The 2017 Ventureburn Tech Startup Survey, powered by Telkom Futuremakers.

1. STARTUP
SURVEY
2017

2. The true picture of
South Africa’s
startup landscape
revealed.

3. TECHNOLOGY CONTENT: DIGITAL TRENDS, MARKETING, STARTUPS, GADGETS AND CARS

4. AGE
GROUPS:
25-35 / 40-45
OCCUPATIONS:
DIRECTORS, CEOS,
PROFESSIONALS,
EXECUTIVES.
ENGAGE WITH THE
PLATFORM THROUGH
DESKTOP DURING
WORK HOURS.
ADVERTISING, MEDIA, IT &
COMMUNICATIONS
INDUSTRIES.
EMOTIVE QUALITIES:
INDEPENDENT.
KNOWLEDGE-HUNGRY.
CONFIDENT AND ASPIRATIONAL.
TECH-SAVVY.
ENGAGES WITH INSIGHTFUL
CONTENT.
VENTUREBURN AUDIENCE
The tech entrepreneur. The tech-savvy.
AVERAGE
AGE:
25 –35
OCCUPATIONS:
PROFESSIONALS,
EXECUTIVES, MANAGERS &
FULL-TIME STUDENTS.
ENGAGE WITH THE
PLATFORMS DURING
LEISURE TIME AT
WORK AND HOME.
.
DIGITAL ADVERTISING,
MEDIA, IT &
COMMUNICATIONS
INDUSTRIES.
EMOTIVE QUALITIES:
TRENDY, SPENDS TIME ONLINE.
COMES TO MEMEBURN FOR
INDUSTRY INSIGHT (RESOURCE)
AND TO CONSUME CONTENT IN
LEISURELY TIME.

5. Official
Research Partner
www.qurio.co

6. About the survey
• 260 startups analysed, after a data clean-up
• Of the total responses, 437 startups started the survey, 298 completed the survey
• 46 questions focused on demographics, funding, revenue challenges, information about
founders & employees, motivations and questions relating to market
• The definition of a startup for the purposes of this survey was: A tech-based startup with
revenues of under R20-million and/or staff numbers from 0-100
• Prizes were offered to startups for completing the survey that included an iPhone 8 and
business startup hamper powered from Telkom, BCX and Trudon

7. Key insights

8. Demographics
• Most startups (47%) exist in Western Cape, followed by Gauteng (44%), however Gauteng has gained ground
on the Western Cape compared to the 2015 VB Survey – Gauteng (29%), Western Cape (59%)
• There has been a surge in black entrepreneurs with 50% black and 46% white
• VB Survey 2015 results: 28% black and 66% white
• Silicon Cape survey (2012) results: 6% black and 78% white
• Male-dominated environment with 78% male and 22% male & female founder teams
• VB 2015 results: 68% male and 6% female - 27% male & female founder teams

9. Business
Demographics

10. 100%
Role?
Founder
45%
41%
10%
4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Services Product / IP
Owner
E-commerce Product / IP
Reseller
Q01: Primary, kind of business?
0%
1%
1%
2%
2%
2%
3%
3%
3%
3%
4%
4%
8%
8%
9%
12%
16%
19%
0% 5% 10% 15% 20% 25%
Public Sector
Real estate
Energy, Elec & Petro
Agriculture
Gaming
Hospitality & Travel
Transportation
Telecommunications
Health & Bio-tech
Food & Beverage
Entertainment / Leisure
Retail & Distribution
Education
Financial Services
Consumer Goods
Other
Media & Advertising
ICT & Software services
Q07: Industry Sector?
45 : 41
ICT & Software Services
Media & Advertising
Dominate = 35%

11. 58%
39%
3%
Q10: B2B, B2C or B2G?
B2B
B2C
B2G
42%
29%
13%
3%
7%
5%
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Under 1 yr 1 to 2 yrs 2 to 3 yrs 3 to 4 yrs 4 to 5 yrs 5 to10 yrs 10 yrs plus
Q04: How long has the startup been in business?
47%
44%
4%
2%
2%
1%
0%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
WC
Gtg
KZN
EC
FS
Mpumalanga
NC
Limpopo
Q06: In which province is the startup based?
Western Cape (47%)
Gauteng (44%)
Only 18% make it to
3 or more years of
trading

