⚡️Charging Up SA’s Minibus Taxi Future...

Plus: Safety drones 🛰, peachy WhatsApp commerce, SARS in your crypto & the hard-hitting startup truths you need to hear.

NEW
Newsletter
October 11, 2024

⚡️Charging Up SA’s Minibus Taxi Future...

Plus: Safety drones 🛰, peachy WhatsApp commerce, SARS in your crypto & the hard-hitting startup truths you need to hear.

Time to whine? To celebrate 30 years of Green Day’s Dookie album, you can now purchase DE-mastered low-fi versions of all 15 songs on 15 different mediums they were never meant to be heard on.

Jip, that means stuff like “Basket Case” on a Big-Mouth Billie Bass, “Welcome to Paradise” on a GameBoy and “When I Come Around” on a wax cylinder (phonograph). 🤘

In this Open Letter:

  • Driving change: The green side of SA’s minibus taxi revolution.

  • Safety drones, Peachy WhatsApp commerce & SARS in your crypto.

  • Good medicine: All the hard-hitting startup truths you need to hear.

  • How you prefer your customer support: The results are in.

  • Lonely building your startup? Join The Open Collab and get support.

Together with — Innovation City Cape Town

Did someone forward you this email? Join 13,620 South Africans reading The Open Letter by signing up here.

The Future of SA's Taxis

15M Daily commuters & cutting SA’s carbon by 3.5M tonnes

If you’ve been a reader of The Open Letter for a while, you’ll know we’re quite bullish on SA’s Taxi Industry

This R90 billion industry keeps the wheels of SA turning, with SA’s 250’000-strong minibus taxi fleet getting 15 million South Africans from their homes and back every single day.

But it’s hard work operating a taxi

Check out some back-of-the-napkin maths we shared in a previous Open Letter.

Sjoe, think we’d rather be the Gaaitjie than owner/operator…

Nearly 40% goes towards petrol, the lifeblood of keeping any (well most) vehicles moving…

And, yeah, the fuel price might be coming down now, but it’s been fluctuating the last few years, making it hard for taxi owners to price daily expenses – and drivers know: you either adjust your fares and risk losing passengers or suck it up and live off already razor-thin margins.

It gets scary when you have price jumps like when the petrol jumped R3 per litre between Jan & May this year – that alone adds around R6k in extra costs each month. Eek!

Not to mention the cost of maintaining your taxi… with the daily mileage these guys rack up, it can get costly, quickly.

I just want to thank Beyoncé

The local solution putting more cash in drivers’ pockets

Last week, a consortium led by GoMetro, launched SA’s first electric taxi, the eKamva.

We spoke to the founder on the latest “How Would You Build It” podcast and, in 2 years of research, they concluded that while pedestrian/private EV vehicles might be sexy, cool and all hyped up, it’s not necessarily where Africa’s EV future lies. 

The 15-seater eKamva (isiXhosa for “into the future”) sports a 60kW battery and has a 200km range, with 2 charging options: a 75-minute fast charge (ideal for the 3-hour window between peak hours), and a 10-hour slow charge for overnight charges.

eKamva is supported by flx EV, an early-stage, charging solution taking an Afro-centric view by seeing how SA taxis operate and using fast charging services. They have also partnered with various municipalities to develop charging facilities in close proximity to existing taxi ranks.

Signature SA flag on the side…now all we need to see is how it performs in the yellow lane.

GoMetro pegs the operational cost saving at between 40% and 70%, and since there are fewer (check out the pod, it’s like 8) moving components than on a combustion engine that can get damaged – think filters, spark plugs and oil – operators can avoid costly repairs.

And if something does go wrong, the vehicle is under warranty and the motor gets sent off for repairs, with a replacement motor provided to get them back on the road asap.

The eKamva will set you back between R1.1 and R1.2 million, (thanks to the 40% import duties on “luxury” EVs). But if the government can be convinced to remove this tax, it could bring the price down to between R650 and R750k – on par with the Toyota Quantum.

The green to care about

Replacing taxis with eKamvas could reduce carbon dioxide emissions by 13.7 tonnes, per vehicle, per year (at 250k taxis, that’s 3.425 million tonnes of CO₂ per year). And that type of green might not be a big motivator for operators. But they might fancy the green cash that initiatives like this can put back in their pockets. We’re watching this space.

We had Justin Coetzee, the CEO and founder of GoMetro tell us more about the journey to eKamva, the challenges, opportunities and work that still needs to be done to green SA’s taxi industry – check it out or catch some highlights:

IN SHORT

Say something interesting…

👀 Tracking Takealot. A new analytics platform called Takealytics has launched to help sellers on Takealot make decisions on what products to sell on the e-commerce platform. Using Takealot’s public API, it pulls product data like reviews, competitors, descriptions and imaging of each day to inform sellers of what products could do well on Takealot.

🍑 Life is Peachy. Local digital payment provider, Peach Payments, is bringing a new sales channel and WhatsApp-based sales to its SA merchants through a partnership with Kenyan CRM and conversational commerce platform, Sukhiba.

🕹️ Sky Lens. SA is seeing a surge in drones in the surveillance and security industries as security industry players look to tackle crime. Local SOE Passenger Rail Agency of SA (PRASA) has reportedly seen a 75% decrease in infrastructure vandalism since it started using drones. So if you’re into security and drones, could be a lekker opportunity for you.

🎯 Taking Aim. SARS has set its sights on the nearly 6 million South Africans holding crypto assets. It’s partnering with the Financial Sector Conduct Authority (FSCA) to ensure tax declaration compliance by crypto holders.

🎓 Busy Body. Old Mutual’s had a busy week this week. Not only has it launched its own Mobile Virtual Network Operator (MVNO) service, Old Mutual Connect (complete with a R5 sim card), but the insurer also introduced its updated financial literacy platform, Moneyvarsity with added resources and some AI-based capabilities.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with your own fractional CFO for less with OCFO, easy-apply R5M business funding with Lula and 11 more vital startup tools & services.

CHECK THIS OUT

The Fastest Way to Meet Potential Investors & Partners in CT

Building ventures is not all about hard work & determination.

The Economist Intelligence Unit found that 8 out of 10 successful founders attribute a big part of their success to networking. And most VCs end up investing in founders they met in person.

Great! But how do you lure enough of the right people to a place where you can meet them?

Answer: You don’t. You simply go to Innovation City’s Business Speed Dating Event on 7 November, instead.

With tailored matchmaking and a super-sharp format of 5-minute rounds, you’ll meet all the investors, founders and potential partners you can handle in just 2 hours.

But there’s a catch: Seats are limited (and going fast), so it’s best to secure your spot early.

Submit your application here.

HAPPENING SOON

Upcoming Events

Today — Linkedin Live: We chat with author and serial entrepreneur Alan Knott-Craig about his new book, Life Lessons — Join here.

25 October 2024 — Online Masterclass: SA’s very own “product legend” Roger Norton is here for the first in a three-part product building series — The Open Collab community exclusive.

1 November 2024 — Online Masterclass: Keep your B2B sales pipe filled Masterclass session with sales expert, Sebastian Chapman — The Open Collab community exclusive.

8 November 2024 — Online Masterclass: Part 2: How to keep shipping truly great products, fast — The Open Collab community exclusive.

14 November 2024 — Cape Town: In-person: Building SA’s most-used digital products — tickets available soon.

View all our upcoming events here.

BUILDING TOGETHER

Happening over at The Open Collab

In the last 48 hours alone, in our online community, we…

  • Helped Enrico find the No 1 🔥 note-taking app for meetings.

  • Helped John find some of the best AI Pro packages out there.

  • Marvelled at GPT4’s South African accent.

  • Helped Jaco find some rad local providers for airtime via API.

  • Discovered the world’s raddest tea thread.

  • Spent an hour working together: From Blouberg to Durban, Pretoria to Düsseldorf and everywhere in between — we all logged in and it’s a vibe.

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all Open Collab members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

MEET THE STARTUP

Every day we meet local founders doing amazing things, and we bring them straight to you.

Trevor’s Savvy Sites lets solos and SMBs get online in just a few minutes… and soon accept and process easy payments via WhatsApp too..

Got some startup memes? Send them our way or tag us on socials.

WHAT YOU SAID

A little bit of customer success

We asked how you talk to customer support, and WhatsApp gets the all-green…

🟨🟨🟨⬜️⬜️⬜️ Anything but automated robot calls! 🤖 (24%)

🟨⬜️⬜️⬜️⬜️⬜️ I actually like talking on the phone ☎️ (11%)

🟨🟨⬜️⬜️⬜️⬜️ Nope, it’s email or nothing 📧 (16%)

🟩🟩🟩🟩🟩🟩 I like engaging on WhatsApp ✅ (44%)

⬜️⬜️⬜️⬜️⬜️⬜️ Can’t we just go back to good old face-to-face? 🤗 (5%)

Your 2 cents…

“I prefer a person to a bot or a mix that gives me real solutions.”

Joanne

Yeh, Joanne, if it adds to the experience or gets you helped faster, great. 🥳

“I have absolutely never had a good experience with WhatsApp as a channel for customer service. FNB once treated me to several hours of misery over three days just to request a simple transaction, for example. I have others.”

William

Eina, sorry William, yeh tech only helps when it actually HELPS, hey? 🤔

“It depends — If I'm going to be holding for a while, I'd much rather use WhatsApp, otherwise I've found that talking on the phone typically resolves my query faster.”

Jason

Guess it comes down to call volumes and query times, eh Jason? 🤙

“Providing customer support face-to-face is invaluable for start-ups. At this early stage, offering personalised assistance, even through video calls, helps build trust and ensures customer satisfaction. When your customer base is small, you can provide "white-glove" service, showing clients that their needs are a priority and addressing any issues promptly. As your business grows and scales, maintaining this level of personal support may not be practical, so it's important to maximise the opportunity while you can to create loyal and satisfied customers. Look after your first-adopters, they form the foundation of growing your client base.”

Trichardt

Pure wisdom, Trichardt! We always say find your ultimate five-star user experience. 👌

🎯 Making Sales While You Sleep...

Plus: Beer money 🍺, scaling local startups, Superbalist’s restructure & 20 years of startup lessons in minutes.

NEW
Newsletter
October 8, 2024

🎯 Making Sales While You Sleep...

Plus: Beer money 🍺, scaling local startups, Superbalist’s restructure & 20 years of startup lessons in minutes.

A bit of privacy? Two Harvard students hacked Meta’s smart Ray-Ban glasses to identify people they’re looking at. But, like in the Watchdogs games, it goes a step further and sends insanely in-depth private info about you straight to their phones. Eeek!

Here’s a doc by the creators on how to protect yourself from this type of tech.

In this Open Letter:

  • Customer X: Tech that makes sales while you sleep.

  • Beer money, scaling local startups & Superbalist’s restructure.

  • Shortcut: Get 20 years of hard-earned startup lessons in 40 mins.

  • How startup founders approach sales: The results are in.

  • Short on ideas? Share this and get 100+ SA startup ideas.

Together with WigWag:

Did someone forward you this email? Join 13,474 South Africans reading The Open Letter by signing up here.

Future-Proofing this R54bn SA Industry

Back in the 1980s, the primary way to buy insurance in South Africa was through brokers. That’s when South African entrepreneur Douw Steyn identified an opportunity to sell insurance to more price-sensitive consumers via telephones — it was a massive success both locally and abroad, giving birth to the telesales industry in South Africa.

Today, the total call centre industry in South Africa employs over 270k South Africans and is estimated to generate somewhere between R35 billion and R54 billion for the SA economy (about 0.4–0.7% of GDP).

And it’ll grow: the government has committed R569M to grow SA’s BPO (Business Process Outsourcing) sector, which is the fancy name for call centres, with an eye on growing it to a R62 billion per year industry by 2027.

Especially the Western Cape, which houses about 60% of SA’s call centres, netting about R21 billion and 10k new jobs per year for Cape Town’s economy… it’s big business.

Soon there'll be an app for that

But how is this game-changing with AI? Well, AI calling bots are here; just check this demo of a close-to-perfect South African accent that could easily act as an insurance salesperson.

And, you guessed it…

Call Centres Need to Evolve or Die

According to McKinsey’s Customer Care Report 2024, voice calls are surprisingly still alive and kicking but facing their gravest challenge yet:

  • rising call volumes

  • high levels of employee attrition

  • and persistent talent shortages

And with AI and automation as an answer, the biggest and best customer-facing organisations are investing heavily in digitally-enabled customer care (like omnichannel, but for call centres) and McKinsey notes that it’s lifting all customers’ expectations from interactions.

Being able to combine live voice with simultaneous chat, video and image-sharing is boosting customer experience through the roof — especially when interaction can be done asynchronously — in, say, an instant messaging format.

Now, throwing Large Language Models into the mix is no doubt lowering costs and doing the same job in a fraction of the time.

So, just how are SA organisations engaging customers in new and creative ways?

And just like that, Rafiki went viral on TikTok

The Local Player Redefining Customer Care

Local scaleup, rather.chat helps companies connect with customers in a new and engaging way via WhatsApp – probably the only channel with equivalent penetration to phone.

Originally built as a tool for selling policies on the popular platform, rather.chat has now been spun out as a full-service solution for businesses to:

  • Market to potential customers and generate leads

  • Perform and close actual sales virtually

  • Handle customer care and customer service

  • And take over some customer feedback functions

And the proof’s in the pudding: rather.chat has facilitated over 15 million connections between customers and companies and concluded over 150k actual sales (85% of which were entirely automated, and required no human intervention whatsoever).

In fact, they’ve partnered with a host of local companies, from Ackermans to Clicks, Discovery to Cars.co.za, and on average, manage to lift low engagement levels of around 1.5% through traditional branded app channels to over 40% through WhatsApp. What’s more, research has shown that customers are 47 times more likely to engage via WhatsApp than download your fancy app to chat that way.

Customer engagement is changing faster than ever and rather.chat is offering a way for consumers to engage that prefer to rather chat. We’re watching this space…

IN SHORT

Great Openers for Your Next Meeting.

🍻 Scaling with because of Beer. The SAB Foundation’s Social Innovation Accelerator and Fund has awarded a combined R3 million in funding to 3 local startups. They are Respo, an affordable private ambulance service app for low-income South Africans, Syked, an online wellness platform providing secure video counselling sessions, and Word of Mouth, an end-to-end e-commerce platform for informal entrepreneurs.

🐟 Scales and Fins. Local FinTech startup LittleFish has successfully closed its seed investment round, with TLcom Capital leading the financing — marking TLcom’s first venture into South Africa — and Flourish Ventures also participating as a co-investor.

💳 Card Scaling. VCs 54, First Circle Capital and Sunny Side Venture Partners have led a pre-seed funding round for Scale, a South African card-issuing orchestration startup. The  R12 million round will help Scale in its mission to connect FinTech platforms with banks, issuer processors, KYC and payment networks so that they can launch cards faster.

😢 Scaling Back. Local e-commerce Superbalist is expected to retrench around 28% of its staff as it restructures its business after recently being sold off by Takealot. Hopefully, those impacted are able to bounce back quickly.

🪙 Crypto Pay Scale. Thanks to a partnership between Luno and Zapper, you can now use crypto to pay for a bunch of stuff like medicine, petrol, flight tickets, parking and more at more than 30k Zapper merchants - hopefully as quickly as using a credit card.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with sustainable scaling and growth strategy help through Metavolve, your own CTO and tech team at a fraction of the cost with Octoco and 11 more vital startup tools & services.

CHECK THIS OUT

Sell It Now and Let Them Pay Later

When it comes to online payments, it’s become super easy to get up and running to receive payments with WigWag.

Even if you are a small or solo business selling on social or via WhatsApp, WigWag is one of the fastest ways to set up and get paid.

But what if your customers can’t pay right now? 

Let’s face it, some bigger ticket items are just sold better in instalments – but as a small business, you don’t have the option of selling it that way… until now.

From tomorrow, if you are registered on WigWag to receive payments, you can switch to Happy Pay’s Buy Now Pay Later (BNPL) solution to allow your customers to pay for your products or services in two convenient, interest-free payments. 

So, if you are collecting payments using Wigwag, you now get:

  • Automatic access to Happy Pay through the WigWag platform.

  • Seamless integration of BNPL at checkout, increasing customer satisfaction and conversion rates.

  • Guaranteed weekly payments, ensuring you can start fulfilling orders immediately after checkout.

  • A simple and user-friendly dashboard, showing all payment types — including Happy Pay transactions — in one place.

Keen to get the simplest online payment solution now with the convenience of Happy Pay’s BNPL solution?

Sign up for a WigWag account now.

HAPPENING SOON

Upcoming Events

11 October 2024 @ 12:00 — LinkedIn Live: We chat with author and serial entrepreneur Alan Knott-Craig on his new book, Life Lessons. Join here.

25 October 2024 — Online Masterclass: SA’s very own “product legend” Roger Norton is here for the first in a three-part product building series — The Open Collab community exclusive.

1 November 2024 — Online Masterclass: Keep your B2B sales pipe filled Masterclass session with sales expert, Sebastian Chapman — The Open Collab community exclusive.

8 November 2024 — Online Masterclass: Part 2: How to keep shipping truly great products, fast — The Open Collab community exclusive.

14 November 2024 — Cape Town: In-person: Building SA’s most-used digital products — tickets available soon.

View all our upcoming events here.

BUILDING TOGETHER

Happening over at The Open Collab

In the last 48 hours alone, in our online community, we…

  • Got our recordings of legal pros teaching us how to start companies overseas.

  • Introduced Chris to the COO of the startup he’s been looking to collab with.

  • Helped Trevor get his job spec looking 100% fly.

  • Tried out a bit of the new ChatGPT with Canvas ability.

