Large companies in South Africa should be incentivised to buy from tech startups, particularly those owned by women, according to Petra Rees, who is the CEO and founder of edutech startup WhyToyz. They should also not be afraid of risking it all by trusting startups in the tech space. Rees was part of a three-women panel at the second annual Women Economic Assembly (WECONA) Conference. It was a two-day event hosted to engage industry leaders to set gender transformation targets in each industry and establish game-changing interventions that increase procurement from women-owned businesses.
WECONA was launched by President Cyril Ramaphosa last year, and this year’s theme was “Gender-responsive value chains for a resilient economy”. According to Rees, it was not easy for South African startups to break into markets. “Where I found it difficult in terms of tech startups in South Africa is that in comparison to China, Europe and America, in South Africa you have to sell to larger corporates because they have a 60% to 70% share of the market, whereas small businesses have about 25% to 30% of the market,” she said.
“In other countries, 80% of their economy is controlled by SMEs, and it is easy for startups in tech to grow in these kinds of environments,” Rees said that corporations must be incentivised so that they can see the value of tech startups and tech companies in their businesses. “Procurement doesn’t know that technology can solve some of their problems, and human resource (departments) don’t know that technology can solve some of their problems as well,” she said.
“The question is how we get these decision-makers to be incentivised to be buying more from tech startups and tech companies,” Rees said for her business to break into the market, she had to get creative. “Finding the markets where we could sell our solutions to was very difficult because it was not possible to knock on big companies’ doors and ask them to pick us,” she said.
“We started by tapping into markets with low barriers of entry, and in our case, it was the educational sector. “Then we proved our concepts, tweaked our technology and we got better at it, and even in that regard you still get companies asking if you can really do it, especially as a woman.” WhyToyz aims at unlocking the creative potential of children by using exponential technologies, with a deep focus on 3D printing. The 3D printing platform houses over 300 unique designs prepared by experts to promote problem-solving, analytical thinking, math and planning skills, innovation and creativity.
Pitsi Mnisi, who is the co-founder of MCorp Investments and a member of Dazzle Angels, which generates inclusive funding for early-stage women-led and women-empowering businesses, told the conference that the country needed more angel investors. Angel investors are generally wealthy private investors focused on financing small business ventures in exchange for equity. Unlike a venture capital firm that uses an investment fund, angels use their own net worth.
“We need to create a culture of providing early-stage development which comes after the entrepreneur has put their own money and has run out of it,” she said. “If we are to activate entrepreneurship, we need investors not to be scared and understand that entrepreneurship is a catalyst to employment in South Africa.”