Pretty pictures? The last thing you’d have expected to come out of MIT’s AI lab (CSAIL) is billboards that change colour at different temperatures. But that’s exactly what they’ve unveiled, and in a world where everything’s gone digital, it’s refreshing to see people still innovating in niche spaces like printed media.

In this Open Letter:

• Level playing field: Helping SMEs get corporate clients, faster.

• LA’s fire app, Mother City traffic champs & Showmax’s livestream play.

• Assuring success: How to get a team of engineers to help you build.

• Did you know this ground-breaking SA startup? The results are in.

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

Together with:

TRENDING NOW

Linking Corporates to Great Suppliers

Landing a big corporate client can change the world when you’re a new/small business, but it’s easier said than done. And not because the corporates are “being difficult”, there are valid reasons why they have protocols in place.

However, as economies grow (resulting in more buying options and requirements) and the world's connectivity making it easier to source from remote locations, procurement teams are finding it challenging to find the best suppliers who meet their mandates.

Today, we explore a South African startup that’s tackling this unique problem, let’s dive in.

How Big is Procurement in SA?

In SA, the Government spends nearly R1 trillion (around 12% of our GDP) procuring from businesses each year. The private sector has also spent a similar amount per year between 2011 and 2021 on investment in fixed assets such as infrastructure, machinery, and equipment.

Whilst the exact amount of procurement taking place in the private sector isn’t known, B2B payments in SA hit nearly $1 trillion in 2022.

There’s lots of money going around buying things, yet small businesses often find it hard to sell to large organisations. 

Why can’t I just sell to them?

When you’re a small business yourself, buying and selling pretty much rests on the owner’s discretion. And, in most cases, the owner would act diligently with these funds as it’s in their own best interest to do so. 

But this model doesn’t work so well in large companies for mostly obvious reasons:

• The owners of listed companies mostly don’t work there (so it's not practical for them to decide where to spend).

• There are several departments or people within a company that need to procure.

• Spending needs to be monitored and managed in line with approved budgets.

That’s why the procurement function is often centralised, meaning that there is a department within an organisation that sources potential suppliers, approves purchasing, and tries to minimise the risk of misspending or even fraud. 

Who they buy from matters…

Another major consideration for SA companies is Enterprise and Supplier Development (ESD), an initiative aiming to empower more local suppliers and increase financial support for black-owned entities. 

It allows for companies to set aside between 1% and 3% of their Nett Profit After Tax (NPAT) to put towards procuring products and services from Exempted Micro-Enterprises (EMEs) (< R10 million annual revenue regardless of BEE score), and Qualifying Small Enterprises (QSEs) (R10–R50 million annual revenue).

This contributes to the organisation’s overall Broad-Based Black Economic Empowerment (B-BBEE) Scorecard whilst supporting smaller businesses. And the budgets are significant. 

Take FirstRand, for example, 1% of net profit after tax lands R200m—R300m in this basket per year.

Now extrapolate that to the around 400 other JSE-listed companies alone (with similar numbers and then some), and it starts adding up.

The danger in getting it wrong…

The thing is, it’s not just about the BEE points. ESD forms part of the “Preferential Procurement” component, a “Priority Element” of a corporate’s B-BEE scorecard. And they need to achieve 40% of the subminimum score, or they get penalised 1 B-BEE level, which impacts who they can do business with elsewhere in their organisation or even results in fines. 

So, while centralised procurement helps combat fraud and manage spending, it does create major bottlenecks:

• They have so many departments to source and vet suppliers for

• And your central procurement person isn’t always an expert in the department’s subject matter.

And that’s why corporates so often miss out on engaging high-quality SMEs. 

This is the problem local startup Procure Africa is working to solve…

Small-businesses-to-corporate opportunities…

Procure Africa is a B2B marketplace that connects private sector buyer organisations to (mostly) small, township-owned suppliers through Requests For Quotations (RFQs) in the mining, construction, manufacturing, and renewable energy sectors.

It works by allowing organisations looking to buy products and services to create, send, receive, and manage RFQs via the Procure Africa platform. The platform automates a number of routine tasks like sending reminders to suppliers, generating reports, and creating purchase orders.

Buyers (corporates) can also find and compare various products and services from a large pool of vetted suppliers (SMEs), with vetting including everything from credentials to compliance and anything in between. This helps corporates fast-track discovering new suppliers and quickly evaluate their suitability. 

For SMEs, it’s a way to get on the corporates’ books, a little bit faster.

Procure Africa also lets organisations white-label the platform, so suppliers can onboard themselves directly on their own website. Noice!

With founders like Nyeko Mathebula and their teams building platforms that narrow the gap between trusted suppliers, and larger organisations with some cash to spend, we’re watching this space…

IN SHORT

Be the sharpest eagle at the water cooler…

⛏️ Can you dig it? African mining startups can apply for the timbuktoo MineTech Accelerator programme run by the United Nations Development Programme (UNDP), the timbuktoo Africa Innovation Foundation, and National Institute for Scientific and Industrial Research (NISIR). It aims to give MineTech African startups access to networks, high-tech products, and financing. Nice one — applications close 13 Feb 2025.

