from the VC firm, and subsequently reneged on the deal, a suggestion denied by the startup.

The legal action – which Custos said forced it to significantly cut the size of its team and meant it was battling to survive – provoked disquiet in the South African startup and VC space, with several well-known investors and entrepreneurs taking to social media to criticise the approach taken by HAVAÍC. There was eventually a “meeting of the minds”, and the two parties settled their differences and agreed to work together in their mutual interest. HAVAÍC will as a result make an investment in Custos.

Local founders become local investors

E4E, a venture capital fund aimed at helping South African entrepreneurs build internationally-successful companies and counting the likes of Bas Hochstenbach and Aisha Pandor among its founding partners, launched in July, as successful local founders started “giving back” to the South African ecosystem.

E4E, which is backed by a founding investment from the SA SME Fund and has a first close of R135-million (US$8.1 million), has already closed two investments, including in grocery delivery startup Yebo Fresh, and managing partner Philani Sangweni said he believes it is set to make a major contribution to the development of the local tech space.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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