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • Friday 12-1: Masterclasses, where we either LinkedIn Live chats with startup legends or get masterclasses in practical building skills from industry pros.

  • New: Free monthly startup strategy calls for all Open Collab members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

MEET THE STARTUP

Didn’t know we were looking for love…

We meet a lot of cool SA founders and started doing quickfire pitches where they tell us what their startups are all about.

This is Serisha, sharing how the Boardroom App helps busy professionals find love in a fast, fast world…

WHAT YOU SAID

Show Me the Money

We asked how you make sales for your startup, and it’s DIY for most…

🟩🟩🟩🟩🟩🟩 🎯 I do it myself (cos then I know I can eat) (62%)

⬜️⬜️⬜️⬜️⬜️⬜️ 📢 Influencers, ads – anything but selling myself (3%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🚀 I hire and train the best salespeople in the world (6%)

⬜️⬜️⬜️⬜️⬜️⬜️ 👔 I get like 90% of my leads via my LinkedIn (9%)

🟨⬜️⬜️⬜️⬜️⬜️ 😎 Very easily since I found Apollo on The Open Letter’s Founder’s Stack (20%)

Great! And remember to check out the sales tools in the Founder Stack:

You can find and contact leads with Apollo via your LinkedIn, build drip campaigns via email with Beehiiv, collect payments with WigWag and automate workflows between them all with Make so it all runs automatically 24/7.

You don’t even have to write any copy yourself, just get Stream to do it for you. 😉

💸 How to Claw Back 30% of Company Revenue

Plus: Africa startup acceleration 🪘, Elon’s SA investments & 300 million seeds & how to offshore your startup.

NEW
Newsletter
October 4, 2024

💸 How to Claw Back 30% of Company Revenue

Plus: Africa startup acceleration 🪘, Elon’s SA investments & 300 million seeds & how to offshore your startup.

Deeper meaning? Some joker asked Google’s NotebookLM to generate an entire podcast from a document with only the words “poop” and “fart” written on it, 1’000 times. And the AI did it — behold 10 minutes of poop-fart deep-dive.

Should we be worried about how good AI is at making stuff up?

In this Open Letter:

  • Sales optimised: How to claw back 30% of your company revenue.

  • Africa startup acceleration, Elon’s SA investments & 300 million seeds.

  • Offshore savvy: Join us to learn about housing your startup overseas.

  • What most of us are saving up for: The results are in.

  • Short on ideas? Share this with one friend and get 100+ startup ideas.

Together with:

Did someone forward you this email? Join 13,252 South Africans reading The Open Letter by signing up here.

Clawing Back 30% of Your Revenue

Let’s face it, when it comes to buying something from someone, nothing beats face-to-face. 

In fact, research has found that face-to-face is 36 times more successful than digital channels. But that doesn’t always mean it's best for the business. 

Face-to-face sales are pricey! Travel time, travel cost, and aligning calendars (think travelling salesman problem) all add up to make it likely the most expensive of sales processes.

Traditionally salespeople spend as much as 70% of their time on “non-selling” tasks – i.e. stuff they have to do but that aren’t bringing in revenue, like:

  • Administrative work,

  • team meetings,

  • reporting and documenting, etc.

And that’s why many organisations have become adept at doing sales remotely. Sure, it’s less effective, but at a fraction of the cost and complexity, in some cases, it does make sense. 

Taking it a step further, the advent of AI has seen people building AI callers that do sales calls for you. Old Mutual is piloting such a tool in SA right now – robocalling insurance armies.

InsurBot takes zero offence when you are rude to them…

Whilst certainly effective in certain market segments, it will be completely ineffective in others – that’s where instead of using tech to replace humans, one should use tech to make humans more effective at sales, all while reducing costs.

But running human sales teams in a post-covid, remote first world is complicated. 67% of sales managers say that overseeing a remote sales team is more challenging than they expected and 77% of B2B companies said they had faced challenges with their field reps working from home. 

Bringing the Human Back

Smart devices have done a lot for field sales. 

Being connected back to the office, easy calendar bookings and navigation using on-device navigation have all made the process of field sales force more streamlined. 

But add reporting, intelligence and sales capturing intuitively and all of a sudden you have a field sales team that turns into a field sales force.

That’s what local scale-up Skynamo started doing back in 2012. After building a field sales force solution for themselves in a company called EMSS (which later became Alphawave), they realised that there might be opportunities to build solutions like that for other companies, pitching on an array of tenders (including a field installation app for SA’s Digital TV rollouts, that due to politics never ended up happening). 

But they soon realised that while many people need a solution like this, most don’t have the budgets to build and maintain their own solutions. 

And right there, the SaaS opportunity was born with a 6-in-1 Field Sales Software platform catered towards:

  • Sales Reps — give your sales reps access to live stock checks and instant reports, execute assigned tasks/visits and access relevant info on the fly.

  • Sales Managers — watch sales unfold live and respond to customer queries or escalations.

  • Sales Intelligence — smart analytics and insights help you make decisions that can lead to better results.

  • Customer Intelligence — predict customer needs accurately.

  • Strategic Forecasting — using past data, simplify your future forecasting and planning.

  • Revenue Intelligence — figure out which deals/customers are most profitable.

Initially called Honeybee, they were renamed to Skynamo in 2018 and were able to raise $30 million right before COVID. Good for cash flow, not so great for international expansion plans. 

Once the lockdowns eased, they hit international markets, particularly the US hard with on-the-ground teams. Since then they have scaled back their on-the-ground US operations — a decision founder Sam Clarke explains on the latest ep of our “How Would You Build It” podcast

Skynamo is however still one of SA’s greatest SaaS success stories and continues to grow its customer base both in SA and beyond. 

And with the Robocallers going into overdrive, we think in-person sales will be more effective than ever and tools like this will have a major role to play. We are watching this space…

We recently chatted with Sam Clarke, CEO of Skynamo, on the “How Would You Build It” podcast. Check out the latest episode, or dive into some highlights:

IN SHORT

Drop some nuggets at the weekend braai

🔘 Hit the Start Button. The SA SME Fund, the Department of Science and Innovation (DSI), the Technology Innovation Agency (TIA) and impact investor E Squared Investments, have launched a R300 million Seed Fund of Funds. Aimed at early stage, tech startups, the fund will provide a much-needed boost for local startups starting out.

🚢 All Aboard. Local shipping platform for e-commerce exports TUNL has raised a seed round, after closing a $1 million pre-seed round in December 2023. Great news as it expands its local growth and dives into international payments & marketing support for local SMEs (to sell their stuff abroad).

Investments in the Stars? Elon Musk has expressed his desire to “invest in and otherwise support South Africa” should South Africa relook the telecoms regulations tripping up digital inclusion in the sector and SA at large. This comes off the back of our Communications minister Solly Malatsi’s meeting with Starlink reps to talk about potential SA investments.

🚄 African Acceleration. Fifteen African startups, including 10 from South Africa have progressed to the second phase of the UCT Graduate School of Business’ Solution Space and ayoba’s e-Track programme. The 12-week programme is aimed at accelerating the development of validated ventures (from the first phase) and will culminate in a demo day on the 28th of November.

🚀 Boosting Benefits. Employee benefits tech platform Bento has just concluded a R5.2 million pre-seed funding round, led by NEXT176. With employee benefits playing a larger part in helping SMEs land top talent, that’ll help Bento’s mission of helping more SMEs offer competitive, flexible, and affordable employee benefits.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with easy cloud-based accounting with Xero, superior quality tech content to build brand trust from Stream and 11 more vital startup tools & services.

CHECK THIS OUT

Wish you learnt about money sooner?

You're not alone, over two-thirds of the world is considered financially illiterate!

But what if we could change that?

Remember playing Monopoly as a kid: The flipping the board in a heated game?

FinMaster is here to replace that with something better — a game that’s fun, fast-paced, and teaches real-world financial skills to children 13 and up.

Seems like an ideal solution for educational family game nights…

In FinMaster, you’re not just collecting assets, you’re controlling the market!

Will you build your wealth or cause the next financial meltdown? It’s your choice.

From creating booms to surviving crashes, FinMaster turns learning about money into a thrilling experience.

Here’s what some of our playtesters are saying:

  • What a fun game!

  • A lot more realistic than Monopoly.

  • Engaging, educational, with an element of competition.

  • Interactive and great for a group of friends.

Pre-order your FinMaster today and make it part of your next friends and family games night. It’s the modern-day money game South Africa’s been waiting for!

Events that rock

Stellenbosch, you beauty

Oh man, were we underestimating Africa’s AI and Machine Learning capability — our latest event guests gave everyone an entirely new perspective on SA’s AI and ML capability earlier this week. We heard stories about:

  • how they are using it to help small companies beat their giant incumbents

  • as well as how to use it to intelligently deploy traffic department staff to reduce road fatalities by up to 50%

Interesting Topics

Awesome Community

Was great meeting so many of you there, see you at our next event!

Upcoming Events

4 October 2024 — Online Masterclass: All about offshoring with Andea du Toit from Dommisse Attorneys — The Open Collab community exclusive.

11 October 2024 — Linkedin Live: We chat with author and serial entrepreneur Alan Knott-Craig on his new book, Life Lessons.

25 October 2024 — Online Masterclass: SA’s very own “product legend” Roger Norton is here for the first in a three-part product building series — The Open Collab community exclusive.

1 November 2024 — Online Masterclass: Keep your B2B sales pipe filled Masterclass session with sales expert, Sebastian Chapman — The Open Collab community exclusive.

View all our upcoming events here.

BUILDING TOGETHER

Happening over at The Open Collab

In the last 48 hours alone, in our online community, we…

  • Celebrated Erhard’s startup Hoom going live!

  • Debated the whole Elon-Starlink-coming-to-SA thing…

  • Helped Pieter get square on his next startup steps.

  • Celebrated with Richard making great progress, with some help from Collab members.

  • Debated whether it’s best to focus on 1 thing or spread your luck/risk.

  • Welcomed 5 new members!

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all Open Collab members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

FOR THE MEMES

It’s a jungle out there…

Got some startup memes? Send them our way or tag us on socials.

WHAT YOU SAID

Priorities, priorities

We asked what you need to save for, and investing in getting to market or PMF’s the big one…

🟩🟩🟩🟩🟩🟩 Cash for my startup or MVP 🚀 (32%)

🟨⬜️⬜️⬜️⬜️⬜️ Home improvements – need that new pool, baby 👙 (11%)

🟨🟨🟨⬜️⬜️⬜️ A car or house – gotta keep moving up 💸 (17%)

🟨🟨🟨🟨⬜️⬜️ Purchase an investment property – esp. if interest rates keep dropping 🏘️ (21%)

🟨🟨🟨⬜️⬜️⬜️ A lekker holiday! It's time 🏖️ (19%)

Your 2 cents…

“Purchasing property and stashing cash for retirement! at 35 years old, I am trying to put as much money away as possible for retirement as damn! You need a lot to retire!”

Michelle

Nice one, Michelle! Do you know FinMeUp? Local guys that help you get your risk profile and manage investment goals in a fun and engaging way. 😎 💸

“The home improvements list gets longer by the week...”

Jason

Oh, by the way, Jason, please remember to fix the cupboard door. 🤣

🇿🇦 Taking R50bn to the Next Level...

Plus: Uber safaris 🦁, Eskom’s magic coal dust, solar-powered home bots & tickets to our next startup event.

NEW
Newsletter
October 1, 2024

🇿🇦 Taking R50bn to the Next Level...

Plus: Uber safaris 🦁, Eskom’s magic coal dust, solar-powered home bots & tickets to our next startup event.

Pearly whites? Researchers used toothpaste to make edible transistors, opening up the possibility of microchips you can safely swallow to help track and manage your body’s health from the inside.

In this Open Letter:

  • Uniquely SA: Helping 19 million save better, more securely.

  • Uber safaris, Eskom’s magic coal dust & solar-powered home bots.

  • See you tonight: Our Stellenbosch event is tonight — book your spot.

  • How often you eat out: And the latest poll results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

Together with:

Did someone forward you this email? Join 13,111 South Africans reading The Open Letter by signing up here.

Helping SA Manage R50bn in Savings

SA has the most mature and robust banking industry in Africa (and right up there with the best in the world, mind you), but despite that, late last year, we learned that a staggering 19 million South Africans remain underbanked

And while most still get paid in cash and use that cash to spend, many remain in the cash world, so it made sense that saving also happened in the world of cash: Hence the Stokvel.

Ah, the Stokvel 

For those who don’t know: A Stokvel is a member-only group savings system where 12 or more people contribute a set amount of money to a shared fund regularly (weekly, bi-weekly, or monthly) with different members receiving the entire collected amount in a lump sum on a rotational basis.

Let’s say you’re 12 people, each contributing R1’000 per month. In a classic rotational stokvel, each member chooses a month out of the year, and for that one month, you get R12’000 to use for yourself.

It’s a uniquely South African savings mechanism.

Now, stokvels are guided by a constitution that outlines all the rules: contributions, payouts, and member roles. And by law groups must be registered with the National Stokvel Association of South Africa (NASASA), the only association approved by the Registrar of Banks in terms of the Banks Act 1990 (Act No. 94 of 1990).

And, as one can imagine, you can use this mechanism in various ways. That’s why there are different types of Stokvels: from grocery stokvels to investment clubs.

The Stokvel game is no small thing…

According to NASASA, there are more than 800k Stokvel groups in South Africa with more than 11 million individuals. 

And the industry manages around R50 billion each year, essentially creating a massive network of “human banks” in the local economy.

Now, up until very recently, we would not have thought that a digital stokvel is viable. It faces adoption challenges and “money-in” friction. Basically, if someone has to take cash to a bank to join a stokvel, it's costing them way too much in terms of time and taxi fare. It’s a non-starter.

But things have started changing fast in the financial infrastructure for townships space.

Earlier in the year, we covered how Kazang has a presence in more than 85’000 spaza shops across SA and how their tech is enabling merchants to take cash deposits, allow withdrawals from cards (and make payments with cards), sell bus tickets and a host of other interesting offerings.

With this footprint, it could finally make sense to do the digital stokvel and it looks like it’s happening…

The local player bringing the Stokvel into the future

StokFella is a digital stokvel app designed to make running a stokvel more efficient and secure by offering tools for record-keeping, financial tracking, and communication – all in a user-friendly, secure platform.

They’ve got a pretty flexible subscription-based pricing, starting with a free plan for up to 15 members, which covers the basics of running a stokvel. 

But if you wanna go pro for R500 per month, stokvels get meeting resources, detailed reports, executive coaching discounts, and higher interest rates on savings. They are also integrating innovative solutions to offer members such as a link into Troygold to allow stokvels to effortlessly invest in gold via API.

With over 42’000 members and more than R220 million transacted, StokFella is bringing an innovative solution that modernises old-school, traditional savings and investment schemes like stokvels. We’re watching this space…

IN SHORT

Sound smart at the watercooler

🤖 Power Bot. Local home energy management company Plentify has joined forces with one of SA’s largest solar and electrical distributors Herholdts to launch SolarBot. This intelligent controller analyses weather patterns, load-shedding schedules and customer demand to make smarter decisions on when to charge and discharge the battery.

🦁 All Hail Safari. Uber has just launched Uber Safari in South Africa. And just like the name suggests, users will be able to book a full-day “Wildlife Adventure” from Cape Town to the Aquila Private Game Reserve which includes a 3-hour game drive to see Africa’s Big 5. The round trip will set you back around R3’400 for 4 peeps and runs on Fridays and Saturdays.

🏠 Home affairs at Home. South African home affairs is notorious for long queues, confusing processes and frustrations. However, given that their budget has been cut by as much as 40%, perhaps that’s part of the reason. The new Home Affairs minister is planning to build Home Affairs @ home, taking everything online and making it digital. If it works, no more queues…hooraay!

🛣️ Recycled Roads. Eskom’s Research, Testing, and Development (RT&D) initiative is trialling the use of recycled coal ash instead of traditional cement for road construction. It’s starting its trial with a new access road at its Kusile Power Station and is expecting to use around 2’904 tonnes of coal ash per km of road.

🏦 Take it to the Bank. Africa's largest financial institution by market capitalisation, FirstRand, is set to acquire all of HSBC Bank plc’s South African operations including clients, banking assets, liabilities, and staff with the deal set to close at the end of 2025.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with super-easy local and international payment processing with WigWag, expert offshoring, company structure and legal advice from Dommisse Attorneys and 11 more vital startup tools & services.

CHECK THIS OUT

Do banks even know what startups are?

One recent Open Letter user poll revealed that South Africans are tired of their banks.

  • High fees

  • Horrible service, and

  • A general sense that their bank just doesn’t get their needs.

But there is hope. Introducing Lula’s ZERO fee bank accounts.

That’s right, zero monthly fees to set up and use a Lula business bank account.

What’s more, when you have a Lula bank account, you can:

  • Stay on top of finances with their free, powerful cashflow manager called Lulaflow

  • Earn 1.5% annual interest on positive balances

  • Get dedicated support from real humans in real time

Finally, with a Lula business bank account, it’s never been easier to get access to up to R5 million in business finance.

Trusted by SMEs for more than a decade – get a bank that understands small business.

HAPPENING SOON

Upcoming Events

1 October 2024 — Stellenbosch: How to Build an AI Startup with Dries Cronje and Retief Gerber — tickets here.

4 October 2024 — Online Masterclass: All about offshoring with Andea du Toit from Dommisse Attorneys — The Open Collab community exclusive.

11 October 2024 — Linkedin Live: We chat with author and serial entrepreneur Alan Knott-Craig on his new book, Life Lessons.

25 October 2024 — Online Masterclass: SA’s very own “product legend” Roger Norton is here for the first in a three-part product building series — The Open Collab community exclusive.

