Silicon Valley is home to some of the world's largest technology corporations and thousands of technology-related startup companies. Located in northern California, in the southern region of the San Francisco Bay Area, the Silicon Valley name was coined by entrepreneur Ralph Vaerst in the 1970s, originally derived from the region's large number of silicon chip manufacturers. Silicon Valley now hosts the headquarters and office complexes of a number of high-tech businesses, including Apple Inc., eBay Inc., Facebook Inc., Intuit Inc., Adobe Systems Inc., Intel Corp. and Hewlett-Packard Co.

Silicon Valley continues to be one of the country's leading regions for high-tech innovation and development, accounting for about one-third of all venture capital investment in the United States, according to data collected in the Money Tree Report by Thomson Reuters in 2010. Other leading venture capital hubs include New England, the New York Metro area and Los Angeles County.

Cities in Silicon Valley include Los Altos, Palo Alto, San Jose, Santa Clara among 20 others. Notable institutions of higher education in the Silicon Valley include Stanford University, Silicon Valley University and three University of California campuses.

South Africa: The next Silicon Valley

South Africa has a long history of innovation, with famous inventions like the CAT scan and procedures like the first heart transplant pioneered there – and there are even more signs that South Africa could be the next hotbed for innovation.

The 2021 report from fDi Intelligence, a data division of the Financial Times group, shows Cape Town is one of the world’s fastest-growing regions for foreign direct investment. Silicon Cape Initiative, for instance, is a Cape region community of tech entrepreneurs, developers, creatives, angel investors and VCs who are passionate about entrepreneurship and the roles they can play in the future of South Africa. According to the Organisation for Economic Co-operation and Development (OECD), Cape Town has dedicated funding to support innovation capacity

In addition to receiving the largest number of foreign direct investment (FDI) projects in the software and IT services sector, South Africa also recorded the second-highest number of start-ups, after Nigeria.

Cape Town was also awarded second place after Cairo for FDI strategy, after displaying impressive initiative in creating the necessary infrastructure for a thriving tech ecosystem.

“Extending beyond Cape Town, the Western Cape boasts a robust tech ecosystem,” said Wesgro, the Western Cape’s official tourism, trade and investment promotion agency. “The Cape Town – Stellenbosch corridor contains 450 tech firms employing more than 40,000 people, making the ecosystem bigger than Nairobi and Lagos combined.”

Other key aspects that make Cape Town the “tech capital of Africa” include:

  • Tech start-ups: At the end of 2020, there were 550 tech companies and over 40,000 people employed in the tech sector in Cape Town.
  • Investments: In 2020, a total of $88 million (R1.2 billion) disclosed investments were injected into tech start-ups in Cape Town across 46 deals, the highest investments made in South Africa.
  • Venture capital firms: The Western Cape has the highest number of venture capital firms, which makes it easy for startups to access funding.
  • Co-working spaces: The Western Cape has over 30 co-working spaces, the highest in Africa as well as 715 free WiFi spots in Cape Town alone.
  • Developer talent: Cape Town hosts 38% of the total developers in South Africa, the highest concentration of developers in the country.
  • EdTech Hub of Africa: Cape Town has a high density of digital skills training academies and is the location of choice for EdTech businesses that are building content for entities and educational institutions across the globe.
  • Home to world-class universities: The University of Cape Town retained its spot as Africa’s top university, with Stellenbosch University ranked the 3rd best University in the 2021 Times Higher Education (THE) World University Rankings. Students from across the globe come to study in Cape Town, with many being attracted to the growing tech ecosystem.
  • Ease of doing business: According to the latest World Bank research report on “Doing Business in South Africa”, Cape Town ranked as the top metropolitan municipality in the country when it comes to the ease of doing business.

According to research, Silicon Valley has been able to sustain innovation for so long for multiple reasons, but here are two key points that South Africa also shares:

  • Silicon Valley embraced cultural diversity by welcoming immigrant and transplant populations. In fact, between 1995 and 2005, more than half of Silicon Valley’s startups were founded by immigrants. Comparatively, South Africa has often been called the “Rainbow Nation”.
  • Silicon Valley benefited from several world-class education institutions seeding the Valley with fresh ideas, energy and research. Investing in educational institutions with such an innovative focus helped support economic growth. According to World rankings, South Africa’s university system is the strongest on the continent.
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