12. 22%
2%
0%
0%
0%
19%
1%
3%
28%
25%
0% 5% 10% 15% 20% 25% 30%
Not compliant
BEE Level 8 (Lowest)
BEE Level 7
BEE Level 6
BEE Level 5
BEE Level 4
BEE Level 3
BEE Level 2
BEE Level 1 (Highest)
I don't know
Q39: What is your startup's BEE status?
3%
14%
18%
21%
22%
56%
0% 10% 20% 30% 40% 50% 60%
Garage
Incubator or VC
Shared Space
Rent/Own Office
Remotely
Home
Q16: Where is the startup run from?
56% work from home
21% rent/own office
32% have a
credible
BEE status

13. Founder
information

14. 1%
4%
13%
38%
44%
0% 10% 20% 30% 40% 50%
5 or more
4
3
2
1
Q03: How many Founders?
2%
18%
33% 32%
17%
18%
7%
0%
5%
10%
15%
20%
25%
30%
35%
Under 20 20 to 25 25 to 30 30 to 35 35 to 40 40 to 50 50 plus
Q11: What is the age group of the founder/s ?
44% … have 1 founder
Female Founders – all are part of a
founding group
65% : 25 to 35
years old

15. 78%
22%
Q12: Gender Founder/s?
Male
Female
40%
38%
22%
Q15: Founders Technical?
YES - Founder =
Developer
YES - Founder assists
Dev strategy
NO
78 : 22
The Racial
Classification Split is
50% Black | White
46%
1%
4%
7%
11%
31%
46%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Asian
Prefer not to say
Indian
Coloured
Black
White
Q13: Racial Classification of Founder/s?

16. Employees

17. 2%
7%
5%
56%
30%
0% 10% 20% 30% 40% 50% 60%
26 to 40
11 to 25
6 to 10
1 to 5
0
Q17: How many Employees? (Excl. Founders)
3%
4%
8%
12%
12%
14%
16%
31%
0% 5% 10% 15% 20% 25% 30% 35%
Above Market
Bonuses
Profit Share
Shares
Other Incentives
Volunteer Basis
Below Market
Market Related
Q18: How are the employees remunerated? (Excl. Founders)
86% employ 0 to 5 people
31% are able to offer market related pay

18. 1%
2%
5%
10%
14%
18%
21%
29%
0% 5% 10% 15% 20% 25% 30% 35%
Pension
Medical Aid
Other
Travel (Car/Petrol, S&T)
Productivity (PC/Phone/Data)
Skills Dev (Training/Edu.)
Office (Coffee/Lunch)
None Listed
Q19: Additional Benefits to Employees?
3%
4%
6%
7%
7%
7%
9%
11%
12%
13%
21%
0% 5% 10% 15% 20% 25%
Other
Poached - Competition
Personal Reasons
Benefits
Employee Performance
Poached - Corporate
Working Hours
Multiple Roles
Startup Culture
Pressure Levels
Remuneration
Q20: Main Reasons for Losing Employees?
21% of employees leave due to pay rate
39% leave due to a variety of financial reasons
20% (or less) of Startups offer benefits

19. Challenges

20. 2%
4%
7%
7%
7%
10%
11%
52%
Market Too Small
Lack of Govt Support
Lack of Eco-System Support
Red Tape
General Skills Shortage
Tech/Dev Skills Shortage
Other
Lack of Funding/Capital
0% 10% 20% 30% 40% 50% 60%
Q21: Biggest Challenge?
9%
19%
19%
26%
27%
0% 5% 10% 15% 20% 25% 30%
Idea Generation
Commercialisation
Business Training
Market Access
Funding
Q24: Where can Incubation Programs Value Add?
Funding is seen as the biggest challenge
Funding & Market Access are the main
Areas where Incubators can add value