🎹 Streaming Amapiano. Grammy-winning, Amapiano superstar Tyla is set to perform live on local streaming service Showmax’s platform this coming weekend. It’s the first time Showmax will live stream an event, and will serve as an opportunity to test its Peacock-powered platform’s powers. Hopefully, Showmax took a leaf out of the Paul/Tyson fight playbook…

🔥 LA Fire Updates. During the ongoing wildfires taking place in Los Angeles this past week, a fire-tracking app ”Watch Duty” was downloaded more than 2 million times and seen by 14 million unique users in the past week. It uses a network of retired firefighters, first responders, official government reports, and volunteer reporters. While tragic, still great to see tech helping keep people safe with real-time active fire updates…

🛻 Mother City Jams. Cape Town has earned the unwanted accolade of having the worst traffic in ZA with residents losing as much as 94 hours stuck in traffic (nearly twice as much as 2nd place Jozi). Not only that, but it’s ranked 7th on the global list of worst traffic behind big-hitters like NYC, London, and Paris. Perhaps it might get better now that the holidays are over…

🎯 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with the best in business strategy with Metavolve, investment, offshoring and startup legal insights with Dommisse Attorneys and 12 more vital startup tools & services.

CHECK THIS OUT

The Most Powerful Tech Investment a New Venture Can Make

Only a few startups make it past year 3, 5, 10 and onwards… But those that do have something in common – at some point in their journey (if only because their investors insist on it) they employ a Chief Technical Officer (CTO) to work directly with the CEO (leadership).

Why? CTOs are highly skilled and highly experienced technical professionals, with a much broader scope of understanding than normal devs – in fact, most CTOs are engineers and themselves founders.

They fill the unique function of strategic tech overview, i.e. they deeply understand the company’s vision and ensure that every tech investment enables that vision in the future.

What’s the difference? Your normal tech hires, like developers or even a dev agency, usually only execute what you tell them. A CTO will have the clout, ability and experience to truly challenge even a founder or CEO to ensure your tech is 100% what your company needs for the future.

And it really matters:

• One Turkish university showed that ventures that employ a CTO are more profitable.

• Researchers at Princeton found that a CTO’s influence on tech and strategy greatly improves organisational performance.

• One venture-building firm showed that companies with CTOs are more competitive in their markets.

That’s why many VCs and investors will often require scale-ups to have a CTO in place to access more funding.

The Scarcity Conundrum

Great CTOs are so sought-after, in fact, that the companies who really need them – startups – simply can’t afford them. And that’s why we in SA have Octoco.

It stands for Outsourced CTO Company. And, as the name suggests, it’s similar to having an outsourced/fractional CFO (finance), but just for your tech function. Basically, it’s a fractional CTO – you can’t afford one full-time, but you can afford to get a CTO team onboard for a few hours a week.

And it Really Works…

The ventures that have used Octoco are able to grow faster, turn a profit quicker and build more complex tech in a fraction of the time than their competitors can…

Take, for instance:

• Picklogger was able to reduce farmers’ orchard performance analysis from once-per-season to instant with GPS and accelerometer-enabled pruning sheers that track every cut and snip thanks to Octoco.

• Henlo Coffee was able to produce one of the most advanced AI-enabled coffee machines that save hospitality owners thousands on wastage and barista training.

• Flexistore was able to build one of the first fully digital public storage and warehousing solutions in the world that’s totally scalable, allowing them to expand to new locations as fast as they can raise capital.

• LeaseSurance was able to go from a simple dev-agency-built MVP to full roll-out (with profitability in sight) in just 5 months, thanks to Octoco.

See more remarkable startups fast-tracked by Octoco’s fractional CTO insights right here.

If you’re serious about making this your year, get the right tech partner on board for 2025.

HAPPENING SOON

Upcoming Events

17 January 2025 — Sales Masterclass — Online: Come learn and ask questions directly to pros — exclusive to members of The Open Collab community.

24 January 2025 — Offshoring Case Study — AMA: Get firsthand insights into what it takes to take your company global from SA — exclusive to members of The Open Collab community.

31 January 2025 — Fundraising 101 — AMA: We’ve invited founders and teams who’ve recently raised funding to give you the ins and outs of securing investment —exclusive to members of The Open Collab community.

View all our upcoming events here.

BUILDING TOGETHER

Happening over at The Open Collab

In the last few days alone, in our online community, we…

• Started the year off right with in-person coffee meetups in Cape Town and Stellenbosch ☕

• Discussed UFC's president Dana White joining the Meta board — and musing if Zuck's prepping for a fight against Musk.

• Helped Wynand discover a load of powerful team-based WhatsApp solutions for customer support.

• Helped connect Richard to a promising local provider for support.

• Explored Nvidia's big new personal "supercomputer" play (an affordable desktop with the ability to run complex processing for AI).

• Celebrated Christian's start on the Lula team 🎉

• Welcomed more awesome new members!

Thinking about joining The Open Collab?

• Supercharge your network in the SA startup landscape — get that introduction, get that customer, or meet that partner.

• Get feedback on your products, services and/or offers from others who have built and are building their own products right now.

• Join all our online and in-person events for free!

• Exclusive 1-on-1 sessions with startup consultants.

SA’s only dedicated tech startup and scale-up founder community.

WHAT YOU SAID

An SA first…

Last Friday, we riddled you which SA startup created one of the world’s first mobile payment solutions back in 2007, and only a quarter of respondents recognised Bevan Ducasse’s WiGroup (former) from Cape Town…

🟨🟨🟨🟨🟨🟨 MobiPay (67%)

🟩🟩⬜️⬜️⬜️⬜️ WiGroup (26%)

⬜️⬜️⬜️⬜️⬜️⬜️ CellCash (7%)

Your 2 cents…

Ha ha, oh yes, Thabo, pretty sure they wished they used “MobiPay” when they launched. Incidentally, WiGroup sold and merged with a UK FinTech called YoYo in 2020, and is now part of the YoYo Group. 💸