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The Ventureburn Startup Survey partnered with First National Bank (FNB), investment advisory firm Clifftop Colony and analytics company Qurio to poll just under 200 tech startups. Each of the startups were asked 42 questions, ranging from funding, the profile of their founders, to their revenues and the everyday challenges they face.

Jacques Coetzee, who heads up Ventureburn says that the Ventureburn Startup Survey is packed with insights, from the shifting demographics of South Africa’s startup landscape to a reaffirmation in the belief that funding is a major challenge for most entrepreneurs. And that’s above other challenges listed like “not enough skilled technical staff” (12%), “too much red tape” (7%) and the “market being too small” (9%). For an overview of the findings, the Ventureburn infographic can be accessed here.

 Funding remains a major challenge

Coetzee continues that funding has always been one of the biggest challenges in South Africa's startup space and that the survey confirms that this is still very much the case. Nearly half (43%) of all South Africa’s tech startups find access to funds their biggest challenge. Bootstrapping (self-funding) remains the most popular way to raise initial funds (56%), followed by investments from friends and family (11%). Funds by way of government or quasi government funding account for just 1%. Coetzee notes that Interestingly, credit cards (3%) are more popular than bank loans as a funding channel. Bank loans are one of the least popular sources of funding (2%), which Coetzee says comes as little surprise given the perception that banks are well-known as a “no-go” as a source of funding to startups. The survey also found that while angel investors, venture capitalists, and private equity firms grab all the headlines, very few startups actually go on to make it to these rounds. In fact, just three percent of startups make it to the venture capitalist stage in their funding evolution.

Tech startups and diversity

It was found that for the most part, founders are white and male. There are signs that more black entrepreneurs are forming tech startups, but there is still a significant gender gap. The survey indicated that 17% of startups in the country had black founders. This is a significant increase from a national survey undertaken in 2012 where just over six percent of startup founders were black. However, there is a large gap when it comes to the number of female founders. The survey found that just six percent of the country’s startups have female-only founders. By comparison, 68% of startups have male founders, while 27% are run by combined male and female founder teams.

What motivates startup founders

Most tech startup founders are motivated by “opportunity”, or a “gap in the market” (17%) and to become “pioneers”, or “innovate” (15%). On the other hand, few are driven to “make the big bucks” (4%). 

Working for SA Tech startups - exciting but tough

The survey found that over a third of startups are made up of “volunteers” (20%) and employees who get “below market-related salaries” (19%). Benefits are virtually non-existent in the startup world with exactly zero startups indicating they do not offer pensions. Just 2% of startups say they offer medical aid. It’s not too surprising then that the most common reasons for losing employees is “remuneration” (26%) followed by “startup culture does not agree with them” (14%).

More information on the Ventureburn Startup Survey:

Ventureburn survey sheds light on SA’s tough, but pioneering startup industry

No surprise: funding the biggest hurdle for SA’s startups

What do South Africa’s startup founders look like, and what drives them?

Working for SA startups may be exciting, but not at all that glamorous

Go big or go home: most SA startups need to scale fast to survive

SA startup industry: all the stats and numbers you need to know [infographic]

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