1 November 2024 — Online Masterclass: Keep your B2B sales pipe filled Masterclass session with sales expert, Sebastian Chapman — The Open Collab community exclusive.

View all our upcoming events here.

BUILDING TOGETHER

Happening over at The Open Collab

In the last 48 hours alone, in our online community, we…

  • Learned that in 3-or-so weeks, TJ Strydom is releasing a new book on how the Capitec founders turned their tiny little startup into a Big 5 contender.

  • Shared what business books everyone is reading — got 7-odd awesome recommendations.

  • Discovered an awesome new spreadsheet and data presentation tool.

  • Learnt where to get Padel gear for a good price.

  • Discussed how similar the CIA’s description of activist groups is to meetings in academia.

  • Welcomed a host of new members! (It’s starting to buzz in here).

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all Open Collab members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

FOR THE MEMES

Always keeping it spicy

Got some startup memes? Send them our way or tag us on socials.

WHAT YOU SAID

A Bite to Eat

We asked how often you eat out, and once a week’s the way…

🟨⬜️⬜️⬜️⬜️⬜️ 🍜 Daily – lunches at the office (13%)

🟩🟩🟩🟩🟩🟩 🍔 Once a week (38%)

🟨🟨⬜️⬜️⬜️⬜️ 🍕 Monthly as a payday treat (17%)

🟨🟨🟨⬜️⬜️⬜️ 🥞 Special occasions only like birthdays or anniversaries (23%)

🟨⬜️⬜️⬜️⬜️⬜️ 👨‍🍳 I don't eat out – I make better food at home for a fraction of the price (9%)

Your 2 cents…

“Being vegan it's hard to eat out locally and there is often a surcharge for the vegan cheese or milk etc (it's rather off putting actually). Fortunately I love cooking and experimenting at home, but it would be a nice treat to have something really delicious out once in a while.”

Spatzendreck

Nice one for cooking, Spatzendreck. Guess it also depends where you live — in Cape Town, we have some good-looking vegan options (our favourites are always vegan desserts, ‘cos everyone can enjoy them together). 🤗

“My brother used to work in the catering and fast-food business, so I know how small the margins are and the concept and software mentioned is brilliant. But just a heads-up about the industry as a whole facing a new challenge. Some restaurants in the Midrand area are facing thugs threatening to report them to the Department of Labour and Home Affairs for employing foreigners, unless the owner pays a monthly charge determined by the number of foreigners he or she employs. Sick and sad.”

Chris

Oh wow, Chris. Yes, we’ve been noticing lately a lot more reports on extortion networks in SA than we seem to have had before — hope it doesn’t become an issue in the future. 😥

“60% of my meals are takeout.”

Princess

We hope initiatives like HeadsUp help ensure you always get value, Princess! 🌯

“Becoming too expensive, when you add everything up.”

Marius

Eish, ja, Marius. We’re hoping for cost savings and better Rand making things a little more affordable again. 💸

♨️ Using AI to Find the Best Prices...

Plus: OpenExodus 🤖, Cape Town’s salty water plans, Meta’s AR specs & look who’s sponsoring our next event drinks.

NEW
Newsletter
September 27, 2024

♨️ Using AI to Find the Best Prices...

Plus: OpenExodus 🤖, Cape Town’s salty water plans, Meta’s AR specs & look who’s sponsoring our next event drinks.

Ready to launch? Behold the most amazing exploding rocket video yet! This beauty comes to you courtesy of China’s Deep Blue Aerospace as the Hollywood-movie quality vid of their failed launch-and-land attempt.

In this Open Letter:

  • Game changer: Using AI for better food prices.

  • OpenExodus, Cape Town’s salty water plans & Meta’s AR specs.

  • Drinks on us: Grab your event ticket + check out our drinks sponsors.

  • What you like most about the Collab: The results are in.

  • Last chance: 24 Hours left to get 50% off The Open Collab.

  • Meet the Startup: The latest startup we bumped into at our event.

In partnership with

Did someone forward you this email? Join 13,006 South Africans reading The Open Letter by signing up here.

Putting More Meat on This R100bn Industry’s Plate

It’s hard to imagine an industry more cut-throat than a restaurant. Complexities of managing staff and customers aside, restaurants operate on tiny margins of around 4.4% in South Africa.

It goes without saying then that planning leads to large amounts of food waste or something as simple as overpaying for some of the 700+ items they order and use can destroy profits, if not sink the operation.

Not to mention, most restaurants are likely still recovering from those nasty hard lockdowns, where more than 770 restaurants shut their doors.

“But we saving on the gas bill chef?”

Margins like carpaccio…

This nearly R100 billion per annum industry operates through ±16’000 restaurants nationally. Half of these are quick-service restaurants, typically part of a franchise where central ordering and price negotiation take that burden off the franchise owner.

However, non-franchise restaurants typically order all of their stock themselves, buying from a large array of suppliers. On average, they spend about R500k on suppliers per month and, because of their lack of data, are often at the mercy of suppliers not overcharging.

This is a major risk for restauranteurs… overpaying by 10% could be the difference between making a profit or making a loss.

Wouldn’t it be nice to know you’re paying a fair price?

Local startup HeadsUp built an AI-powered app that gives restaurants price transparency by comparing ingredient prices to market data from others’ invoice histories.

How it works is: restaurants send HeadsUp their supplier invoices via WhatsApp or email, and the AI organises and analyses the restaurant’s data, compares it with their other users’ invoice data, supplier info, products, and prices (they have thousands of data points to work with), and lets users know if they’re over-paying for specific products based on current market prices – and what this would cost you over the space of a year.

Restaurants can then decide to switch to another supplier (if they’re getting ripped off and there’s better value to be found elsewhere) or equip the restaurant with solid info to negotiate better prices.

HeadsUp charges a SaaS fee to restaurants, which they say is easily offset by the amount they save. They regularly find products being marked up by as much as 80%! And that’s likely why more than 200 customers are using the product.

We had Sven Tietz the CEO & Co-Founder of HeadsUp on this week’s episode of our “How Would You Build It” podcast. His passion for helping restaurants double their margins using HeadsUp is palpable, and he shares candidly about how they’re building HeadsUp. Check out the full episode, or catch these highlights:

THE OPEN COLLAB ONLY

Get exclusive insights into this startup, the industry and other opportunities, PLUS join our community of founders who get access to free events and support in building their businesses and

IN SHORT

Nuggets for the Weekend Braai

👋 Bye Bye OpenAI. Three top leaders from OpenAI have announced their departure from the company including CTO Mira Murati, VP of Research Barret Zoph and Chief Research Officer Bob McGrew. This comes after a string of OpenAI executive departures in May and August this year, amidst the company’s planned restructure to a for-profit benefit corporation where Sam Altman is said to receive 7% equity.

🚚 Special Delivery. The SA leg of the Last Mile Innovation Nexus held in Jozi on the 17th of October will see local logistics startups get the chance to pitch to and connect with over 100 supply chain leaders, including Woolworths, Pick n Pay, Massmart, Homechoice, Clicks Group, and more.

🤓 Orion’s Specs. Meta just launched Orion, (previously known as Project Nazare) to Meta employees and select external audiences. The AR glasses combine the look and feel of a regular pair of glasses with the immersive capabilities of augmented reality, with Meta calling Orion “the most advanced pair of AR glasses ever made”.

⚡️Blast from the Past. Longing for the late 90s listening to MP3s on your computer via Winamp? Well, they’ve just released Winamp’s complete source code on GitHub, inviting developers to help make some improvements to it.

🚰 Don’t be Salty. Remember Cape Town’s Day Zero in 2018 and talk about a desalination plant? Turns out the City of Cape Town (CoCT) has commenced its feasibility study on the proposed R5 billion, 22’000 m2 sea-water, reverse-osmosis desalination plant set to be ready by 2030.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with expert growth strategy help from Metavolve, fractional CTO for hardware & software from Octoco and 11 more vital startup tools & services.

CHECK THIS OUT

Unlock Referral Bonuses by Connecting Friends with Top Jobs

Why should company employees have all the fun with referral bonuses?

Meet Draftboard: A platform where referral bonuses are open to everyone. Share job opportunities from companies like SeatGeek, Via, Formlabs, Bilt, Triple Whale, and OneSignal with your network. Earn when your friends get hired.

Here’s How:

  • Seamless Sharing: Copy and share your unique referral link via text, email, or social media.

  • Diverse Companies: Access job postings from over 80 premier companies across multiple sectors.

  • Real-Time Updates: Track the progress of your referrals as they advance through the hiring process.

HAPPENING SOON

This Tuesday in Stellenbosch

Want to learn how Vodacom saves billions per year using AI?

Or how The Daily Maverick uses AI to uncover corruption and fraud?

Then you don’t wanna miss our upcoming event on 1 October in Stellenbosch.

Only a few more tickets left — it’s R150 or free if you’re an Open Collab member.

If you aren’t in Stellenbosch, don’t despair; check out these cool events coming up, including taking your business offshore, why Mxit failed and mastering Sales.

BUILDING TOGETHER

Happening over at The Open Collab

In the last 48 hours alone, in our online community, we…

  • Thoroughly unpacked Meta’s Orion glasses play — taking no prisoners, dragging Apple and Epic Games into the ring too.

  • Got our tickets to the sweet-sweet next startup event in Stellenbosch.

  • Celebrated Gustav’s app launch on Apple!

  • Celebrated Danei’s pre-orders rolling in!

  • Discovered a ton of helpful payment gateway info.

  • Got the lowdown on startup showcase.

  • And had the entire community gang up to convince us to do pitch events, with pitch deck workshops beforehand… hmmm…

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all Open Collab members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

MEET THE STARTUP

Justin from Rainchekk

We meet a lot of startups and love learning about all the crazy and cool things people build.

Here’s Justin Coomber telling us all about his startup that’s like an “operating system” for local businesses…

WHAT YOU SAID

The Open Collab Favs

We asked what you look forward to in The Open Collab, and it’s the events, of course…

🟩🟩🟩🟩🟩🟩 🥂 Free entry to all startup events, of course! (34%)

🟨🟨🟨🟨⬜️⬜️ 🤩 Being able to ask successful founders questions (25%)

🟨🟨🟨⬜️⬜️⬜️ 🥹 Connecting with other founders (in this lonely game) (17%)

🟨⬜️⬜️⬜️⬜️⬜️ ✅ 24/7 support, introductions and free consults on the chat (8%)

🟨⬜️⬜️⬜️⬜️⬜️ 💡 The deep-dive content & opportunities (looking to expand my biz) (8%)

🟨⬜️⬜️⬜️⬜️⬜️ 📚 I’d actually like to see what the upcoming courses are (8%)

⬜️⬜️⬜️⬜️⬜️⬜️ 😎 I’m hoping to get sweet partner discounts (0)

Well, in that case, good news! 

If you join The Open Collab, you get free entry to all 10 of these startup events in the next 2 months — that’s like almost an event a week!

PS: Today is the last day to get 50% off the annual plan… use the code HERITAGE to claim your discount.

🦓 The Best Place to Build a Startup...

Plus: Kenya’s solar road trip 🛵, SA’s investment boom & SA goods on Amazon.

NEW
Newsletter
September 24, 2024

🦓 The Best Place to Build a Startup...

Plus: Kenya’s solar road trip 🛵, SA’s investment boom & SA goods on Amazon.

Celebrating SA? Don’t forget this Heritage Week you get free entry to Cape Nature parks for some swimming, hiking, mountain biking — whatever you fancy.

And more good news: the price of braaibroodjies is stabilising — see Johann Biermann’s braaibroodjie index. It’s a South African food inflation indicator, showing that, while the cost of braaibroodjies has increased year on year, we are at least in better space than January! If you needed more reason to light a fire, there you go… you’re welcome.

All in all, a good time to be living and building in SA…

In this Open Letter:

  • Heritage special: The best place to build a startup.

  • Kenya’s solar road trip, SA’s investment boom & SA goods on Amazon.

  • Where people buy their clothing: And the results are in.

  • Startup fuel: Share this once and get 100+ startup ideas!

  • Save: Get 50% off The Open Collab this week!

Happy Heritage Day!

We’re doing things a little differently today since it’s a Public Holiday, and many of us might be taking it easy – especially if you were strategic and took yesterday off as well.

So let’s just take a minute to celebrate…

The Best Place to Build a Startup

Building a Startup in SA is special…

We’re exposed to some unique challenges and limitations – but that also means we’re perfectly poised to build really powerful, solutions that solve these uniquely South African challenges.

Build a startup in South Africa they said. It’ll be fun they said.

And, naturally, we at The Open Letter have developed a pretty in-depth overview of the SA startup scene over the years. We have

  • Interviewed hundreds of founders and builders over the last 2 years.

  • Shared 160+ deep-dives into SA ventures, industries and opportunities.

  • Published 129+ podcasts featuring SA founders, investors and PMs.

  • Collected/curated preferential services, deals and tools for SA founders.

  • Built an engaged community of SA founders, investors, developers and startup pros.

The best part of what we do? Seeing South Africans come up with really unique solutions to some of our most complex problems. So, to celebrate, here are some of our favourites…

1. The last-mile play that’s keeping SA rolling

Local Rent-to-Own bike startup Bike2Own have more than 400 riders earning between R2’600 and R6’000 per week, renting their delivery bikes from Bike2Own for anything between R650 to R850 per week. And after 18 months, the bike becomes theirs. 

(Pssst… something pretty cool happens to about 60% of the riders once they’ve paid off their bikes – read the full Open Letter on SA’s rent-to-own bikes).

2. Connecting more SA townships for cheaper and faster

Many people in townships have two mobile devices – 1 cheaper, lower-spec phone for travelling and a 2nd higher-end device that stays at home because it’s mainly used for entertainment.

Unfortunately, the internet speeds available in townships haven't kept up with the demand for streaming. 

Until now. fibertime, a Stellenbosch-based township internet provider, financed and installed Wi-Fi devices in 880 homes in Kayamandi, Stellenbosch, at no charge to the occupants, giving residents the ability to purchase Wi-Fi connectivity at R5 per day with speeds of up to 100Mbps. Learn more about it in this edition of The Open Letter.

3. Helping 15m+ South Africans combat the debt trap

Debt is a massive issue in South Africa, with some 62% of people’s incomes going towards servicing their debt. Local HRTech Jem is leveraging WhatsApp to provide a powerful Earned Wage Access (EWA) product that helps employees access the part of their wages/salary they’ve already earned so far that month. Check out the Jem feature in this Open Letter on financial inclusion tech.

4. The future of learning built right here in SA.

Local EdTech Lessonspace is building a virtual classroom, online tutoring & collaborative learning platform with a collaborative digital whiteboard which teachers and tutors can use to make notes, draw drawings, and explain concepts.

A key differentiator is Lessonspace’s set of education-specific tools built specifically for a wide range of subject matter - find out which subjects in this previous edition of The Open Letter on digital classrooms in SA.

5. Curing 2.5 million people with AI

Tuberculosis (TB) kills 153 people in South Africa every day, partly because it’s so hard to detect. 

Local MedTech AI Diagnostics are revolutionising TB screening with their AI-enabled digital stethoscope that captures and analyses a patient’s lung sounds to help diagnose if that patient has TB. (Find out how it works in this Open Letter.)

These are just a few of the local startups we’ve recently featured building powerful solutions for South African problems – there are 160 more right here

But founders: you don’t have to go it alone…

Of course, building in a special place requires special people… And developing a new business is as tough and lonely as it is rewarding. And right here in SA, we are changing that.

Yes I can see Neo in your glasses’ reflection

The Open Collab (previously known as The Open Letter PRO) is a thriving startup community of more than 50 South African founders and operators building together. In The Open Collab, founders get to…

  • Connect with other local founders.

  • Access a broader network in order to make progress faster.

  • Learn nuanced skills like B2B Sales and Product in a South African context.

  • Get access to experts who have done it before and be able to ask them questions and engage with them.

  • Book 1-on-1 coaching sessions with startup specialists.

  • Get deep dives into the business models and workings of all the startups we feature.

  • Find up to 3 auxiliary opportunities to work with every startup we feature in every newsletter (twice per week — that 6+ real SA business ideas, every week).

We have some fantastic workshops lined up (did someone say B2B sales?!) exclusive to members of the community and we would like to make our circle bigger by offering 50% off this week.

Join For 12 Months, Get 50% Off

We’re doing a special Heritage Day Sale where you can join The Open Letter Collab for R2’500 for 12 months (our normal price is R5’000). Head over to The Open Collab page, choose the annual plan and use promo code HERITAGE (valid until Friday)

We’re bullish on startups and bullish on South Africa. It’s why we’re building The Open Letter to be the leading startup publication and hub in South Africa with all of you. We’re watching this space…

IN SHORT

🪴 Growing Startups. The British High Commission’s UK-SA Tech Hub has awarded an undisclosed amount in its third round of funding (with previous rounds reaching R2 millie) to assist high-growth start-ups in South Africa by propelling the SA Start-up Act Movement’s efforts.

🇿🇦 Proudly Mzansi. Amazon.co.za has launched the ‘Shop Mzansi’ storefront which houses more than 160 brands from new, emerging, and established South African businesses to make it easier for South African customers to find products from these local small businesses.

🛵 Sun Scooting. A solar-powered electric motorbike designed and built by Roam, a Kenyan electric mobility company will travel around 6’000kms from Nairobi to Stellenbosch in South Africa, in October. The partnership between Roam and Researchers from the Faculty of Engineering at Stellenbosch University (SU) will see the Roam Air arrive at SU on October 18 for its Electric Mobility Day.

