Assessing the entrepreneurial ecosystem readiness to support high-growth digital startups in South Africa

Pardesi, Sabica
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There has been a prevalence of studies that suggest that high-growth startups are an important determinant of national economic growth. Furthermore, with both the transition into the digital economy and the emergence of digital technologies, entrepreneurs and new ventures are increasing at an exponential rate globally. This has led to a rise in ‘entrepreneurial ecosystem’ studies that aim to understand how to establish environments that can best assist these new ventures. The focus of this qualitative study was to explore and assess how the entrepreneurial ecosystem supports venture growth for high-growth digital startups in South Africa. In contrast to popularised local studies that focus on the material manifestation of the ecosystem, this study honed into the narratives of twelve founders within the framework of a dynamic capabilities model in order to explore how they identified, captured, and redeployed resources and opportunities as well as the role that location played in supporting their venture growth. The data was collected through semi-structured interviews and analysed using an exploratory approach. The contributions underline the dynamic relationship that digital startup founders have with other ecosystem actors. The first key finding revealed that the South African entrepreneurial ecosystem is primarily led by entrepreneurs who had developed advanced sensing capabilities, i.e., the ability to recognise opportunities within the entrepreneurial ecosystem. The second key finding revealed that all of the interviewed founders took on significant personal and financial risk when starting their businesses. South African stakeholders show increasing concerns about the high-failure rate of startups. It was concluded that there needs to be two differentiated strategies to support high-growth entrepreneurship; one that supports experienced entrepreneurs, and one that is focused on nurturing younger inexperienced entrepreneurs. Linked to this, risk appetite should be viewed as an independent determinant for ecosystem growth; it is the missing glue required to promote innovative entrepreneurship. Lastly, recommendations were made for both ecosystem stakeholders and technology-based entrepreneurs looking to scale in the South African entrepreneurial ecosystem
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management (in the field of Digital Business), 2021
High-growth startups, Entrepreneurial ecosystems, Digital technologies, Digital economy, Innovation