South Africa's start-up growth path is to scale globally

South African startups must prioritise global scalability and actively pursue international venture capital to drive the next wave of investment, job creation and economic growth. Strengthening the entrepreneurship ecosystem and fostering a culture of innovation could further boost local start-ups.

The traditional view of entrepreneurs depicts them as fearless visionaries who risk everything to challenge the status quo, achieving success through sheer grit and ingenuity. However, this traditional view is no longer sufficient. Traditional incubation programmes, therefore, need to rethink how they cultivate and equip local entrepreneurs with the traits of their modern global expert counterparts.

Initiatives like the Telkom FutureMakers Programme are looking to foster a more agile, innovative and versatile approach to entrepreneurship. This is in line with a growing re-evaluation of what running a successful business is about.

Effectual entrepreneurship

More than two decades ago, U.S. professor Saras Sarasvathy coined the term “effectual entrepreneurship”. Entrepreneurship today extends beyond lone visionaries taking bold risks. The lone visionary model, she argues, relies heavily on detailed long-term business plans, assumes a predictable future and often seeks external funding. It portrays the entrepreneur as an isolated figure driven by a predetermined vision.

She pointed out that entrepreneurs operate in uncertain, complex environments where the future cannot be predicted. Effective entrepreneurs, therefore, prioritise adaptability. They view unexpected events as opportunities to pivot and change direction.

This adaptability has significant implications for traditional business planning. Given the fluid nature of the market, the business plan, on which funding is often based, can quickly become irrelevant.

The sad reality for many entrepreneurs is that they pursue their initial business plan until they hit rock bottom. Therefore, it is not advisable for an entrepreneur to remain fixated on the original business plan particularly at the early stages of the business.

Overcoming startup constraints

There are many barriers to entry, such as upfront capital and business complexities, which can be daunting for potential entrepreneurs. A recent report by the Global Entrepreneurship Monitor sees a decline in entrepreneurial activity, noting that only 10% of adults aged 16-64 intend to start a new business in the next three years - the lowest in 20 years.

The main causes are red tape and lack of funding. There is also a preference, as research by Aspen Network of Development Entrepreneurs shows, for job and finance security - more likely to be found in corporate and government jobs.

Notwithstanding, our observation from running the FutureMarkers programme for the past decade is that the best way to start, as Prof Sarasvathy suggest, is with who you are, what you know, and whom you know. That is, your own resources and networks and do not be afraid to change direction.

Adapt your course when necessary

Recently, I left the Telkom FutureMakers Township Innovation Incubator Programme graduation ceremony feeling deeply encouraged. The graduates provided a compelling example of this modern approach. For example, Ntshabo Tofile, one of the 13 graduates, has had a remarkable entrepreneurial journey that began in 2018. With her partners, she co-founded Tuu Post, a venture aimed at bridging the digital divide and making essential services accessible to township and rural communities. In 2022, they launched Makeeda Hospitality, a township BnB digital marketing solution.

During the 18-month Telkom FutureMakers incubation programme, they identified a bottleneck in delivering parcels to consumers in township and rural areas. This led to the birth of Merrigo Technologies, which looks to boost township logistics, with the potential to scale across the continent. Through the Telkom ecosystem, Merrigo’s discussions with potential major retail partners are at an advanced stage.

The Merrigo Technologies story demonstrates that successful entrepreneurs are not lone rangers married to their ideas. Yes, they are daring, committed and willing to put in long hours to pursue their vision. But they are also humble, willing to learn and collaborative. As more information becomes available, they are willing to change course.

Merrigo Technologies is not alone. In 2024 FutureMakers supported 428 SMEs. These companies generated revenue of R399 million, sustaining 69,500 jobs that resulted in 229,350 lives impacted. We hope many will grow to join other Telkom-initiated start-ups such as Boniswa Group, Gwensa Telecoms and Devtel – now large enterprises operating in several countries.

Think global

Indeed, global scalability is a key Telkom focus area – achieved through platforms like the UK-SA Tech Hub, which unites entrepreneurs, ecosystem partners, policymakers and thought leaders. The UK-SA Tech Hub is a UK government initiative that drives digital inclusion and growth by stimulating local economies, building digital skills and fostering international tech partnerships.

South Africa must up its game to stay competitive in developing entrepreneurs and small businesses. We must remove barriers, embrace innovation and strengthen ties with global investors and entrepreneurs. There is massive potential for us to reignite the start-up sector to where – like our European and US counterparts – our small businesses contribute to 90% of all jobs.