🤑 Local Investing. South Africa is seeing an investment boom in the 100+ days after the formation of its business-friendly coalition government. ArcelorMittal decided against closing two steel plants, Qatar Airways bought a stake in SA Airlink, Toyota opened a $70 million auto parts facility, and Anglo American announced a $625 million iron-ore investment.

🛏️ Fancy Staying. Two South African hotels (and the only ones from Sub-Saharan Africa) have cracked the nod for the 2nd edition of the World’s 50 Best Hotels. The Mount Nelson in Cape Town came in at 28 (and was also crowned Best Hotel in Africa), while Singita Kruger National Park took the 44th place.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with zero-monthly-fee bank accounts and business loans with Lula and specialist small- and medium-sized business accounting software for less with Xero.

What You Said…

We asked where you buy your clothing, and it’s the usual suspects…

🟨🟨🟨🟨🟨⬜️ 🇿🇦 Local Proudly South African brands (26%)

🟩🟩🟩🟩🟩🟩 🛍️ SA’s usual fashion retailers (Mr Price, Ackermans etc) (29%)

🟨🟨🟨⬜️⬜️⬜️ 👠 International chains (H&M, Zara etc) (17%)

🟨⬜️⬜️⬜️⬜️⬜️ 👜 High-end fashion labels (9%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🤩 Novelty tees with funny illustrations (2%)

🟨🟨🟨⬜️⬜️⬜️ 🧵 In this economy, I’ve taken up sewing to make my own clothes (17%)

Your 2 cents…

“Actually, I do a mix of all of the above :) ”

Joanne

Nice, healthy balance, Joanne. 🤸

“Bring on the classic Cape Union and Old Khaki! ;-)”

Herman

Hey, way to go local, Herman. 🧭

“I have bought off Shein mainly over the past 3 years as they have more variety than local stores and they are more cost effective.”

Michelle

Money-smart, Michelle. Hope you don’t get impacted by extra tax… 👠

“I've kept my clothes so long its back in fashion...”

Bzaar

He he, nice one Bzaar, keeping and maintaining your clothes is an art form. 🪡

🧢 Unboxing SA's R193bn Fashion Game

Plus: SA’s coolest champ ❄️, Happy funding, the last of your Tupperware & your ticket to home-grown AI insights.

NEW
Newsletter
September 20, 2024

🧢 Unboxing SA's R193bn Fashion Game

Plus: SA’s coolest champ, Happy funding, the last of your Tupperware & your ticket to home-grown AI insights.

Bright future? Scientists have found a way to store an entire human genome in 5D memory crystals for billions of years. The material is one of the most chemically and thermally stable substances on Earth and could be the next way for today’s billionaires to attain immortality (kind of).

In this Open Letter:

  • Data unwrapped: Levelling up SA’s R193bn fashion game.

  • SA’s coolest champ, Happy funding & the last of your Tupperware.

  • Taking the leap: How to set up an offshore entity for your startup.

  • Your biggest gripes with big banks: The results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

Together with:

Did someone forward you this email? Join 12,922 South Africans reading The Open Letter by signing up here.

A Shoo-In for SA’s R193bn Fashion Sector

There are a handful of things humans need to survive…

Food, water, maybe a shelter of some kind – and, of course, clothing.

Early humans started wearing adapted animal skins and vegetation around 170k years ago to protect them from cold, heat and rain, particularly as they migrated to newer climates.

With the advent of newer technologies like sewing needles (50k years ago), dyed fibres (36k years ago), and later on looms, and high-tech machinery to produce the type of modern textiles we use to manufacture clothes today, clothing form an integral part of human history. 

Despite breaking multiple social norms, Derek still rocked his signature “Blue Stone” look…

The big bucks in global fashion…

And with more than 8 billion people on the planet, it’s no wonder the global fashion/clothing/apparel market is huge.

Despite taking a knock in 2020 during Covid, the global clothing market is set to be $1.79 trillion this year, employing 1 in every 8 workers (~12%) around the world in the fashion and textiles industry.

There are more than 100 billion items of clothing made each year — equating to about 12 items of clothing per person per year.

Closer to home, South Africa has the largest apparel and footwear industry in sub-Saharan Africa – worth over $11 billion or R193 billion+.

Big bucks also mean big headaches…

The fashion industry is highly cyclical… Warm clothing for autumn and winter, cooler for spring and summer. Not to mention different colours or colour schemes, different styles and cuts, different patterns and textures – all dependant on current trends (or what’s about to become trendy).

Then, retailers are often sourcing stock from multiple suppliers. Plus they’ve got to get that fine stock balance just right – too little stock and you suffer from stockouts. Too much, and you’re overstocked.

So imagine a large retailer with multiple stores across the country (sometimes with quite a broad range of socio-economic customer base) having to source and place a variety of items, in different sizes, all in a way to maximise sales and minimise leftover stock that needs to go on the profit-eroding sale rack at the end of the season. It’s complicated….

The local player helping local fashion retailers 

But this is exactly the kind of problem where machine learning shines.

Local startup Pattern has built a business intelligence platform tailored to solve this problem for fashion retailers

It uses big data and AI to automate typical resource-heavy activities like merchandise planning and buying, stock allocation and replenishment to ensure that fashion retail teams can focus on getting the right mix of stock into the relevant stores to ensure their customers’ needs are met. 

It integrates with a fashion retailer’s existing systems, where it takes the data from those systems to track in-season trends, optimise stock, and analyse historical customer purchasing patterns.

With greater granularity on single stock items, users are able to see how each item is specifically driving revenue. They can also see how each item performs at a store level, and assess the size curve accuracy (did they have enough of the item in the various sizes to ensure optimal stock levels?), which helps them understand future stock levels.

Pattern consolidates a ton of merchandising intelligence available in real-time and at their fingertips, to help teams make critical buying and planning decisions on the fly.

In the fast-paced world of fashion, companies like Pattern are bringing old-school industries into the future. Through data-driven insights and automation, they're helping fashion retailers thrive in a highly competitive environment. We’re watching this space…

On the Pod…

We had James Townsend the Co-founder and CEO of Pattern on the latest episode of our How Would You Build It podcast. Check out some highlights below:

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🛍️ Syfting to Xero. Syft, a local cloud-based reporting and analytics platform will be acquired by global accounting software firm Xero for a cool $70 million. Having started in 2016, Syft’s AI financial reporting platform provides small and medium businesses with access to reporting tools.

🚀 Happy Funding. SA BNPL player Happy Pay has raised R32 million in pre-seed funding to accelerate the FinTech’s growth and product offering expansion. It’s also just hit the 150k active user mark after launching in 2023.

🥽 I can (almost) see clearly now. Neuralink’s experimental Blindsight implant has been designated as a "breakthrough device" by America’s Food and Drug Administration (FDA). The Blindsight implant is being touted as being able to potentially restore blind people’s sight.

🥶 World Champions of Staying Cool. Philippus Saayman was the sole winner from South Africa at the 2024 WorldSkills Competition where he was awarded the 'Best of Nation' medal for being the top competitor in the Refrigeration and Air Conditioning skill category.

💨 Disappearing kitchen supplies. After nearly 80 years as a staple in kitchens around the world, Tupperware has filed for Chapter 11 bankruptcy in the US. Perhaps they should start a lid/container swapping marketplace for people to complete their Tupperware sets.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with super-easy social payment collection by WigWag and your own CTO (for less) with OCTOCO.

BUILDER’S CORNER

How to Set Up an Offshore Entity from South Africa

Written in conjunction with Jacques Stemmet of Dommisse Attorneys Inc.

Setting up an offshore entity can seem daunting, but, if done right, it can open new doors for your business. We asked the experts at Dommisse Attorneys Inc. to break down the four key steps to establishing your company offshore:

We going offshore, Baby.

Step 1: Understand Why You Want to Offshore

Before you leap, make sure you know why. Do you have an international market or investors? Or perhaps you’re planning to sell offshore one day…

Whatever the case, it’s about more than just wanting to earn foreign currency – there are legal and tax implications, including South Africa’s exchange control regulations, to navigate. 

Offshore entities must meet criteria like “place of effective management” and “a foreign business establishment”. I.e. OffshoreCo needs real people conducting real business to maintain compliance and avoid hefty profit taxes. 

Additionally, exchange control requires you to get approval to license IP to a related offshore party and outright forbids selling the IP. It’s not impossible to offshore IP, but following the right process is paramount. 

Step 2: Choose the Right Structure

There are two primary ways to structure your offshore company in relation to your South African company (SACo):

  • Mirror Structure: OffshoreCo mirrors the shareholding of SACo, forming a synthetic group structure where both entities operate in parallel. This is achieved by a stapling agreement, which ensures that any movement of shares in SACo must be replicated in OffshoreCo (and vice versa). In effect, an investor will subscribe for equal shares in both entities. On exit, the investor will sell their shares in both entities and benefit from growth from the respective entities.  

  • Holding Company Structure: OffshoreCo acts as SACo’s holding company, which is often preferred by international investors because of its simplicity and industry-standard approach. It’s complicated, though: it creates a loop structure, requiring strict conditions to be met and additional reporting obligations.

Your structure impacts present and future tax, investor relations, and operational setup. And your circumstances can impact structure choice: shareholder limitations, numbers and company valuation may be so high that a mirror structure is more cost-effective than the legal and tax implications of restructuring to a holding company. 

Step 3: Pick the Right Destination

Where you establish OffshoreCo matters. The destination should align with your business goals, target market, and investor preferences. Although popular jurisdictions offer tax benefits, business-friendly environments and reduced administrative burdens, you still need to do your homework, as some jurisdictions may offer more beneficial grants or tax breaks for your specific industry, or may be the most appropriate jurisdiction to leverage investment and your business growth. 

It’s crucial to assess the long-term advantages, maintenance costs and risks before making a decision.

Step 4: Build the Right Team

The success of your offshore expansion hinges on having the right team to support you through legal and financial challenges. You’ll need advisors who are experienced in international structuring and can guide you through compliance, exchange controls, transfer pricing and ongoing obligations.

If you’re ready to take the next step and explore international structuring, contact Dommisse Attorneys Inc

“Our team is here to help you achieve your global ambitions with ease”, says Dommisse’s Jacques Stemmet.

ENGAGE

Upcoming Event

On Tuesday, 1 October, you’re gonna want to report to LaunchLab in Stellenbosch by 6pm — we are hosting two South African AI pioneers, to give us the skinny on where AI is realistically going in the next decade, and what it means for business in South Africa.

Tickets are R150 right here, but Pro members can get in for free.

Psst If you are a TOL Pro member, use the THEOPENLETTERPRO promo code to claim your free ticket!

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  • Access to exclusive AMA’s with industry experts where you can ask them anything and learn.

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What You Said…

We asked about your biggest gripe with banks, and the fees are a problem…

🟩🟩🟩🟩🟩🟩 😭 High fees (32%)

🟨🟨🟨🟨⬜️⬜️ 👎 Horrible service (24%)

🟨⬜️⬜️⬜️⬜️⬜️ 💩 Products don’t suit my needs (9%)

🟨🟨🟨🟨⬜️⬜️ 😔 They don’t really care about me/my business (27%)

🟨⬜️⬜️⬜️⬜️⬜️ 🥰 Nothing, I love my bank (8%)

Your 2 cents…

“Impossible to get finance from them especially FNB.”

Xpress

Ai, Xpress, now at least you know you can get up to 5 mil with Lula. 🤑

“Hi I must say, I am quite excited I came across your organization, there is hope for Small Businesses especially in traditionally unbankable communities. The fact that I can also open a Business Account in minutes with no costs at the beginning is magic. We have been struggling with the big banks to get our account going, it's a major struggle. Thank you.”

Ranyawa

Wonderful, Sir! We love seeing you succeed. 🚀

“I miss the days where talking to my bank meant I could talk to a person. Not message an app. Some issues with my bank stay unresolved because of the anonymity and because I just give up.”

Erika

Ha ha, ja Erika would be great if they could try to get customer success right. 🤗

“Constantly following up on whether they have resolved issues, no one gets back to you, and those godforsaken call centers where you have to repeat your issues to 6 different people before the call cuts and nothing gets done.”

Nikhil

Eish, sure everyone can feel that one, Nikhil. 🛎️

“I switched to Capitec a long time ago and have never looked back.”

Alana

Sounds like you got it good, Alana. Nice one. 💳

💪 Enabling 2.5 Million SA Enterprises

Plus: Clear glass solar panels 🌞, Cyril X Elon, Bezos’ SA grid hook up & meeting SA’s AI startup OGs in Stellenbosch.

NEW
Newsletter
September 17, 2024

💪 Enabling 2.5 Million SA Enterprises

Plus: Clear glass solar panels 🌞, Cyril X Elon, Bezos’ SA grid hook up & meeting SA’s AI startup OGs in Stellenbosch.

Ready to play? Not that he isn’t always in the news, but if you noticed even more MrBeast hype than usual, it’s because someone leaked an internal MrBeast production document (hope it’s now been taken down yet) and it’s basically a playbook for how to become successful on YouTube. Enjoy!

In this Open Letter:

  • Banking on innovation: Enabling 25M SA enterprises.

  • Clear glass solar panels, Cyril X Elon & Bezos’ SA grid hook up.

  • AI fireside in Stellies: Come join us in learning about AI from SA’s OGs.

  • Where you’d invest R100M right now: The results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

In partnership with

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A Play for SA’s R400bn Banking Space

In Friday’s Open Letter on Africa FinTech investment, we featured a stat about the Big 4 banks having combined revenue of close to R400 billion per annum. 

Banks are big business. But with the five banks well established (if you add the largest bank by customer account numbers, Capitec) are there still any opportunities for new banks? 

Let’s dive in…

The first shakeup in traditional banking

Perhaps one of the most noteworthy success stories in South African banking is Capitec. 

Founded in 2001, Capitec quickly differentiated itself by targeting underserved markets with simplified, low-cost banking. It provided easy-to-understand accounts, minimal fees, and an accessible approach to savings and loans.

In terms of market capitalisation, Capitec has seen exponential growth. In 2006, Capitec’s market cap was around R3 billion. By 2010, it had surged to R18 billion, and today, it boasts a market cap of over R350 billion, serving 22 million active clients (11.2 million of those on the Capitec App).

And just like that, there it was… A South African case study that proves focussing on niches is the way to take on the big banks.

The riches in niches…

Discovery Bank, which labels itself as the world's first behavioural bank, is another example of how niching down can bring great gains. 

They recently announced that their one-millionth customer was ahead of plan. They offer a completely digital product (no branches) to target higher-income earners and use behavioural incentives to better quantify and manage risk.

Other players in the consumer banking space include TymeBank (whose deposits recently grew by 59% to R6.5 billion), Former FNB CEO-backed Bank Zero, as well as Old Mutual, which is planning to launch their bank by the end of the year after recently appointing a CEO.

But there is a sector which has been largely overlooked when it comes to banking… small and medium-sized businesses.

Eh, Laddie?

The business of business banking

South Africa has roughly 2.6 million small and medium-sized businesses, contributing up to an estimated 34% of GDP. That being said, it's estimated that less than 20% (or 520k) of these businesses are formalised. 

That means roughly 2 million small businesses still need to be formalised, start paying taxes, and get bank accounts. Talk about banking the unbanked…

Local FinTech, Lula, started out in 2014 by offering funding to small businesses, where banks would either not help their clients or were simply too slow or rigid in their credit scoring processes to meet the demands of small businesses. 

But after seeing how inefficient traditional banks were when it came to serving small business customers, solving their problems, and just how much these banks charged them, Lula launched its small business banking offering

Not only can businesses get a free bank account with 1.5% annual interest on their balance, but they can also get access to as much as R5 million in funding within hours – a game-changer for SMEs that often struggle to get the support they need from traditional banks.

With more than 2 million customers up for grabs and an economy set for growth, what the big bank play people might be missing is small and medium-sized banks. We are watching this space…

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IN SHORT

👨‍🌾 AgriTech Growth. NEXT176 is investing more than R7 million in local AgriTech startup, Pumpkn to help scale its lending operations that bridge the financing gap for more than 100’000 local small- and medium-sized agricultural businesses (Agri-SMEs) to access much-needed finance.

🪟 I can see clearly now... SA is getting a transparent glass solar panel technology through a partnership between Aussie glass solar technology developer ClearVue and local distributor Concept Business Solutions. The insulated glass unit (IGU) window can generate up to 30 W of electricity per square metre — without impacting window transparency or building aesthetics.

📞 Making the call. Affordable international calling app Talk360 has raised R25 million in pre-series A funding. The round led by Havaic will help Talk360 deliver on its next phase of growth, reaching 7 million users and achieving profitability across its global operations.

🛰️ Star(link)s aligning? SA’s President Ramaphosa has apparently spoken to Elon Musk to help kickstart the conversation for South Africa to become one of the next African countries to receive Starlink services, as well as other local investments for the SA-born Billionaire.

⚙️ Gearing up SA’s Grid. The Global Energy Alliance for People and Planet (or Geapp), a global organisation backed by Amazon Founder Jeff Bezos’ climate and biodiversity fund, is gearing up to attract R319 billion in investment into South African municipal power grids to prepare for the introduction of more renewable energy.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with next-level project management like Notion and your own startup CFO without the hefty price tag with OCFO.

Learn AI-led Business & startup strategies, tools, & hacks worth a Million Dollars (free AI Masterclass) 🚀

This incredible 3-hour Crash Course on AI & ChatGPT (worth $399) designed for founders & entrepreneurs will help you 10x your business, revenue, team management & more.

It has been taken by 1 Million+ founders & entrepreneurs across the globe, who have been able to:

  • Automate 50% of their workflow & scale your business

  • Make quick & smarter decisions for their company using AI-led data insights

  • Write emails, content & more in seconds using AI

  • Solve complex problems, research 10x faster & save 16 hours every week

Engage SA’s Most Vibrant Startup Community

Did you miss our last event?