21. Funding

22. 42%
14%
12%
10%
6%
6%
5%
5%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Below R50k
R50k to R100k
R100k to R250k
R250 to R500k
R500k to R1m
R5m+
R1m to R2m
R2m to R5m
Q26: Total Funding to Date?
90%
8%
2%
Q27: Where are funds sourced from?
South Africa
US, UK, Europe,
Australasia
Africa
84% of total funding is
less than R1 million

23. 17%
21%
30%
14%
8%
6%
3%
0%
5%
10%
15%
20%
25%
30%
35%
Funding Not
Needed
0 to R1m R1m to R5m R5m to R10m R10m to R25m R25m to R100m R100m and above
Q29: How much Funding over the next three years?
81% generate less than R1 million revenue
71% want more than R1 million funding
52% believe biggest challenge is lack of funding

24. 1%
2%
2%
2%
2%
3%
3%
3%
5%
5%
5%
6%
7%
16%
40%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Crowd Funding
VC Investment
Government Funding
Bank Loan
Cash from a Business
Cash from a Competition
A Grant (Donors)
Private Equity
Services Revenue
Credit Cards
Other
Angel Investment
Loan from Friend/Family
Investment by Friend/Family
Self-Funded
Q25: How did the startup first access funds?
70%
of initial funding is
sourced from
Savings
Family/Friends
Credit/Loan

25. ?
37%
believe they will
attract investment
via
Venture Capital
Angel
Private Equity
0%
2%
4%
4%
4%
4%
6%
6%
6%
7%
7%
7%
7%
10%
12%
15%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Credit Cards
Loan from Friends/Family
Crowd Funding
Investment by Friend/Family
Cash from a Business
Bank Loan
Other
A Grant (Donors)
Cash from a Competition
Services Revenue
Self-Funded
Funding Not Needed
Government Funding
Private Equity
Angel Investment
VC Investment
Q30: How will you raise the funds?

26. Market &
Revenue

27. 1%
1%
3%
3%
5%
8%
39%
40%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
South America
Other
Australasia
North America
Europe
Whole world
South Africa
Africa
Q33: Which market/s does your startup operate in?
37%
21%
15%
28%
0%
5%
10%
15%
20%
25%
30%
35%
40%
R0 to R100m R100m to R500m R500m to R1b R1b plus
Q34: Market Size (revenue per year)?
63%
R100m plus
79%
Africa
South Africa

28. 63%
7%
5%
6%
7%
5%
4%
2%
1%
0% 10% 20% 30% 40% 50% 60% 70%
R0k to R100k
R100k to R250k
R250k to R500k
R500k to R1m
R1m to R2m
R2m to R5m
R5m to R10m
R10m to 20m
R20m plus
Q36: How much Revenue per year?
15%
24%
18%
16%
5%
23%
0% 5% 10% 15% 20% 25% 30%
0%
10%
25%
50%
75%
100%
Q35: What is your revenue growth target over the next
year?
19%
R1m plus Only 23% are targeting
doubling revenue (81%
turnover less than R1m)

29. 4%
6%
16%
28%
46%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
1
2
3
4
5
Q31: Will your product transform the way business is done?
5%
15%
40%
25%
16%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 2 3 4 5
Q32: Barriers to market & bus opportunity (SA private sector)?
• 46% are convinced they will disrupt the market
• Barriers to market entry are not seen as particularly high

30. Operations

31. 7%
16%
17%
20%
20%
21%
0% 5% 10% 15% 20% 25%
HR (Human Resources)
Sales
Finance and Admin
Product Development
IT (Information Technology)
Marketing and PR (Public Relations)
Q09: Budgeted/Managed: business operations?
IT SPEND
Hardware
Software
Services
Cloud
70% R5k or less
CONNECTIVITY
SPEND
Voice
Data
Mobile/Fixed
89% R5k or less

