💸 A Share of SA's R4.2bn Ballot Industry…

Hi there,

Posh flush? There goes the maxim of Alexa “doing everything for you” ‘cept wipe. This new smart toilet comes with an Alexa-enabled bidet, so you can ask her to “spray” and she’ll keep you clean.

Welcome to all our new readers!

Wow, what an amazing start to 2024 – 200+ new signups in just the last 5 days. So if this is your first newsletter, welcome! A quick recap of what we do:

• We send 2 newsletters every week, Tuesdays and Fridays.

• For each newsletter, we pick relevant business/startup sectors.

• The spread of topics is to accommodate different industries

• And the purpose is to give you great insights and ideas for the work you do.

We often find very niche and previously unknown opportunities in strange places, like today’s “business and politics” focus. Next time it will be something else, just as crazy, but always backed up by data.

Hit reply and let us know how you like it!

Let’s get into it.

In this Open Letter:

• Smart moves: Business opportunities in politics.

• Blimp funding, volcano drilling & cashless Woolies.

• Founder focus: How to avoid startup theatre & build something solid.

• SA’s best startup sector: The results are in.

• Free stuff: Share this and get cool business tools.

TRENDING NOW

The business of politics

Half the world is heading to the polls in 2024, including us here in South Africa. And democracy and progress aside, elections are big business.

Although official numbers are hard to come by, it appears big political parties spend anything from R550m to R1bn on election campaigns. (Cyril Ramaphosa apparently spent in the region of R400m to become president of the ANC).

In the 2019 national elections, every ±40 000 votes resulted in one seat in parliament. For the DA’s R550m they spent, they gained 3,622,531 votes nationally. That’s R151 per vote or ±R6m per parliamentary seat. 

Incidentally, that’s about the 5-year salary of a member of parliament.

Where do they get money?

• Investments: I.e. Chancellor House is ANC’s investment vehicle.

• Donations: Which by law needs to be declared — you can track all of them here on a very cool dashboard.

• Companies paying for things on their behalf (not quite legal, but likely happens) — these ones aren’t tracked.

Want a slice of the campaign budget? Offer something to get that cost per vote down (it’s like CAC, but for political parties — CoV?). And whilst traditionally T-shirts and KFC vouchers played a key part, it’s likely more and more the online narrative will influence voting patterns. 

So, a few billion rands will be spent this year, but where are the opportunities? 

Intelligence

Channel campaign messages and budget in the right area and you will certainly get the cost per vote down. This is where intelligence ventures like Murmur can capitalise – being able to map and predict online trends and sentiment using big data and AI. Analysing hundreds of thousands of online conversations, these guys can tell politicians where to focus their attention and money.

Campaigns

Manufacturing T-shirts and banners might not get you paid (at least not until the next election), but digital services for campaigns or even the operating system for the election campaign payment terms are likely different. 

Stellenbosch-based, PlusPlusMinus built a suite of campaign management tools for the DA and has spun it out as a standalone product for political campaigns used in various countries across the world.

Management

Nothing buys a cheap vote come the next election better than performance. So performance management software, tailored for political parties, can do a whole host to help those who are serious about service delivery to track and monitor their reps.

With billions to be spent in the next 6 months on wooing voters, opportunities abound. You know what to do… we will be watching this space…

IN SHORT

🎈 Soaring High. Local blimp startup Cloudline has raised $6 million in a funding round led by an ex-Google VC and a couple of pan-African funds in a bid to become the leader in carbon emissions-free autonomous flights.

🌋 Hot Stuff. Scientists in Iceland are going to drill not one, but two boreholes into a magma chamber – the first journey to the “centre” of the earth to give the first direct measurement of magma and to potentially supercharge geothermal power.

🥶 Funding Winter. Looks like it could be a long, cold winter for startups in SA as the impact of the US economy continues to be felt on SA shores. With the interplay between the rand, dollar, the Fed as well and US interest rates impacting the available capital for emerging markets, it might be time to look further afield for those cash injections.