We have some good news… Tickets for our second Stellenbosch event are available!

And it’s a special one…

On Tuesday, 1 October, we are hosting two South African AI pioneers — the “crazy” guys we met who were talking and building LLMs 10 years ago — to give us their take on where AI is realistically going in the next 10, and what it means for business in South Africa.

Tickets are R150 right here, but Pro members can get in for free.

Want to unlock valuable opportunities on tap?

In the last 48 hours alone, in our online community, we…

  • Connected Trevor with insider insights into selling tech products into UAE schools.

  • Got some gold market-fit journey insights from Paul — that sparked a nice discussion about what it really takes to succeed in SA startup.

  • Received a 🔥 pitch deck from Ben Shaw in preparation for Friday’s exclusive high-growth AMA.

  • Got our free tickets to the lekker-est Stellenbosch event in 2 weeks’ time.

  • Welcomed a whole bunch of new members!

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • Friday 12-1: A Pro member-exclusive AMA session on maintaining focus in a high-growth venture with EXCEO co-founder, Ben Shaw.

  • New: Free monthly startup strategy calls for all Pro members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

Meet the Startup

We meet so many awesome founders that we decided to start featuring them on our socials. Check out this quickfire interview with Tim from Yazi.

What You Said…

We asked where you’d invest R100m, and FinTech’s the way…

🟩🟩🟩🟩🟩🟩 👨‍💻 FinTech startups (37%)

🟨🟨🟨🟨⬜️⬜️ 🌾 AgriTech startups (29%)

⬜️⬜️⬜️⬜️⬜️⬜️ 💎 MinigTech startups (4%)

🟨⬜️⬜️⬜️⬜️⬜️ 🪙 Bitcoin (7%)

🟨⬜️⬜️⬜️⬜️⬜️ 💵 Money market (7%)

⬜️⬜️⬜️⬜️⬜️⬜️ 💳 Gold – as in Troygold (6%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🛏️ Under my mattress (1%)

🟨⬜️⬜️⬜️⬜️⬜️ 💭 Somewhere else (9%)

Your 2 cents…

“Fintech is great from an investment perspective but doesn’t always feel like it solves a meaningful problem. Agritech feels like it really helps farmers that have been [at a disadvantage] in the food economy for decades and it helps the man on the street be healthier for less.”

Mia

Hear, hear, Mia! We carbon-based life forms will always need to eat. 🌽

“People want the easiest way to do transactions from small payments for essential from a spaza shop to payment for services without a lot of hassle or high fees.”

Chris

That’s right, Chris. And they’ll support the most innovative, for sure. 💳

“I'm confident that Bitcoin will have a good upswing soon. Note to self: DO NOT forget the wallet's password!! Lol”

John

With interest rates coming down and US election excitement, John, you’re probably right on the money re Bitcoin. 🚀

“Food security in the face of climate change will mean national security by the latter decades of the 21st century. I would invest in agritech companies building scalable solutions for an industry which has no choice but to adapt to the challenges of today and tomorrow.”

Tom

Right you are, Tom. When it gets right down to it, those with food and water will always thrive. 🌱

“The AI balloon is getting bigger daily. That combined with the need for better financial services, is a must-invest in the sector.”

Vakele

Indeed, Vakele, there’s big movement in the space. Just be sure not to be around when the balloon pops. 🤖

💸 R213bn FinTech Plays...

Plus: Tri-fold phones 📱, another space billionaire, your Stellies connection & managing startup hyper-growth.

NEW
Newsletter
September 13, 2024

💸 R213bn FinTech Plays...

Plus: Tri-fold phones 📱, another space billionaire, your Stellies connection & managing startup hyper-growth.

Clearing up? Believe it or not, researchers have found a way to turn mice transparent using Doritos. You know, so they don’t have to hurt them when they do tests on them. Apparently, a dye in the chips changes how living tissue reacts to light. (Wait, does that mean our stomachs turn transparent when we eat Doritos?)

In this Open Letter:

  • FinTech funding: Financing R213bn in transaction innovations.

  • Tri-fold phones, another space billionaire & your Stellies connection.

  • Unlocking hyper-growth: How to keep your focus when it matters.

  • The best and worst kind of beer: The results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

Together with:

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This week, we had a SA FinTech OG on our Podcast. Anton Gaylard’s family business was selling credit card machines to retailers in the 90s long before credit cards were mainstream. Today, he is the co-founder & CXO of Crossfin Holdings. He shared some incredible secrets to building FinTech in Africa. 

But first, let’s set the scene…

R213bn FinTech Plays

These days, it feels a lot better to be in business in South Africa…

We haven’t had loadshedding in 171 days, our GNU seems to be working hard at getting along and, more importantly, getting work done. 

The rand has seen its best run in years, staying steady at around the R17–R18 mark for 12 weeks.

In fact, The Bureau for Economic Research (BER) estimated that South Africa’s GDP would increase by 2.2% in 2025. To put that in perspective, we haven't seen that kind of growth since 2013 (excluding the Covid rebound).

Most importantly, our current population growth rate is 1.33%, meaning economic growth of 2.2% should drive up our GDP per capita (i.e. we’re getting wealthier – congrats!).

It’s actually happening.

And with predictions showing that interest rates are coming down in the next few months (a collective sigh of relief for everyone with debt), it will free up money to go into the economy and boost growth.

Good news for all, but especially when investing in businesses

The venture capital and private equity scene in SA has heated up in the last few years. 

The Southern African Venture Capital and Private Equity Association (SAVCA), which represents over 200 firms in the region that manage more than R213 billion in assets, brings out annual reports on the industry, which has revealed a substantial rise in capital flow, with R10.73 billion ($586 million) invested across 1’106 deals since 2010. 

Although deal activity saw a slight decline in 2023, dropping to 184 deals from 195 in 2022, the overall volume remained well above pre-pandemic levels.

When everything around us smells like opportunity…

But just where lies the opportunity?

If you have been reading The Open Letter for some time, you’d know there are countless opportunities. But most of them lie where the money flows fastest. And these three sectors are :

  1. Trade, catering and accommodation make up almost 12% of GDP or ± R875bn per year. This includes retail (shopping), restaurants, travel and tourism, events, catering etc.

  2. Personal service makes up almost 16% of GDP or ± R1.17 trillion per year. This includes Health and Wellness Services (Medtech, Healthtech), household and Domestic Services, Personal Care Services, Educational and Instructional Services, Leisure and Lifestyle Services, Repair and Maintenance Services

  3. Finance, real estate and business services make up 24% of GDP or R1.75 trillion per year. This includes Banking, Insurance, Investment Services, consulting, Legal services, Real estate, Tax consulting, IT and business consulting among others.

And within the biggest sector, none are likely as big as banking. For perspective, the combined revenue and headline earnings of the 5 biggest banks in SA in 2023 were R399 billion and R120.9 billion, respectively. 

The key? Overly simplified, these companies are distributed to execute transactions (which generate data and fees) and then have the ability to offer financial services using the data as a way to mitigate risk. 

This brings us to the strategy of the local investment holding group, Crossfin. It invests in Fintech solutions to enable growth for economies in emerging markets, particularly Africa, and beyond

When it comes to their investment thesis, two parts excite them: 

  1. Transactions – these generate data while also generating revenue.

  2. Financial services – with the capabilities that digital brings, the capability to understand risk better using machine learning together with data at a transactional level, one can offer very exciting and more affordable financial services.

And they have had some great success with this model. With portfolio companies like IkhokaTroygold, and Momint, as well as past exits of Retail Capital to TymeBank and Adumo to Lesaka Technologies (sold for $85m).

There has likely never been a better time to invest in SA businesses, and what better place than the biggest industry of them all? We are watching this space with great excitement!

Listen to Anton’s secrets to building FinTech in Africa in this week’s episode of How Would You Build It podcast.

Podcast Highlights:

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IN SHORT

🤝 Founder Connections. Join us at Stellenbosch Connect for a shark tank and mixer with our very own Renier Kriel as a guest speaker hosted by Octoco. Connect with other entrepreneurs, investors, and thought leaders and let’s build lekker stuff together. Get your tickets.

👨‍🚀 Walking on Space Dust. The first private spacewalk was just completed when an American Tech Billionaire climbed out of a SpaceX Dragon capsule on Thursday. The Polaris Dawn mission was to test a new line of slimline space suits designed by SpaceX.

📂 Oh Wow Hey. The world’s first tri-fold smartphone the Mate XT Ultimate Design was launched by Huawei this week. It unfolds into a full-size tablet and folds into a traditional phone with a 10.2-inch screen that can also be used as a 6.4-inch or 7.9-inch screen.

🤖 Thinking Bots. OpenAI just dropped o1, also known as Project Strawberry/Q. This is a new level of AI that can "think" and "reason" before responding to you.

🍯Two-pot rush. SARS reported that within the first week, they received more than 18’000 applications to withdraw from retirement annuities under the new two-pot retirement system. These applications total R4.1bn in withdrawals thus far.

🚧 Beat the Q. South African drivers are turning to the Road Traffic Management Corporation (RTMC) online platform online.natis, in droves to renew their vehicle licenses. In 2022 the monthly average of users to the platform was 44’802 with that number hitting 222’606 last month.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with outbound sales tools like Apollo and business strategy development with Metavolve.

CHECK THIS OUT

Actually Get Your Product off the Ground

According to Standish Group’s Annual CHAOS report, which analysed 50k tech projects, 66% of technology projects end in partial or total failure.

And some of the main reasons include: 

  • Poor Requirements Gathering

  • Inadequate Risk Management

  • Ineffective Tech Leadership and Communication

So it should go without saying that, if you’re serious about succeeding, then you’ll want the highest quality and most experienced team on your side.

But how do you know who’s really the best in the tech biz? Look at the track record….

The faces you’ll remember when your startup becomes a success.

Whether you are building complicated hardware projects like Henlo Coffee or Gap Draught or FinTech solutions like LeaseSurrance, the partner you need when technical excellence is not negotiable is Octoco.

Get in touch today to book an exploratory session with their team of top-tier technical experts.

Engage SA’s Most Vibrant Startup Community

On Friday 20 September, Ben Shaw, founder of SA’s would-be unicorn HouseMe (killed by Covid), now founder of EXEO and author of The First Kudu, is coming to share his insights into what it takes to build a unicorn-level startup in Africa. This is a TOL Pro community exclusive.

Want to unlock valuable opportunities on tap?

In the last 48 hours alone, in our online community, we…

  • Ran an internal poll and discovered the No 1 thing SA founders covet.

  • Got a sneak peek at some awesome fin education games for kiddos.

  • Discovered loads of school contacts for running EduTech trials.

  • Met a sleek-looking AI virtual assistant and delegation tool.

  • Laughed at Renier’s “add” in a poll… (guess YHTBT).

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all pro members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked what the worst type of draught is, and nobody wants a stale one…

🟩🟩🟩🟩🟩🟩 🥴 A stale one (39%)

🟨🟨🟨⬜️⬜️⬜️ 🥵 Not cold enough (25%)

🟨🟨⬜️⬜️⬜️⬜️ 🚦 One you have to queue for (16%)

🟨⬜️⬜️⬜️⬜️⬜️ 🍺 One with too much foam (9%)

🟨⬜️⬜️⬜️⬜️⬜️ 🚣 One you have to make small talk with a moustachioed hipster for (11%)

Your 2 cents…

“Cold or not cold enough still have foam.”

Zwane

Yeh, Zwane, when it comes to foam, you want just enough. 🫧

“Who pays R70 for a draught?!”

Enrico

Nogal, Enrico. What’s the world coming to? 🍺

“A stale one means sales are slow.”

Stan

Ja, probably not the best sign, eh, Stan? 🕖

“Being served with a stale draught, when you have been anticipating a fresh one, is like being kicked in your stomach......”

Vakele

Oof, yes exactly, Vakele. No more kicks here, please!

“Just have to say, I absolutely love what you guys are doing, keep up the amazing work, can't wait to see in you person for one of the events!!!”

Christiaan

Definitely, Christiaan. Come meet us in Stellenbosch 1 Oct, Cape Town just before keDezemba, and then we’ll launch JHB next year! 🎫

🍺 How to Get the Freshest Brew, Guaranteed

Plus: Startup suppers 🍽, AI’s service, the latest iPhone & maintaining focus in a hyper-growth startup.

NEW
Newsletter
September 10, 2024

🍺 How to Get the Freshest Brew, Guaranteed

Plus: Startup suppers 🍽, AI’s service, the latest iPhone & maintaining focus in a hyper-growth startup.

Orbiting Factories? Humankind has 3D-printed a metal part in space. This is a significant step since many manufacturing processes are set to be a LOT cheaper and more efficient in zero-G.

In this Open Letter:

  • Cold ones: Getting SA bars fresher brews & 30% more revenue.

  • Startup suppers, AI’s service & A peek at the latest iPhone.

  • Keeping the pace: How to keep your focus in a hyper-growth startup.

  • What’s wrong with our mobile contracts: The results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

Together with:

Did someone forward you this email? Join 12,753 South Africans reading The Open Letter by signing up here.

Fresher Brews + 30% More Revenue

Still buzzing from the Boks’ historic Freedom Cup-earning (first time since 2009) win over New Zealand over the weekend, we’re celebrating champagne rugby like most South Africans, with an ice-cold beer…

It’s not only South Africa’s preferred beverage but a major contributor to the local economy – employing 250’000+ people (1 in 66 jobs in SA is a beer job) and adding around R71bn to the country’s GDP (1.3%).

And the can or bottle’s good at home, but when you’re out on the town for dinner or going to a bar, people tend to opt for draught beer for a few reasons:

  • it’s fresher

  • has better flavour

  • served at the ideal temperature

  • produces a better head and carbonation

  • and it’s socially more fun – a wider variety of craft and speciality beers make draughts a vibe. 

Not all that glitters is Gold…

Every beer drinker’s had the experience before though, where you get your draught at the bar, maybe take a sip or two and something’s just not right – it’s not cold enough, tastes stale, or upsets your stomach later that night or the next day.

Quality lapses happen, because, let’s face it, working in a bar can get crazy.

The barman battles to keep track of when last they poured from which tap, when exactly the keg was tapped, or even when last the hose was cleaned and sanitised.

Not to mention missing that the cooler’s malfunctioning.

But what you don’t always consider is how this leads to losses for the bar – anywhere between 10 and 30% of draught beer losses come from overpouring, incorrectly pouring, spillage, theft, and spoilage from beer sitting in a keg for too long. 

And it compounds: Busy outlets serve as many as a thousand draughts per weekend (especially if the Bokke win), and at around R70 a draught (R70’000 in revenue) 10-30% can lead to losses of up to R20’000… big numbers.

Pub owners every time they announce a Springbok fixture

The local player putting better beer in your glass… 

Gap Draught is a smart draught monitoring system that provides everyone from beer brewers to bars and restaurants with a desktop and mobile reporting platform that gives real-time data to help eliminate theft, minimise wastage and reduce over-pouring of draught beer.

And it’s not a massive hardware investment: Their system plugs in directly with existing draught taps, offering instant answers to questions like:

  • Does the establishment sell as many draughts as it’s pouring (are the draughts being paid for)?

  • Are bartenders overpouring or pouring outside of operating hours?

  • How efficiently are they pouring – using data from the platform’s precise variance calculator.

  • Which draught brands are popular, (or not)?

  • When was the last time a draught was poured from a specific tap?

  • How fresh is the draught?

  • Is it being poured at the right temperature?

You can build in preset alerts to notify you if the cooler gets switched off; when the beer temp rises; or if a draught has not been poured in either 48 or 96 hours (typically when it starts to lose its fresh flavour).

The platform can also establish if a draught line has been cleaned and sanitised (every 21 days according to SA’s big beer players) – this is a pretty important one: Remember that lady who went viral on TikTok after the soda fountain water she got from her local Wendy’s started forming spores after she left the container in the car?

You can also integrate Gap Draught into your bar or restaurant’s POS system to match pours with sales and better manage your stock levels since you can determine when a keg has reached a minimum threshold (so you don't have to weigh kegs after closing time).

You also have access to benchmarking reports from other places using their system, to help you compare bars & beer brands; locally, regionally and nationally.

For brewers, the system helps them troubleshoot potential issues with a particular draught, using specific data around temperature, freshness, etc. 

Ultimately, everyone, including the end-consumer wins with the perfect, ice-cold pour to enjoy with friends watching the game. We’re watching this space…

THE OPEN LETTER PRO ONLY

Get exclusive insights into this startup, the industry and other opportunities, PLUS join our community of founders who get access to free events and support in building their businesses and

IN SHORT

🍽️ What’s for dinner? Metavolve has created The Supper Club to bring entrepreneurs together to connect outside the business context. It’s a fine-dining experience by The Test Kitchen’s Chef Luke Dale-Roberts and The Potluck Club, with tables being rotated between courses to maximise the number of founders you can meet.

🍏 How you like them Apples? Last night Apple announced a bunch of new products and upgrades, including the full iPhone 16 line-up, iOS18’s AI-related updates, Apple’s thinnest watch to date (plus an update to detect sleep apnea), and also an interesting mention that Apple Intelligence will be able to understand “South African English” — great now we can finally ask it to make that “braai shopping list”.

🔫 Shots fired. Gunfire detection technology ShotSpotter recorded 7’400 rounders fired in 10 km2 outside Cape Town in 8 months. That amounts to one gun fired every 47 minutes. However, authorities say only 1 in 13 of these incidents are reported to the police.

🤖 AI-Powered Customer Service. Local customer service software startup Cue has launched AI Agents, which help clients automate routine inquiries, personalise customer interactions, and deliver better services at scale. AI Agents are trained on content from websites and company documents provided by businesses.