32. Founder
Motivation

33. 1%
2%
5%
5%
6%
8%
8%
8%
9%
10%
10%
13%
14%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Other
Altruism
Make Big Bucks
Rigidity & Rules of Corporate
Startup Culture
Lifestyle (Office Hr/Location)
More Control Over Work
Creative Outlet
Be My Own Boss
Personal ddevelopment
More Meaning in my Life
Opportunity/Gap in Market
To Innovate/be a Pioneer
Q43: Why did you join/found a startup?
?
LIFESTYLE
MARKET GAP
INNOVATE

34. 5%
3%
9%
22%
27%
33%
5 or more
4
3
2
1
0
0% 5% 10% 15% 20% 25% 30% 35%
Q40: Prior Startup Involvement?
31%
2%
1%
2%
8%
33%
23%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Not Applicable
5 or more
4
3
2
1
0
Q41: Prior Startup Success?
• 67% have prior startup involvement
• 33% have been involved in a successful startup
• Success was not defined

35. What makes a ‘successful’ startup
• Services businesses are more likely profitable &
make money from day one (less scalable).
• B2B startups are more likely profitable (likely services)
•
Successful Regions: N. America (33%) & Europe (40%)vs 28%
in the South African and greater African market
• Region: WC 32% and Gauteng 22%
• Successful Sectors: Advertising & Media (47%), Financial
Services (42%), Software (32%)
•
Businesses older than two years are more profitable.
Older founders are more successful (40 to 50 yr)
More experience, refined business model
“Successful" startups (27%): Profitable or Growth stage (significant
revenue vs expenditure, but not profitable). "Other" startups (73%):
Conceptualstage , Early stage or Seed stage (negligible revenue)
Scorecard Successful Other
Kind of Business (model)
Services Oriented 16% 29%
Product or IP Oriented 8% 32%
Business Type (market)
B2C (Business to Consumer) 7% 32%
B2B (Business to Business) 19% 39%
Age of Business
More than Two Years 17% 13%
Biggest Challenges
Raising enough Funds/Access to Capital 10% 42%
Method of Funding
Self-Funded from the Start 11% 28%
Founding Reasons startups
More Control over the work I do 3% 6%
Want to Innovate/be a Pioneer 3% 10%
Gap in the market 3% 9%
Personal Development 3% 7%
Be my own Boss 3% 6%
•
• Founding partners are 37% successful vs 25% single founder
Self-funding is more common among profitable startups

36. Performance Metrics
Surge in black entrepreneurs:
• 50% black compared to 46% white
• VB 2015 results: 28% black and 66% white
• Silicon Cape survey (2012) results: 6% black & 78% white
A key insight from our successful startup scorecard is that
“Businesses older than two years are more profitable”
The recent surge in black entrepreneurs also means that
not many have reached the 2 year milestone:
• 48% of black startups are older than 1 year compared to
67% of white startups
• 10% of black startups have traded for 2 years while 24%
of white startups have gone beyond three or more years
* Defined as Black African, Coloured, Indian and Chinese South African
(Incl. startups that have both black and white founders)
** Read as 59% of the start-ups that received angel funding were white-owned
Performance Metric White Black*
Profitable 16% 4%
Generate Revenue 70% 39%
Revenue above R1m 29% 9%
Startup is more than 1 year old 67% 48%
Rent or Own Office 24% 10%
Have Paid Staff 89% 81%
Pay at least Market-Related
Salaries
37% 26%
Employ over 10 Staff 17% 11%
Forecast to at least Double
Revenue
29% 17%
Global Markets 11% 6%
Payment gateway on their website 32% 20%
Raised over R1m in funding 24% 8%
Got angel funding 59%** 37%

37. The Small Print
• In order to ensure that the results were representative of the tech startup ecosystem, we
removed inconsistent responses and we removed any responses from employees (whether
holding shares or not)
• Qurio, the official research partner, has done as much as possible to ensure statistical
accuracy with a survey of this nature.
• For some of the checkbox questions (questions where respondents could choose more
than one option), we decided to weigh the questions according to how many answer
options were chosen. These questions are marked with a (W). For example:
–If someone chose 2 options, each answer option would be weighed by 50%
–If someone chose 3 options, each answer option by 33.33%