⚽️ Turned Tables. The SABC has (finally) managed to get one over MultiChoice & SuperSport after it secured the broadcast rights for the Afcon 2023 football tournament set to kick off in a couple of days.

🚫 Cashing Out. Woolies have announced that their WCafé’s will be going cashless from the 16th of January and it’s caused a bit of a stir on X and other social media platforms.

BUILDER’S CORNER

How to Grow a Next-Gen Startup

So, you were excited about building a startup the Silicon Valley way: You know, develop an idea, convince a bunch of investors to bet loads of money on it, hire lots of people, take years to develop it, borrow some more, grow to unicorn status… and then hope to someday get a payday…

Experienced founders in The Open Letter say that things don't always work out as you expect, and investors are not foolish enough to invest in every idea.

We’ve said a few times: There are other ways of building something truly amazing. But, just in case you think we’re full of it, you should know this line of thinking is not unique to South Africa.

Canadian founder Pierre Sabbagh shared this insanely sobering post on LinkedIn. So we thought we’d use it for today’s Builders Corner.

The Experienced Founder’s Advice to First-Timers

1. Steer Clear of the Startup Hype

Don’t get swept up in the glitz of startup culture of having to constantly raise money. Focus less on fundraising and remember, a startup's worth is not in its perceived glamour but in its real business value.

2. Embrace Bootstrapping

Start with what you have. Use your own funds and invest your own time and effort. Look into government grants for initial support if need be (check the TIA seed fund grant or some of the SEDA programs). This self-reliant approach breeds resilience and creativity.

3. Build a Compact, Capable Team

Resist the urge to hire too early. But do outsource tasks that aren't core to your business. Rely on your founding team for critical operations. A lean team is nimble and more manageable.

4. Product Development: Think Before You Code

Before diving into product development, take a step back. Reconsider your initial ideas. Hold off on writing code until you have a clearer picture of what is truly needed. Validate the idea first, then make sure the market actually wants (and will pay for it) before you try to build anything scalable.

5. The Importance of 'The One Customer'

Find that one customer who can be a real partner in your journey. Someone willing to share insights into their business pains, challenges, and gaps in existing solutions. This relationship is invaluable for targeted product development.

6. Craft and Refine Your MVP

Develop your Minimum Viable Product (MVP) in collaboration with this first customer. Offer them a significant discount, but avoid giving away your product for free. This approach ensures real-world feedback and a committed early adopter.

7. Expand Through Referrals

Utilise your first customer’s network for growth. Each new customer brings opportunities for learning and product refinement.

8. Focus on Revenue from the Outset

Prioritise generating revenue from day one. Grow your business sensibly, without the pressure to expand rapidly. Always keep an eye on your financial health.

Some absolute Gold in there. Great principles for almost any new business. How are you tracking with them, what do you need to start (or stop) doing in 2024? Hit reply and let us know.

THE RESULTS

We asked which startup sector in SA has the most potential in 2024, and AgriTech seems to be the hot new favourite…

🟨🟨🟨⬜️⬜️⬜️ FinTech (13%)

🟨🟨⬜️⬜️⬜️⬜️ AI (9%)

🟩🟩🟩🟩🟩🟩 AgriTech (23%)

🟨🟨🟨⬜️⬜️⬜️ EdTech (11%)

🟨⬜️⬜️⬜️⬜️⬜️ InsureTech (5%)

🟨🟨🟨⬜️⬜️⬜️ GreenTech (13%)

🟨⬜️⬜️⬜️⬜️⬜️ HealthTech (6%)

🟨🟨⬜️⬜️⬜️⬜️ E-commerce (9%)

🟨🟨🟨⬜️⬜️⬜️ A brand-new sector I'm creating (11%)

Your 2 cents…

You’re right, William, we left off PropTech – sorry! But it will indeed be interesting to see what startups can do in that space in 2024.

FOR THE MEMES

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