🛒 Going with the cash flow. Shoprite is planning on doubling down on SA’s informal economy with the expansion of its Usave store footprint over the next 5 years. This comes off the back of the group's lower-income segment’s revenue results increasing by 10.7% in the most recent financial year to hit R90 billion in sales.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with newsletter and automation tools like Beehiiv and sound startup legal advice from Dommisse Attorneys.

CHECK THIS OUT

Never Make a Co-Payment Again

A definite pain point in SA healthcare is having to make additional out-of-pocket payments when you’re already paying a monthly medical aid contribution.

Sure, you don’t mind paying a bit extra for better service or products, if you can afford it…

But studies show that most people are confused by co-payments; people feel it’s unclear why exactly medical aids don’t just cover the full amount, and it’s a huge reason why people in lower-income brackets either don’t adopt medical aid or simply forego care.

SA medical aid prices range from around R1’000 to R10’000+ per month, yet there's always a chance you have to pay extra when visiting the doc — why?

Seems no one knows…

It’s tech to the rescue…

Since Udok has such a vast (and growing) national network of doctors and patients and the preferred online doctor solution of Clicks, they’ve used their clout to negotiate better terms with many SA medical aids.

To the point where you can now do a virtual doctor’s consult via Udok and charge it to your medical aid with no co-payments whatsoever.

Don’t have medical aid or not covered for GP visits? No problem. Udok online consults are 40% cheaper than normal doctor consultations. Plus, you save time by being able to see a doctor right now.

All you do is register with Udok, ask to see a doctor and select “medical aid” as your payment option. Then, the system will confirm your scheme’s “no co-payment” status.

Don’t delay, the doctor will see you now, only on Udok.

Engage SA’s Most Vibrant Startup Community

On Friday 20 September, we’re getting a lesson in startup growth from Ben Shaw, founder of SA’s would-be unicorn HouseMe (killed by Covid) and author of The First Kudu. This is a Pro community exclusive.

Want to unlock valuable opportunities on tap?

Last week in our online community, we…

  • Learnt some insane startup scaling from the strategy pros at Metavolve.

  • Had some honest discussions on the value of peer-to-peer networking.

  • Discovered a go-to-market & sales accelerator solution.

  • Kicked off weekly accountability check-ins for pro builders.

  • Helped Justin discover some contacts for setting up an offshore entity.

Coming Up This Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all pro members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked what you dislike most about your current cellphone situation, and costs are a problem…

🟩🟩🟩🟩🟩🟩 💸 The high costs (41%)

🟨🟨🟨⬜️⬜️⬜️ 💀 Long contract duration (21%)

🟨⬜️⬜️⬜️⬜️⬜️ 🙉 Spotty reception (11%)

🟨⬜️⬜️⬜️⬜️⬜️ ⛰️ That I even have one (11%)

🟨🟨⬜️⬜️⬜️⬜️ 😡 Poor customer service (16%)

Your 2 cents…

“I hate being tied into a fixed term contract (36 months). But it was for my wife, so we dala what we must.”

Ayuballie

Ja, gotta keep on keeping on. 💪

“Smart Phones are very expensive. Data is very expensive. Unused data should never expire.”

Stan

Preach, brother. 🙌

“I was told my application for a specific contract was accepted 'with conditions'. These conditions were that I was accepted for a far smaller contract. This was after a month waiting, and I had to phone them to find out. My parting words to their manager? I accept that he can date my sister, but with conditions. He'll have to date the ugly one.”

FJ

Ha ha, fire FJ! ❤️‍🔥

“I would love to click more that just one option here, the current operators infrastructure and service are below par due to lack of proper competition, may this soon change.”

Renaldo

Well, that’s what the MVNOs’ll get started we hope, Renaldo. 🤞

“With every renewal, even for the same package one has to pay more. I am a pensioner and costs are becoming out of reach for many in my position. There is no solution.”

Rene

Hmm, maybe we also need a bit of a phone package structure innovation, hey Rene? 💡

🍉 Slicing Up SA's R200bn+ Telco Market

Plus: SA’s 2-pot hits the streets 💰, how to VC, Gumtree killing scammers’ game & startup scaling strategies, sorted.

NEW
Newsletter
September 6, 2024

Shaken or stirred? A white whale that in 2019 was thought to be a Russian spy was found shot dead in Norway last week, fueling rumours of foul play and all kinds of blubber-O-7 shenanigans.

In this Open Letter:

  • Smart cuts: Slicing up SA's R200bn+ telecoms market.
  • SA’s 2-pot hits the streets, how to VC & Gumtree killing scammers’ game.
  • Join live today: Scaling your business in SA — pro insights.
  • The most practical use cases for AI: The results are in.
  • Startup fuel: Share this 10 times and get Pro membership.

Did someone forward you this email? Join 12,668 South Africans reading The Open Letter by signing up here.

TRENDING NOW

A Play for SA’s R200bn+ Mobile Game

Back in 1994, South Africa received cellular services for the first time courtesy of Vodacom and MTN… joined by Cell C (2001) and Telkom Mobile/8ta (2010).

Together, these 4 networks are the primary Mobile Network Operators (MNO) by SA mobile market share:

  • Vodacom (43.8%)
  • MTN (32.0%)
  • Telkom (16.9%)
  • Cell C (7.3%)

And being a Mobile Network Operator (MNO) is a very specific gig – you manage and maintain the infrastructure (towers) and manage access across a massive geographical area (in exchange for a slice of the pie from anyone who wants to

But it has its limitations: For starters, these MNOs’ systems are 20+ years old, limiting their ability to serve the ever-evolving user needs of SA’s 112.7 million mobile connections, each spending on average R100-R500 per month on phone services (jip, that’s R11.2bn–R56.3bn every single month!).

Easy money

In the past, keeping SA mobile users happy was simple:

  • Create a series of stock-standard packages
  • And push new mobile phone upgrades (every 2 years)

The mobile big 4 didn’t have to bother too much with user experience and customisability – airtime is airtime – allowing them to focus on maintaining the network: operations, staffing and overhead costs they could neatly pass onto the consumer.

Yeh, I’d like to make my TikToks in 8k quality, please

A premature revolution


Some caught onto the gig, though.

As early as 2006, South Africa got its first MVNO (Mobile Virtual Network Operator) when Virgin Mobile SA launched on Cell C’s network.

An MVNO being a brand that leases space on the network from an MNO, freeing it from those heavy network maintenance costs and allowing it to focus solely on providing superior products and customer service.

But it didn’t go so well… we all know Virgin Mobile is gone now. In fact, out of the 40 MNVOs launched in SA over the last 18 years, only 19 are currently in operation – and these are mainly value-add services from banks, grocery retailers, fashion retailers, insurers and ISPs.

SA was struggling to get its MVNO game off the ground.

In fact, the total MVNO market was completely stagnant at less than R2bn per year (just 2% of SA’s mobile retail market) for 4 years between 2019 and 2022.

But then it all changed…

The Big MVNO Surge

Last year (2023), the MVNO market literally doubled to R4.3 billion, with some predictions for growth for 2024 to 2029 so ludicrous, we dare not repeat it here.

Why? Well, it could be that SA’s big data costs debate has finally just caught up. Or perhaps South Africans just want more flexibility and better user experiences.

One trend is that we’re no longer buying every new model of phone (and therefore not upgrading as often), likely due to:

  • Small, incremental phone upgrades mean you can skip a model or two.
  • Rising costs drive users to wait an extra year or two before upgrading.
  • Phones are becoming hardier, so they last longer (not Nokia 3310 levels yet, but better).
“I can get the time from my wristwatch just fine, thank you very much...”


Either way, there’s a lot of opportunity up for grabs in the MVNO space, and you can bet that’s just what some innovative SA startups are doing…

Melon Mobile

Melon Mobile is a local MVNO launched in April 2023 and is one of only a handful of “pure telecoms” MVNOs in SA – unlike MVNOs that offer telecoms services as an add-on to an established industry (retail, banking etc.) Melon is just in it to improve SA comms.

And it shows as they recently introduced SA’s first, a 14-day free trial of their customisable network and flexible offering.

Users are also able to customise a mobile plan to suit their needs – picking as much, or as little mobile data, call minutes and SMSs as they need. Or if you don’t know where to start, pick one of their pre-configured plans (with unlimited voice calls and SMSs) – all on a month-to-month basis so you’re not locked in for 2–3 years.  

And we mean customisable: Their Family Plans lets you add up to 7 people to one account, and build a unique month-to-month plan for each family member.

What’s more, they’re Africa’s first fully digital MVNO – even their eSIM is 100% digital and already embedded in some Apple and Android phones.

This week, Melon’s founder and CEO Calvin Collett is on the podcast to tell us about the triumphs and challenges of launching fully digital, their disruptive billboards, and how Starlink can add to SA’s telecoms mix…

With SA’s MVNO industry coming on in leaps and bounds, and local players like Melon Mobile offering innovative solutions that shake things up, we’re watching this space…

Podcast Highlights:

IN SHORT

💰 How to VC. The 6th edition of CatalyzU’s Venture Capital Fellowship Cohort is open for applications. Running from 1 October to 12 November 2024, the fellowship aims to equip aspiring venture capitalists with critical skills, knowledge, and connections in the African tech ecosystem.

📺 X gon show it to ya. X has just launched a beta version of its TV app on several app stores as the company pushes into a “video-first platform” to attract more advertisers, creators and partners.

🚰 Everything and the kitchen sink. Shoprite Holdings is selling off its furniture units, ‘House & Home’ and ‘Ok Furniture’, to Pepkor for around R3 billion offering to focus on its specialist clothing, baby, outdoor, and pet stores.

🧼 DStv’s shiny new app. The DStv Stream app is getting a facelift with new capabilities and features as MultiChoice drops the price of its Premium bouquet by a whole R100 — as long as you commit to a 12-month contract.

🦺 Scamless Gumtree. South Africa’s online classifieds site, Gumtree has just launched Pay & Ship, a secure payment and delivery solution for shopping on its site by partnering with digital escrow service TradeSafe, to process payments, and Pargo to handle deliveries.

🍯 Dipping into the pot. SA’s two-pot retirement system came into play on Monday with retirement administrators flooded with withdrawal requests, and many having to place holding messages on their websites warning of high traffic volumes to their sites.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with easy no-code automation with Make and unlimited content to build your brand and authority with Stream.

CHECK THIS OUT

At 12:00 PM today (Friday, 6 September), we’re hosting the startup strategy pros from Metavolve on LinkedIn Live for a session on what it takes to scale like a legend. And, guess what? This one’s free and open to anyone — sign up here.

Engage SA’s Most Vibrant Startup Community

Want to unlock valuable opportunities on tap?

In the last 48 hours alone, in our online community, we…

  • Got our members invites to an exclusive founder’s event in CT.
  • Discussed at length the potential of a pipeline-filling speed-dating event with founders and customers.
  • Ran the world’s most polarised poll on how much rest founders get 😬.
  • Discovered the ultimate anti-self-sabotage must-read.
  • Thoroughly unpacked luck, management and Paul Graham’s founder mode — including that Kanye probably coined it first YHTBT 🤣.

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.
  • New: Free monthly startup strategy calls for all pro members.
  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked where you see the most practical use cases for AI, and it’s in streamlining processes…

🟨🟨🟨⬜️⬜️⬜️ ✍🏽 Helping me write documents for work (18%)

🟨🟨⬜️⬜️⬜️⬜️ 🔎 Replacing my search engine (for research purposes) (15%)

🟨⬜️⬜️⬜️⬜️⬜️ 👩🏽‍💻 Write code for me (8%)

🟨🟨⬜️⬜️⬜️⬜️ 🎥 Content creation (both text, image and video) (15%)

🟩🟩🟩🟩🟩🟩 📈 Business optimisation and cost reduction (36%)

🟨⬜️⬜️⬜️⬜️⬜️ 🧸 Lol, AI is a toy (8%)

Your 2 cents…

“AI will never replace true creativity but it's very useful in giving structure to your 'mind-map'.”

Bzaar

For sure, Bzaar. You’ll probably have cheap AI-gen art in the future, and then proper valuable human content to offset it. 🎨🖌️

“AI is a perfect code monkey, and only slightly worse than a human. If you know what you want, and are able to articulate that in a prompt, you are off to the races.”

William

Right on the money, William! It’s been a game-changer for producing fast, basic scripts and automation for us. 🐒

🥧 Feast on the $15.7 Trillion AI Pie...

Plus: Helper bots 🦾, pulsating aliens, a 1M user-strong MySpace clone & insider secrets to startup scaling in SA.

NEW
Newsletter
September 3, 2024

🥧 Feast on the $15.7 Trillion AI Pie...

Plus: Helper bots 🦾, pulsating aliens, a 1M user-strong MySpace clone & insider secrets to startup scaling in SA.

Got game? Watch these researchers run the 1993 Doom game in real-time AI. So it’s not perfect (yet), but there’s no game engine, just a neural network simulating the game in real-time, based on user inputs. This is basically the first step towards really complex text/voice-to-game gen.

In this Open Letter:

  • Make’em machines work: Using AI to make SA companies Rmillions.

  • Helper bots, pulsating aliens & the 1M user-strong MySpace clone.

  • Learn to scale: Your business growth strategy, sorted.

  • How you prefer to enjoy a book: The results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

Together with:

Did someone forward you this email? Join 12,592 South Africans reading The Open Letter by signing up here.

Making Sense of Data and Machines

Before the launch of ChatGPT in November 2022, most people’s understanding of Artificial Intelligence was that it was the thing that empowered Skynet to take over the world…

Within 5 days of its launch, ChatGPT hit 1 million users (for context, Instagram took 2.5 months and Netflix 3.5 YEARS to hit 1 million users).

Suddenly everyone knew something about AI. And pretty soon, it became the buzzword getting thrown around boardrooms like: “Well, how do we integrate our product/service/offering with AI?”

And it’s not surprising everyone wants a slice of the AI Pie…

There’s big money at play for AI. As more and more AI tools hit the market, their use cases get bigger and bigger, with some estimating that AI could contribute as much as $15.7 trillion to the global economy in 2030.

But not everyone is ready for the AI boom

There have already been a bunch of now-famous AI blunders…

Air Canada had to fork out over CA$800 to a grieving passenger after its AI chatbot gave them the wrong info about the airline's bereavement fares.

AI-generated sports articles came under fire after it was found that Sports Illustrated published articles by fake authors (including their AI-generated headshots), while another publication was forced to pause its AI tool covering high school sports after it missed out on key information (like, you know, the teams’ names).

Or the use of AI recruiting tools that reject applicants based on their (older) age, or Amazon’s AI recruiting tool that only recommends men.  

Not to mention deep fakes, AI’s use in scams and a bunch of other not so lekker stuff.

When a bunch of clowns are about to ruin it for the rest of us…

A local AI Agency making big plays

The above scenarios could be attributed to a variety of reasons, from newly launched AI companies to top management not fully grasping how their businesses could benefit (or not benefit) from AI. 

But where the power of AI really shines is where there is a large amount of data, if processed, that could show areas of improvement or optimisation.

That’s exactly what local data and applied AI startup Spatialedge is helping many of Africa’s largest multinational enterprises develop bespoke AI solutions that solve some of their biggest business headaches.

The team has built over 170 bespoke solutions, including:

  • A Markdown Tool to help Pepkor achieve a 92.7% sell-off rate (meaning they do not have stock left at the end of the season, and the discounts offered didn’t sink them)

  • A proactive model to forecast accident hotspots to bring a 30% decrease in road fatalities over a major long weekend. 

  • A predictive maintenance solution for a mining client to determine when tyres needed replacing, resulting in a decrease in income loss due to operational halts to the tune of $500’000 per month.  

They’ve been around since 2017, working closely with big retail clients like Vodacom, Pepkor, and Ackermans. They recently surpassed R300 mil in revenue which helped them secure R60 million in funding in April this year. 

Something we found interesting is that their preferred hire is someone with an industrial engineering degree. Why? They are often technical enough to understand the tech part, but it's the operational design thinking that helps them identify where in a business machine learning can best add value.

With the race to the top in AI still going and local players like Spatialedge making a big impact for their clients, we’re watching this space…

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IN SHORT

👚 Super”bye”list. Takealot announced on Monday that it has sold its struggling online fashion retailer, Superbalist, to a private equity consortium led by Black Canvas Capital.

🤖 Robots pretending to be Human. 1X Robotics has unveiled a beta version of its humanoid robot Neo. Back by OpenAI, Neo has advanced movement and agility due to its bioinspired actuators and advanced vision systems.

👽 Contact. Over the weekend an Astronaut rang up NASA’s ground crew to report a repeating “almost like a sonar ping” coming from a speaker onboard the Boeing Starliner craft. Listen to the call and the sound in the article.

💰Life Tyme. Sanlam Life is set to acquire a 25% stake in African Rainbow Capital Financial Services Holdings Proprietary Limited (ARC FSH). ARC FSH has existing investments in Tyme Bank, AI Fund, CrossFin and Ooba.

💼 Die Kantoor. SA is getting its very own version of ”The Office”. Local streamer Showmax has secured the rights to adapt the show, making it the 14th international adaptation of the hit show. Filming will be done primarily in Afrikaans and will kick off in 2025.

🚀 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with project management tools like Notion and super-easy social payment collection with WigWag.

Builder’s Corner

When (and How) to Get Serious about Strategy

Written in conjunction with Metavolve.

We have all heard how important strategy is, but, man, oh man, can people make it fluffy. So today, we asked scale strategy specialists Metavolve to share their framework for developing a scaling strategy.

Here are the four key pillars of developing a world-class scaling strategy :

Pillar 1: Market positioning

Understanding your market positioning is all about understanding who you compete with, what makes you different and why it matters.

