The Western Cape Government is “seriously interested” in investing in international start-ups to entice them to base, register and grow their company in Cape Town.
The model is inspired by Start-Up Chile, which has helped the capital Santiago rise into the top 20 cities in the world for start-ups and seen the government commit to investing US$40,000 in 300 companies each year since a successful 2010 pilot.
Jess Green, South African founder and Chief Executive of shopping mobile app Perk, is the driving force behind bringing the initiative to South Africa and has held advanced talks with Alan Winde, Minister of Finance, Economic Development & Tourism at Western Cape Government, and Nezaam Joseph, Director of Service Industries in the Department of Economic Development & Tourism.
In an exclusive interview with HumanIPO, Green said: “We would have an amazing opportunity to bring in the top skills from around the world.
“Great business ideas would come into the country and they would bring their contacts, their experience and we would build a very effective eco-system.”
Green said in an ideal world ‘Start-Up SA’ would begin with a combination of public and private funds, but he is not opposed to it beginning as a solely government project. He describes the government officials he has met with as being “seriously interested”.
He does admit experienced entrepreneurs and investors might need to be brought in to work as mentors or coaches, but the government has proved it is willing to invest in the technology scene in Western Cape as it is already funds the Cape Information Technology Initiative (CITI) and the Bandwidth Barn, in Woodstock, Cape Town.
In Chile, the US$40,000 funding for each start-up comes with the obligation of spending the whole investment within six months and a 12 month working visa – ensuring the company reinvests the investment, and more money if successful, into the country’s economy. A feature Start-Up SA would replicate.
Green added: “Is there enough people that want to come here? Yes. Would it improve the economy here? Absolutely.”
The funds would not be exclusively available to international ventures. Since Start-Up Chile was launched, the project has seen an increasing number of Chilean grantees and beneficiaries.
But quizzed on whether he thought taxpayers would stomach funding outside start-ups, Green was unequivocal.
He said: “Absolutely, because they (the foreign entrepreneurs) are better at it than we are. If the next biggest idea in the world ends up beginning in Cape Town then that is going to be a positive for everyone.
“We are not paying for the knowledge, we are attracting them with our investment. And they will set up their company here, rather than someone else.”