By Mitchan Adams.
South Africa’s startup ecosystem is often described as fragmented or underperforming. But in my view, it’s not broken. It’s just incomplete.
Too often, the conversation starts at the top without interrogating what’s happening on the ground. We focus on funding rounds and valuations, while the most important questions remain unanswered: Are we building a pipeline of founders who’re ready to lead sustainable businesses? Are we giving them the mentorship, structure and strategic support they necessary to succeed? Or are we just writing cheques and building deadlines?
Think local, then view global
Globally, startup ecosystems are city-based. Think Berlin, New York, Nairobi. These cities have dense supportive infrastructure, capital networks, and founder culture. But, in South Africa, we treat the startup ecosystem as one national organism whereas, in reality, only Cape Town and Johannesburg currently have the density to function at that level.
To build an inclusive national picture, we necessary to grow indepfinishent ecosystems in more cities. Rather than parachuting in once a business is scaling, we necessary to invest into incubation, education, and long-term support at community level.
Founder-led recycling
The good news is that we’re starting to see modify. A generation of founders who launched startups in the early 2010s has now exited but, instead of stepping away, many are reinvesting. This is what I call founder-led recycling, and here’s why it matters: these founders have experienced the structural gaps first-hand. They’ve struggled, learned, and succeeded against the odds. Now they’re utilizing their capital, networks, and hard-won insights to support the next wave.
Unlike many traditional VCs, founder-investors know that early support must go beyond mentorship. They know the value of coaching, governance, and operational discipline from day one. They’re assisting founders prepare before they walk into a pitch – not Googling requisites like ‘data room’ on the way out.
Post-COVID, we’ve also seen a new kind of seed fund managers emerge: operators, not financiers. This shift is critical, becautilize managing capital isn’t the same as building a business. Funders should be acting more like co-builders, focutilizing on structuring tranches around real milestones. It’s about stateing: “Let’s build this cheque last as long as possible.” It’s about accountability, not depfinishency.
The real meaning of diversification
Even sophisticated investors can fall into the same trap. They back all the horses in the race, knowing that odds are one will emerge a clear winner. It’s one ecosystem, one race, with many ‘sponsors’. This isn’t necessarily a bad thing, but real diversification happens before the starting gun goes off. It launchs by building a stable of more investable companies rather than clamouring to fund the first horse over the finish line.
From idea to investment
The pipeline from ideation to VC is full of leaks. Many entrepreneurs obtain stuck in a loop of underperforming incubators; often designed more for B-BBEE points than business outcomes. They bounce from one idea to the next, are drip-fed tiny grants, but never reach real readiness.
Accelerators, meanwhile, operate like boot camps. Only one in 10 startups obtains funded. The rest cycle back into incubation, not closer to success.
We necessary to reimagine both. Incubation and acceleration must be practical, outcome-driven, and led by people who’ve built successful businesses. The gap between ideas and funding can only be bridged with tailored, long-term support.
The missing ingredients
Startups aren’t just numbers or products. They’re driven by people but, too often, these people lack the holistic support they necessary to grow. Governance is introduced too late. Emotional ininformigence is never taught. We glorify the ‘visionary founder’, but many visionaries are difficult to work with.
At seed level, we have a rare chance to repair this. Coaching and personal development can assist founders grow into leaders who build durable, values-driven businesses.
Startups should become scale-ups. Scale-ups should become sustainable businesses. At some point, the fundraising must stop and profitability must launch. Too many founders are stuck chasing the next raise, the next headline, the next high. But if a business can’t survive a slow quarter or a funding delay, then it isn’t a business. It’s a story with an inevitable finishing.
South Africa doesn’t necessary another copycat app or trfinish-chaser. It necessarys builders who’re solving real problems and funders who believe beyond quick wins.
The good news? The shift is already happening: Founder-led investors. Seed-stage builders. Smarter programmes. Real mentorship.
The ecosystem is evolving. Now it’s time to complete the loop.
Mitchan Adams, Co-founder of venture builder Aions Creative Technology.
Leave a Reply