Who you compete with could be someone with a similar product, but for most SaaS companies, they simply go up against MS Excel (or Google Sheets). This means that instead of using your product, they rely on a tool which is currently free (albeit clunky).

There are big differences in how we position and sell when our main competitor is Google Sheets as opposed to some other great product.

Pillar 2: Competitive advantages

Ask the question, “Mr customer, how can I serve you better?” and that means being able to solve the need better than anyone or anything else.

This includes:

  • The customer experience through your product and engagement

  • Addressing their actual pains as opposed to perceived pains

What is less obvious is that it sometimes means cutting down on your offering or actually doing nothing. That’s right. Finding your competitive advantage is about doubling down on that which matters most and where you can win.

Pillar 3: Customer Experience

The customer experience is crucial in retaining existing customers and landing new ones. 

In fact, nearly 90% of customers value the customer experience a company provides just as much as the product or service it’s offering.

So key questions to have the answers for include:

  • How stress-free is it to work with your company?

  • Does your value proposition align with your customer’s needs?

  • Does it leave anything up to chance?

  • Does the experience set, meet and exceed your customers’ expectations?

  • Is it an emotionally positive experience?

  • Does the experience provide positive benefits and make your customer feel good?

It’s also important to remember that customer experience is not the same as user experience! It’s the qualitative experience they have at each and every touchpoint with your business. It’s how they feel about it.

Pillar 4: Growth strategy

There are many different ways to grow your business. Anywhere from vertical or horizontal integration, diversification, Geo-expansion, or even good old organic growth from selling the same thing to more customers, proving your organisation’s ability to retain and add new customers.

But sometimes, the shinest looking thing might not be the right fit. You’ve got to be growing in the way that makes the most appropriate choices, given the unique circumstances your company is in, to help maximise your chances of achieving the best possible results.

If you want to get stuck into strategy, we have two amazing offers for you:

  1. Come join our free LinkedIn Live session with Metavolve this coming Friday (6 Sept ‘24) between 12:00 and 13:00, where we will practically unpack each of these pillars further. Book your spot here.

  2. Or… Exclusive for Open Letter readers, book a 45-minute call to get going with your strategy.

Engage SA’s Most Vibrant Startup Community

Recently, in our online community, we…

  • Learnt about a host of absolutely 🔥 podcast guests coming up in the next few weeks.

  • Tested some seriously cool WhatsApp-based AI polling and interviewing tech.

  • Welcomed so many new members, it’s starting to hum in here…

Coming Up This Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all pro members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

All for only R250 a month. Go Open Letter Pro today, and let’s build together…

What You Said…

We asked what you read most, and paper books’re the way…

🟩🟩🟩🟩🟩🟩 📚 Physical books – I influence Exclusive Books’ Top 10 shelf (42%)

🟨⬜️⬜️⬜️⬜️⬜️ 📱Reading apps like Bookt (7%)

🟨🟨🟨🟨⬜️⬜️ ✉️ Emails and other work-related documents (29%)

🟨⬜️⬜️⬜️⬜️⬜️ 🗞️ The news (7%)

⬜️⬜️⬜️⬜️⬜️⬜️ 📺 The subtitles on Netflix count as reading, right? (3%)

🟨⬜️⬜️⬜️⬜️⬜️ 🔥 Startup, tech and business trends in The Open Letter (12%)

Your 2 cents…

“Love the feeling of paper between the fingers! But platforms like Everand and Perlego is also amongst my top platforms to access great books! And the occasional Kindle download when Takealot does not have stock!”

Herman

Sounds like you just enjoy a healthy reading habit. Nice one, Herman 📚☕

“I use Kindle and have invested in that eco system. Have found that it is quite useful as can send PDF there as well. Had a look at the book list and it is quite limited. I assume that the idea is that it becomes a distribution for ebooks. However, would be good to see whether it can tap onto other eco-systems.”

Muller

Hmm, good insights, Muller, sure Bookt is enjoying and learning from your engagement here 💯

“I generally shop for my books online and find Loot to be the best. Readers Warehouse is also well-priced. I enjoy going into a bookshop and browsing and then buy whatever I am interested in online.”

Lauren

Wonderful, Lauren, sounds like you know where the get all the good reads (and the best deals) 💌📖

"’Physical’ as in audio books I read while exercising or driving”

GJ

He he, love it GJ! Always on the move… 👟🎧📕

💡 How to Read 18+ Business Books a Year

Plus: Durex’s data dribble 🎈, SA’s new unis, Discovery’s 1M banking users & perfecting your startup scaling strategy.

NEW
Newsletter
August 30, 2024

💡 How to Read 18+ Business Books a Year

Plus: Durex’s data dribble 🎈, SA’s new unis, Discovery’s 1M banking users & perfecting your startup scaling strategy.

Thinking big? Scientists have found a new use for AI: helping us figure out how reality works. In a new study, astrophysicists explain how they trained a specially-built AI on 2’000 simulated universes (to learn subtle differences in galaxy arrangement) and then used it to analyse 110 thousand real galaxies.

They claim to have found a clue to the parameters or “settings” of our universe — the Matrix or whatever — through AI’s sheer computational power.

In this Open Letter:

  • Big gains: The world’s business knowledge in 10 mins a day.

  • Durex’s data fumble, SA’s new unis & Discovery’s 1M users.

  • Next-level business growth: Learn from the strategy masters.

  • Strategies for running out of money: The results are in.

  • Startup fuel: Share this 10 times and get Pro membership.

Together with WigWag:

Did someone forward you this email? Join 12,479 South Africans reading The Open Letter by signing up here.

All the World’s Business Knowledge in 10 Minutes Per Day

More people can read than ever before…

Since 1820, when only 1 in 10 people could read, reading has become by and large accessible to most people around the world – at around the 87% mark.

Now, while there are certainly some serious outliers scoring very low – Mali at 31% and South Sudan at 35% – most developed countries have a 99% literacy rate today. (South Africa’s literacy rate is around 90% these days, on track with global.)

And it’s a good thing, too, because whilst billionaires don’t often agree on anything, one thing likes of Warren Buffet, Bill Gates, Elon Musk, Mark Zuckerberg and Jeff Bezos all agree on is in business, reading as many books as possible is the key to success.

So, the more we can read (and actually do it), the better it will be for the economy.

Business Books are Big Bucks

While it’s hard to pin down an exact market size for business-related books specifically, the global non-fiction book category’s market size is growing steadily. It’s expected to reach $15.1 billion this year – up from $14.62 billion in 2023 and is estimated to reach $16.94 billion in 2028.

Some estimate the global business/finance category could be around 25% of that, so perhaps around $3.75bn per year? (Around 80M+ or so books.)

And the information in there is good – publishers tend to take way more care in ensuring quality than what you see on podcasts, blogs and social media.

Yeh, this is one of those rare moments where it really is your loss, buddy…

But who’s reading them?

The thing is, once you start looking into it, it’s not clear who is buying all these business books and whether people actually read them.

Studies show that roughly a third of books are bought as gifts, and it’s mainly older people buying and reading them.

In fact, if you look at the media consumption habits of most C-suite, you’ll see about 74% read on their phone in the mornings – and it’s mainly e-blasts, newsletters and web articles or podcasts.

The 6% that say they consume media at night (when most people read a book) say they predominantly watch pre-recorded TV news reports.

So how can we help more people in business access the deep knowledge in books?

Well, it’s long been known that social reading works wonders in educational settings, and a number of professionals have argued that book clubs could be a prime motivational tool for learning in business – with some suggesting every company should start a book club.

And that’s just what one local startup is trying to do, on a much larger scale…

Making reading social again…

Social reading app, Bookt is aimed at entrepreneurs to make reading simple, social and fun.

Bookt takes non-fiction business-related books and divides them into 10-minute daily reading segments called steps to help folks (like entrepreneurs, and those with full schedules) develop a regular reading habit. 

Plus, you’re able to connect with a global reading community to share notes and insights (just like the old-school book club), as they work through specific books together.

While starting as a B2C, they recently pivoted to B2B, which allows teams to create book clubs in their organisations, reading and discussing the content with each other. Using micro-prompts and discussion points, it gets readers to read the book 10 minutes a day on their phones— resulting in reading an entire book in under a month.

Its AI integration can know what book you’re reading, respond to the notes you’re making in specific sections of the book, pull in real-life examples, and even bring in YouTube videos like Ted Talks etc.

We had Bookt founder Louis-Neil Korsten on the pod this week. Check it out, it’s a real page-turner…

As our attention spans dwindle, and more and more solutions are built to counteract that, leveraging smarter ways to help people learn in shorter, sharper bursts, we’re on the cusp of a new era of learning and development. We’re watching this space… 

Podcast Highlights:

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IN SHORT

💰 Securing the Bag. Local FinTech startup Omnisient has just raised US$7.5 million in Series A funding. The privacy-preserving data collaboration and insights platform will use the funding to expand across Africa and beyond.

🪴 Banking 1 Million. Discovery Bank has reached the 1 million user mark two years earlier than initially planned. Launched in 2019, it has grown into a completely digital, comprehensive retail banking offering, attracting over 1’000 new clients per day.

🛰️ More African Starlinks. Following the telecommunications regulator in Botswana’s approval for an operating license in May, Bots has just become SA’s THIRD bordering neighbour to launch Starlink, with Zimbabwe, Lesotho and Namibia all expected to launch by the end of this year.

🎓 Houses of learned Drs. South Africa is set to get 5 brand-spanking-new tertiary institutions including 2 new government universities (the University of Policing and Crime Detection and the University of Science and Innovation) and 3 private tertiary education hubs: Akedemia by Solidriteit, Stadio, and AdvTech.

🎈 Durex Data Dribble. Durex in India has leaked hundreds of its customers’ personal data including names, contact details, and order information due to a lack of proper authentication on its order confirmation page. Honestly, the jokes write themselves.

😎 Get Accelerated. One of our partners, OCFO, is launching the third season of Founders Foundation in partnership with Investec. Get your startup financed and market-ready with this 8-month accelerator program. Apply here

CHECK THIS OUT

Getting Paid Faster, from Anywhere

With the number of online transactions set to double between 2022 and 2027 in SA, streamlining your card payments will become vital.

That’s why you need trusted payment technology, that’s easy to set up, with 24/7 instant payouts from anywhere in the world, with human support and all at a good price.

WigWag uses Stitch’s world-class technology to offer:

  • E-commerce plugins: Integrate your Shopify, WooCommerce, Webflow or Squarespace site with WigWag to seamlessly accept card payments.

  • Embedded payments: Check out WigWag’s API docs if you are building a tech solution and want to embed payments.

  • Global receiving: WigWag processes any Visa and MasterCard, globally, getting you paid, from anywhere in the world.

  • Instant payouts: Real-time withdrawals for smooth business operations.

  • Human support: WigWag is always available to help.

  • Ad hoc payments: Use checkout links or add card payments to Xero invoices for payments outside of your store.

Ready to simplify your payment processes? Check out WigWag today.

Engage SA’s Most Vibrant Startup Community

On Friday 6 September, we’re hosting the startup strategy pros from Metavolve on LinkedIn Live for a session on what it takes to scale like a legend. And, guess what? This one’s free and open to anyone — sign up here.

Want to unlock valuable opportunities on tap?

In the last 48 hours alone, in our online community, we…

  • Discovered Nick Grey, who is a master at teaching you to host events that don’t get stale or boring.

  • Tyler shared a nifty WhatsApp bot his team built that listens to your voice notes and writes the transcript for you — with notes, to-dos and availability checking coming soon.

  • Learnt about a Bitcoin community empowering local businesses along the Garden Route.

And had our first awesome event in Cape Town…

Was great hanging with you guys + meeting some new faces.

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

  • New: Free monthly startup strategy calls for all pro members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked if you’d use early wage access, and most here have some windfall funds…

🟩🟩🟩🟩🟩🟩 💰 No, I use my emergency fund (46%)

🟨🟨🟨⬜️⬜️⬜️ 💳 I use credit cards and overdrafts for emergencies (29%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🪙 I use other financial services (2%)

🟨⬜️⬜️⬜️⬜️⬜️ 🏡 I use friends or family (11%)

⬜️⬜️⬜️⬜️⬜️⬜️ 📲 Yes, I use an EWA product (0)

🟨⬜️⬜️⬜️⬜️⬜️ ✅ I would love to use EWA! (13%)

Your 2 cents…

“Check out this company too: https://levelfinance.co.za/”

Jennifer

Thanks for the intro, Jennifer! 🔥

“First month after employment really covers your whole journey through work. And if you don’t have money from the first day, let alone a bus ticket, you are screwed. And I mean bolted straight on a huge problem. Called into a brief meeting and warnings, taking you straight to a final warning and a "get out of here". EWA sounds like a EUREKA.”

Xola

Hi Xola, yes, so many people really want a job at a company that has EWA, for that reason. And did you know that Jem’s stats show that 70-80% of people who use EWA, use it for important things like transport and groceries? 🙌

💪 Guarding 15M+ SA Livelihoods

Plus: SA’s new AfriLab 🇿🇦, Eskom-powered EVs, TymeBank hits Asia & where to park for our Cape Town startup event.

NEW
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August 27, 2024

Get the sun to shine at night? If you’re looking to get more juice out of solar (or do an insanely awesome party trick), check out this startup working on reflecting sunlight from space onto your chosen destination on Earth at night.

In this Open Letter:

  • Ripple effect: Using tech to protect 15M+ SA livelihoods.
  • SA’s new AfriLab, Eskom-powered EVS & TymeBank hits Asia.
  • Accelerate yourself: Join a leading accelerator program.
  • What skills you’d like to learn: The final results are in.
  • Startup ideas: Share this 10 times and get Pro membership.

Together with:

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TRENDING NOW

Protecting 15M+ SA Livelihoods

Housing, profit, employment, economic growth… it’s easy to get frustrated with South Africa’s economic performance when you’re out of touch with grassroots level.

Example: Did you know that Stanlib found that 75% of working South Africans live paycheck to paycheck? (Eek, that’s like 15 million people!)

One debt counsellor claims as much as 70% can’t pay their bills on time, while another’s quarterly reports show many households are repaying up to 62% of their income to debt.

And it doesn’t get much better for higher earners – stats show the debt-to-income ratio among many earning over R20k per month is a staggering 127% (meaning if they pay their entire salary, they’re still 27% short on monthly debt repayments).

and the gym membership no longer makes the budget…

Where most of the pain is felt

But those are all stats on people who can actually access financial services such as loans. 

For many South Africans, an emergency means getting money through loan sharks or “mashonisas,” who charge interest fees that are upwards of 50%. That’s right, borrow R500 a week before payday, and it’s either you pay them R750 or lose a kneecap. 

And as many as 40% of SA households borrow from these predatory lenders.

The cost of SA’s bad debt

This year, the Reserve Bank estimated that 80% of SA is banked, meaning as much as 20% of South Africans still don’t have access to basic financial services, let alone financial education, which the World Bank’s Global Findex reports show tends to:

But you can see it even more directly within SA companies, where research by Visa has shown that 84% of employees spend time thinking about their money troubles at work (34% over 4 hours per week), which directly lowers productivity.

By how much? Well, one 2017 Mercer study found at a company with 10k employees, financial stress causes 1’922 hours of lost productivity per week – costing the company R533k every week.

spent 3 and half hours on my budget spreadsheet this morning.

The on-the-ground solution

One of the most promising solutions is Earned Wage Access (EWA), aka On-Demand Pay, which innovates at a specific point of inefficiency in companies – the payday schedule.

Instead of holding employees to a 30-day pay cycle, EWA makes a percentage of the employee’s already-earned wages available to them, negating the need to borrow externally.

This allows the employers to actively:

  • Help curb indebtedness among employees
  • Control interest rates and repayments
  • Improve employees’ financial health
  • Use the opportunity to educate employees on finances.

Good for everyone.

Great, so who’s innovating in this space?

Locally, there are a few players in the EWA space, including Floatpays and Paymenow, who both have a dedicated EWA app.

But, we like the way Jem handles its EWA product as a Whatsapp-first solution, i.e. no friction by using an affordable platform the user (employee) is probably already using (it has a 95% adoption rate).

It's way cheaper than anything else workers typically have access to. For example, a R500 advance with Jem costs the user R19, as opposed to R250 from a payday lender – helping people get out of debt.

The service is free for employers, and in addition, it offers these benefits to employers:

  • Reduce HR admin hours spent on payday loans (dropped to 0 after EWA)
  • Reduce absenteeism and promote financial wellness
  • Promote financial literacy (a free WhatsApp-based financial education programme is part of Jem’s EWA offering)

Yes, there’s still a long way to go toward true financial inclusion and empowerment in South Africa. But with innovators like Jem offering tangible no-cost benefits that educate and help curb the debt cycle, there’s reason to get excited. We’re watching this space…

IN SHORT

🌍 African Expansion. Africa’s largest network of innovation and tech hubs, AfriLabs, has added 18 new hubs, bringing its network to just under 500 hubs in 261 cities across the African continent. This includes a hub in a new city in Stellenbosch, South Africa at the Stellenbosch University LaunchLab.

👮‍♀️ Menotté en France. Telegram CEO Pavel Durov was taken into custody at the Paris–Le Bourget Airport over the weekend on “suspicion of failing to take steps to prevent criminal use of Telegram”.

🏄 Indonesian Tyme. SA’s digital bank, TymeBank is further expanding into Southeast Asia with the launch into its 3rd market, Indonesia by the end of this year. This follows its October 2022 launch in the Philippines and its Vietnam launch in January 2024.

⚡️ Eskom’s EVs. Partnering with Gridcars, SA’s power utility Eskom has joined the EV industry with the launch of several new car chargers across SA, as well as procuring 20 electric vehicles for operational use.

