Cape Town's entrepreneurship levels are at 65% above that of the whole of South Africa, as stated by a recent Global Entrepreneurship Monitor (GEM). Johannesburg only recorded 24% above the national average. The latest GEM results show that one in eleven South Africans run their own businesses, compares to one in seven Brazilians.
It appears that the main reason for the increase in entrepreneurship is a case of want to, rather than have to. The concentration of these entrepreneurs is 190% above the average for the country.
Cape Town is also regarded as the 'city of choice' among entrepreneurs who often relocate in hopes of filling the proverbial market gap. Mike Herrington, professor at the University of Cape Town’s Graduate School of Business who heads up the GEM research says the fact that the greater Cape Town has four universities further helps to attract entrepreneurial potential to the city.
Better basic-education results could have a positive influence on entrepreneurship levels in Cape Town, because the link between education and entrepreneurship is “incontrovertible”, said Herrington.
Other experts point out that the business culture in Cape Town is conducive to entrepreneurship. Local and international trade is as old as Cape Town itself, says Mansoor Mohammed, head of Responsible Impact, an organisation that promotes innovation and social entrepreneurship. Like San Francisco and Barcelona, Cape Town’s history as a trading port makes for a deep entrepreneurial culture.
Jaco van der Bank, University of the Western Cape entrepreneurship lecturer and founder of Crowdinvest, said Cape Town’s “old money” makes for a well-developed networks of angel investors with anything from R10 million to R100 million each to invest, that is hugely important for giving new ventures the break they need.
A mining centre such as Johannesburg attracts large investments and tends to build a culture of mega-projects, which is often less accessible than an economy such as Cape Town’s, which is built on smaller, more numerous ventures.
Stuart Hendry, director of the Development Unit for New Enterprise at the University of Cape Town, points to the possibility that the demand for skills among large, high-paying corporates in a city like Johannesburg tend to suck up and hold entrepreneurial talent, whereas the bonds are loser in Cape Town, allowing entrepreneurs to leave their corporate posts more easily to start their own ventures.
