Cloud Computing is Leveling the Playing Field for Tech Entrepreneurs Everywhere
Cloud computing, and Amazon Web Services (AWS) in particular, has played a key role in driving the growth of tech startups in the last two decades. Cloud services have allowed entrepreneurs to launch innovative digital businesses cost effectively, while helping them scale seamlessly from garage operations to servicing customers around the world.
But few know it all started in Cape Town, South Africa. In the early 2000’s, Chris Pinkham, a South African working for Amazon, chose Cape Town as the base from which to assemble an independent team to build Amazon’s elastic compute cloud, EC2. Cape Town offered a great quality of life and an untapped pool of talent that allowed Pinkham to recruit some of the best engineers and developers to build the leading edge tech that forms the core of what became AWS, even though the city sits on the other side of the world from better known centers of tech innovation.
Almost two decades after the birth of AWS in Cape Town, cloud computing is leveling the playing field for tech innovators everywhere. The same drivers that gave birth to AWS 18 years ago are at play again, giving the traditional Silicon Valley tech ecosystem a run for its money — literally.
Innovation from Anywhere
The globalization of digital services has been raging for decades, with IT outsourcing and digital services, ranging from product and graphic design to engineering and coding, growing exponentially. But the potential of innovations originating from Africa and other emerging markets to go global is often overlooked. Some, like South Africa, are very well positioned to provide those services on a global scale.
Frans Cronje launched his company, DataProphet, out of his native Cape Town. Providing AI services for manufacturing companies to move towards automation, it quickly found customers. When it approached Silicon Valley investors, however, making its way up and down Sand Hill Road, they didn’t fit the VC’s pattern-matching expectations, partly because they weren’t in the Valley nor did they attend Stanford University or UC Berkeley. A few years later, DataProphet is, according to Forbes, one of the top 15 innovative AI companies driving exponential shifts in their sectors and growing exponentially to serve customers globally, all out of Cape Town.
The next African Unicorn?
For many of the same reasons Chris Pinkham chose Cape Town, the startup tech ecosystem in South Africa thrives. With its universities, hills, beaches, and culinary highlights, the city and surrounding areas breed and attract young, well-educated tech workers lured by the low-cost, high-quality lifestyle.Most of the global tech giants have figured this out, including Amazon which employs over 7,000 between Cape Town and Johannesburg. It’s not a surprise that Cape Town was recently ranked among the world’s top emerging startup ecosystems.
This ecosystem and its untapped talent pool is uniquely positioned to thrive in both developed and developing markets. Historically, Cape Town has had both the commercial infrastructure of a developed economy as well as the growth pains of a developing economy. The combination offers entrepreneurs the chance to take the best of both worlds, developing solutions for both sides, with the know-how and resources from both.
Where Is My Transport, a South African startup that provides mapping data of developing markets for global companies, is a perfect example of a company that can bridge the two worlds. Its services and data are highly sought after by multinational and local companies alike. It’s hard to imagine entrepreneurs in San Francisco even understanding the problem that Where Is My Transport solves.
The Emerging Investment Opportunity
It’s easy to look at companies emerging from Africa as only serving the growing African market. That investment thesis has legs and whether it’s fintech in Nigeria or AgriTech in East Africa, the continent is hungry for commercial solutions for its young, fast-growing population.
But we shouldn’t overlook the untapped potential of some of these companies to take their technology and business models to new markets outside of Africa. That means both developing markets similar to their own, as well as more mature markets where their innovations offer leapfrog opportunities.
Tinashe Ruzane, the CEO of FlexClub, a South African startup offering car subscriptions to individuals and ride-hailing drivers, is very clear about the vision he has for his company: to be a global firm that provides vehicles as a service. FlexClub offers car subscriptions in South Africa and Mexico and is in the midst of planning its next expansion. Flutterwave, launched in Nigeria, is entering the US market with an explicit goal of making it easy for multinational companies to operate across borders.
While we are sometimes shocked by images of rioting and looting in South Africa or by stories of urban chaos in Lagos, we might miss the silent revolution of innovation riding the rails of cloud computing emerging from forgotten corners of the world. That would be a mistake. It’s a once-in-a-generation investment opportunity I don’t intend to miss.
Twice per year, Untapped Global hosts a highly-curated week in Cape Town where international investors are invited to meet the country top investors and most promising entrepreneurs. Get in touch with us at showcase@untapped-global.com if you are interested in attending a future Showcase.