💥 Defense Plan. Y Combinator has backed its first defence start-up, Ares Industries. The startup is building low-cost cruise missiles that are compatible with existing launch platforms and could see the US Department of Defense get missiles 10x smaller, and 10 cheaper.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with easy no-code automation with Make and unlimited content to build your brand and authority with Stream.

CHECK THIS OUT

Want to give your startup a boost?

If you answered “yes”, join Founders Foundation NPC's Accelerator Programme in partnership with Outsourced CFO & Investec.

The Accelerator Programme runs from October 2024 to June 2025 and you will learn, among other things:

  • Finance Readiness: Create funding opportunities + raise capital.
  • Market Readiness: Elevate sales and marketing to get more clients.

The fee? An incredible 90% of the accelerator is donor-sponsored, meaning only a small opt-in fee is required.

If you are a business that has been in operation for at least two years and generates R1 million+ annually, then apply here:

Apply Now

Need more information? Check it out here.

Want to build your startup with a supportive community around you?

In the last 48 hours alone, in our online community, we…

  • Welcomed two new founders to our growing community!
  • Helped Piet get contacts to finance purchase orders on devices.
  • Got some recommendations for podcast guests.
  • And more…

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.
  • New: Free monthly startup strategy calls for all pro members.
  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked what you’d like to learn, and language lessons rule…

🟩🟩🟩🟩🟩🟩 🥐 A new language (28%)

🟨🟨🟨⬜️⬜️⬜️ 👨🏻‍💻 Coding (15%)

🟨🟨🟨🟨⬜️⬜️ 🤖 AI (20%)

🟨⬜️⬜️⬜️⬜️⬜️ 🎻 How to play a musical instrument (4%)

🟨⬜️⬜️⬜️⬜️⬜️ 📐 Woodworking (9%)

🟨⬜️⬜️⬜️⬜️⬜️ 🔮 How to know what my spouse/partner is thinking (9%)

🟨🟨🟨⬜️⬜️⬜️ 🤪 What’s trending in SA’s startup ecosystem (15%)

Your 2 cents…

“That Kayle & Peele meme had me rolling”

Ayuballie

He he, glad you enjoyed it — we couldn’t resist. 😂

“Now, if only there was a place I could get this info straight to my inbox 2x per week, be part of a lekker community of startup founders, and attend monthly events to find out about trends in SA's startup ecosystem...”

Jason

Yeh, if only such a resource existed. 😎🤏

🎓 Learning Has Never Been This Intuitive

Plus: Interns for Mahala 💼, R1m’s UX up for grabs, dark side of Woolies & only 10 tickets left to Cape Town’s lekker-est startup event.

NEW
Newsletter
August 23, 2024

Accurate enough? A high school in London has announced it’s going to be replacing some teachers with AI, despite experts warning not to since AI is still prone to weird hallucinations — just ask this founder who had to train his AI to stop RickRolling users.

In this Open Letter:

  • Future view: Changing the way we learn, forever.
  • Interns for Mahala, R1m’s UX up for grabs & Woolies goes dark.
  • Last chance: Only 10 spots left at CT’s lekker-est startup event.
  • How most of us buy our cars: And the results are in.
  • Just for you: Share this 10 times and get Pro membership.

Together with:


 

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TRENDING NOW

A Whole New Way to Classroom

 

Covid sent online learning into overdrive…

Rocketing it from a respectable $164bn (R2.9 trillion) industry pre-Covid to an attractive $200bn (R3.6 trillion) and $240bn (R4.3 trillion) in 2022.

But, unlike a few things around Covid, e-learning has shown some real staying power.


The industry is expected to 5X globally to a cool $1 trillion by 2030.

So, naturally, there are a lot of players in this space… From your “familiar faces” like Coursera, Udemy, Khan and Shaw Academy to big universities offering unprecedented programmes like MIT’s online programmes and even a few free courses

To exciting newcomers like Jordan Peterson launching his own university.

Heck, one of SA’s most memorable exits in the last ten years was Cape Town brothers Rob and Sam Paddock’s online academy, GetSmarter, which sold for about R1bn. 


 

So, if you’re wondering how all these people can play in this pace, there’s something you should know…

Their timing is always immaculate...

It’s bigger than most of us think

See, when you think e-learning, most people immediately jump to K12 learning (you know, regular school, grade 1 to 12) and tertiary education.

But it is so much bigger than that. Also think:

  • Corporate training –  ±R6 trillion industry
  • Professional development – ±R790bn
  • Microlearning – ±R27bn
  • Language learning – ±R1.1 trillion
  • Healthcare training – ±R1.9 trillion
  • Financial literacy – ?? (surely billions)
  • Coding and programming – ±R7.1 trillion


And you probably also need to think beyond the standard teacher-student concept (almost the entire world is short of teachers!) and start thinking about empowering people to teach each other.

Think of subject matter experts, retirees and experienced professionals sharing their insights; coaches and mentors able to connect with wider audiences; developers, IT pros and others in the tech space sharing skills and even tradespeople, musicians, writers, etc. all sharing the secrets of their craft with the next generation.

All that’s needed is a more creative space/way to teach…

Insubordinate and churlish. Mischievous and deceitful. Chicanerous and deplorable. IYKYK.

The SA EdTech Building a Fully-Integrated Digital Classroom

Launched in 2018, local EdTech player Lessonspace is building a platform for virtual classrooms, online tutoring & collaborative learning.

Central to their platform is their collaborative whiteboard. And much like on actual whiteboards teachers and tutors can use it to make notes, draw drawings, and explain concepts.

What makes Lessonspace really interesting though is its set of education-specific tools that are built specifically for a wide range of subject matter including:

  • Mathematics: Editable graphs and equations straight from the built-in resource drawer.
  • Languages: Activities to help teach specific languages (10 at the moment, with more to come).
  • Music: interactive sheet music so that students can learn to read and play different notes, songs etc.
  • Coding: The collaborative whiteboard offers pair programming, complete with syntax highlighting.

Where most of its magic happens is as a tool existing EdTech tools plug into. This allows the platforms and institutions to focus on what they are good at, you know, courses and student matters, and leave the online classroom experience (high-quality video streaming without issue etc) to the experts.

This week, Lessonspace Founder Matthew Henshall was on this week’s podcast. Catch the entire episode.

With platforms like Lessonspace building bespoke, industry-specific tools and platforms to make the e-learning experience better for students and teachers alike, they’re poised to ride the online learning wave in a big way. We’re watching this space.

Podcast Highlights:

IN SHORT

🎓 Free Startup Interns. Graduate placement platform Jobox is on a mission to place 4’000 interns at SA companies; if approved, these interns will be paid a stipend at no cost to you. If you could do with an extra set of hands at your company, check out the InternFIT Programme.

🫡 Salute an SA Legend. South Africa’s most loved Maths and Science teacher William Smith (you know, the uncle from SABC 3) has passed away at the age of 85. Tributes have been pouring in for the teacher who helped countless South African learners and students pass Maths and Science. RIP, Sir.

🧠 Chipped Brain. Neuralink has confirmed its 2nd brain device implant surgery went well, with the recipient, Alex, able to design 3D objects and play video games.

🛵 In the Dark. Woolworths’ on-demand delivery platform Woolies Dash has seen a 71% growth in sales in the last year. The retailer will launch more ”dark stores” — not open to the public — to keep up with demand and to counteract the challenges of fulfilling online orders from local stores.

👩‍🚀 Startup Moonshot Help. Got an idea to get to market or pitch? Our friends at Jack Studios are celebrating their 10th birthday by giving startups a chance to secure R1 million worth of services — from UX to design, pitches to product help — to take a new idea to the moon. What you waiting for?

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with advanced lead sourcing and contact through Apollo and your own startup CFO without the hefty price tag with OCFO.

CHECK THIS OUT

Building Solid = Building Smart

When building Lean, especially early-stage, one of the last things you need to consider is the legal ramifications of testing and “breaking things”.

But, as many YCombinator startups learned in the 2010s, as soon as your idea gets legs, legalities become a big thing — one California University found up to 62% of new tech startups run into legal issues per year.

The truth is startups need legal advice for everything from company structure and compliance to contracts and agreements, securing your IP, employee matters, risk management and dispute resolution — and don’t even get us started on fundraising and managing investor relationships.

But there’s a catch: What startup can afford their own in-house legal person?

Fortunately, you don’t need to hire internally. You just need a savvy legal eye with ventures experience to step in and help every now and again.

That’s why we keep Dommisse Attorneys’ number handy — they know what high-growth companies need. Ask them yourself.

Engage SA’s Most Vibrant Startup Community

Want to unlock valuable opportunities on tap?

In the last 48 hours alone, in our online community, we…

  • Got Danei some pro design feedback on their trivia-style mini-game.
  • Helped Pieter get the ball rolling in finding a non-tech co-founder.
  • Had a good community laugh-cry session about the pressures of building big things when your old-school parents just want you to “get a freakin’ job”… #startuplife


 

And we have only 10 tickets left for our Cape Town event, so, you know…

 

Next week, 27 August at Stitch’s offices in Solan Road, Cape Town, we’re learning from successful African innovators and meeting the extended Open Letter community — grab your ticket here for only R150 or go for free if you are part of The Open Letter Pro (only R250).

Coming Up Next Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.
  • New: Free monthly startup strategy calls for all pro members.
  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked how you purchased your vehicle, and cash is king…

🟨⬜️⬜️⬜️⬜️⬜️ 🚘 Bought a nice car with balloon payment and swapping for a new one every few years. (10%)

🟩🟩🟩🟩🟩🟩 💵 Cash, baby (48%)

🟨🟨⬜️⬜️⬜️⬜️ 🚲 I don’t have a car (18%)

🟨🟨🟨⬜️⬜️⬜️ 📈 Normal bank loan (24%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🔑 I lease mine (0)

Your 2 cents…

“Bought a car via loan, almost done with balloon payment”

Angeline

Nice one, Angeline. Trust you got the wheels you wanted… 🚘

“As an immigrant worker, getting a credit is an uphill battle. So I decided to work multiple jobs while living waay below my means to be able to save up for a car & pay for advancing my tertiary education.”

Isaac

Well done, Isaac. It’s tough but we’re all rooting for you. 💪🏽

“I fought hard to buy my car cash. It is second hand and I did not want to take out a loan. Less monthly expenses was the main goal! ”

Michelle

Remarkable, Michelle, hope you get many happy kms from it. 🚙

“Started off with balloon payment, then paid off the car early and now it is paid in full”

Madelein

Good one, Madelein. Hope you managed to save some on interest. 🏁

“First choice, so dumb, but hey. It's a hybrid so my petrol expense is decreased. And yes, that is what I need to tell myself so that I can sleep at night.”

Andersen

Hmm, nah we think you can sleep soundly, Sir! 🔋

🔥 Moving a Quick R66bn in Cars

Plus: Spaza shop solar 💡, FinTech finalists, MTN’s mixed bag & Cape Town’s lekker-est startup event.

NEW
Newsletter
August 20, 2024

🔥 Moving a Quick R66bn in Cars

Plus: Spaza shop solar 💡, FinTech finalists, MTN’s mixed bag & Cape Town’s lekker-est startup event.

Need a medkit? America’s FDA has approved a real-life medi-gel treatment, so you can patch up like in video games. The algae-based innovation that’s been on the cards for 10 years now (here’s the original video) will finally be available in real life.

In this Open Letter:

  • Fleet deals: Moving R66bn’s worth of vehicles, fast.

  • Spaza shop solar, flying our FinTech flag & MTN’s mixed bag.

  • Ready Cape Town? Tickets for our first CT event are flying.

  • The hardest part of hiring new people: The results are in.

  • Startup ideas: Share this 10 times and get Pro membership.

In Cape Town next week?

Join us for our first Cape Town in-person ever!

Moving a Quick R66bn’s Worth of Cars

About a quarter of the 12 million-odd vehicles on SA roads are commercial ones. And it is estimated that more than 184k new commercial vehicles hit the SA roads every year.

But many (if not most) of these vehicles aren’t owned by the companies that operate them. Rather, they are leased from a bank or another company. 

The reasons for this differ from company to company, but generally, it’s due to:

  • Cashflow: Reducing high upfront costs and better cash flow management.

  • Mitigating risks: By not owning the vehicles, companies can transfer certain risks (like maintenance issues, depreciation, and resale challenges) to the leasing or fleet management company. This can be particularly valuable for businesses that do not specialise in vehicle management.

  • Outsourcing non-core functions: For many companies, managing a vehicle fleet is not a core function of their business. Outsourcing this through leasing or fleet management allows them to focus on what they do best, while still having access to the vehicles they need.

  • Tax benefits: Leasing a vehicle typically results in it being classified as an expense as opposed to a depreciating asset on the balance sheet. Sometimes, you pay less company tax when you are profitable.

So, an entire industry developed around the financing and leasing of commercial vehicles. 

These companies put together packages for their clients based on the capital required to purchase those vehicles, all other costs associated with leasing the vehicle and the money they estimate they will make from selling the second-hand vehicles once the contract expires. 

At this rate, you’re practically giving it away…

“De-fleeting”

On the flip side, the leasing and de-fleeting business itself and, in fact, most car rental companies, have two major risks when offloading cars:

  1. Understanding the residual value (the price you’ll be able to sell that second-hand car for once the lease agreement ends).

  2. Having a buyer ready at an acceptable price (to make the whole deal profitable) as soon as the agreement finishes.

A few years back, all of that had to be done manually, making it a very tricky business – the de-fleeter had to know a bunch of second-hand dealers they could move stock onto. 

Not very efficient, not very scalable, and very risky.

An SA online marketplace that works!

Online marketplaces are notoriously hard to build in SA, largely due to the lack of market size that impedes reaching critical mass.

However, the local B2B marketplace, DealersOnline, managed to do just that in the de-fleeter space. Think rental car companies, banks and other fleet solutions companies on the supply side, and second-hard card dealers on the demand side.

Their bidding platform, which now operates in several countries across Africa and the Middle East, helped large banks increase the sales value of their vehicles by up to 12%, and reduced the time to sell a vehicle from 45 days down to under 5. 

And when you increase revenue and reduce time to sale, there is a margin to be made (to learn how much and how the business works, sign up for The Open Letter Pro and get the exclusive deep-dive info).

Good volume 

They currently sell between 4’500 and 5’500 vehicles per month in SA alone, where they operate the platform (as well as their vehicle inspection and storage offering), so they have one of the most accurate predictions of what second-hand vehicles sell for in SA. This neatly solves the fleet owner’s other problem of calculating that residual value.

Whilst no longer a startup (Barloworld did own a majority stake at one point, which the founders bought back again later), it’s impressive what they managed to build in a short space of time.

With a local used car market still going strong, innovative ways to get used cars into the hands of South Africans are a good bet. We’re watching this space…

THE OPEN LETTER PRO ONLY

Get exclusive insights into this startup, the industry and other opportunities, PLUS join our community of founders who get access to free events and support in building their businesses and more…

IN SHORT

🔋Powering spaza shops. Local solar-as-a-service provider Wetility is partnering with informal retailer FinTech A2Pay to provide affordable solar solutions to A2Pay’s merchant network of more than 6’000 spaza shops.

💰 Securing the bag. The annual Ecobank Fintech Challenge has announced its 12 startup finalists including SA’s very own EasyEquities, with the winner set to walk away with a cool US$50’000 in prize money.

🚘 GM’s AI play. General Motors is cutting nearly 1’000 software jobs globally to focus on higher priority initiatives like improving its driver assistance system Super Cruise, improving its infotainment platform and exploring the use of AI.

🥴 Mixed Bag. MTN has announced that it’s grown its user base for its super app Ayoba by 28.6% YoY to 36 million monthly active users. In stark contrast, its interim financial results for the first half of 2024 reveal a 20.8% drop in revenue for the group.

🏦 Stokvel stacked. Lesaka Technologies has invested R3.2m into local stokvel FinTech StokFella as part of their enterprise development initiatives.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with newsletter and automation tools like Beehiiv and business strategy development with Metavolve.

Engage SA’s Most Vibrant Startup Community

Want to unlock valuable opportunities on tap?

Last week, in our online community, we…

  • We learned a whack load of hardcore founder truths about hiring, firing, and building the kind of team that’ll get you there with special AMA guest Philip Joubert last Friday.

  • We discovered that if you don’t record online sessions, pros feel free to open up and give you the cold, hard truths you need to build big and not fool yourself.

And we’re only just getting started.

This time next week, we’re meeting in person to learn what tech approaches work and what doesn’t in Africa…

See you on 27 August at Stitch’s offices in Solan Road, Cape Town, to learn from successful African innovators and meet the extended Open Letter community — grab your ticket here for only R150 or go for free if you are part of The Open Letter Pro (only R250).

Coming Up This Week

  • Wednesday 10-11: Office Hours, where we all log in and work together, + the entire Open Letter team is at members’ disposal.

  • New: Free uncapped startup strategy calls for all pro members.

  • Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked what you dislike most about hiring, and it’s the resumes…

🟩🟩🟩🟩🟩🟩 😴 Going through countless CVs (40%)

🟨🟨🟨🟨⬜️⬜️ 👥 Interviewing people (30%)

🟨⬜️⬜️⬜️⬜️⬜️ 🧟‍♂️ The candidates (10%)

⬜️⬜️⬜️⬜️⬜️⬜️ 📝 The recruitment company (0)

🟨🟨🟨⬜️⬜️⬜️ 🥺 Letting someone go that stuffed up in probation (20%)

Your 2 cents…

“Love how you add a touch of humor to your reports!”

Roux

Ha ha, ja that’s just ‘cos we want you to have as much fun with this as we do. 🤓

1
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