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June 7, 2024

Cape Town’s Millionaires Grow, Energizing Web3 Startups

Cape Town’s Millionaires Grow,  Energizing Web3 Startups

By Shogo Ishida and Yosuke Yoshida, Co-CEOs, EMURGO Africa

Cape Town, the southern tip of Africa, is experiencing a surge in Web3 startups, fueled by a growing pool of high-net-worth individuals (HNWIs) interested in Web3. South Africa, now Africa’s biggest economy, maintains a friendly regulatory approach towards cryptocurrencies and blockchain-based technologies, which is providing a fertile ground for startup-led innovation.

Key Takeaways

  1. Cape Town has the second highest number of dollar millionaires in Africa
  2. HNWIs are investing in Web3 startups in Cape Town
  3. Crypto law is driving more Web3 investment in Cape Town

Cape Town Will Overtake Johannesburg to Become Africa’s Wealthiest City by 2030

Cape Town skyline

Johannesburg, the bustling financial center, has long held the title of Africa's top destination for High-Net-Worth Individuals (HNWIs). However, a recent shift in the wind suggests Cape Town may be poised to steal the crown by the end of this decade.

The latest African Wealth Report 2024 by Henley & Partners and New World Wealth shows that South Africa leads Africa with 37,400 high-net-worth individuals (HNWIs) – those with liquid wealth exceeding US$1 million. Johannesburg has 12,300 HNWIs but the report projects that by 2030, Cape Town, which currently has 7,400 HNWIs, will overtake South Africa’s commercial capital, and become Africa’s wealthiest city.

Cape Town boasts several of Africa's most luxurious residential neighborhoods, among them the renowned "Prime 7" identified by New World Wealth. These upscale areas include Clifton, Bantry Bay, Camps Bay, Bishopscourt, Constantia, Llandudno, and St. James.

The city is currently experiencing a significant influx of affluent individuals relocating from other parts of South Africa, notably Johannesburg and Pretoria, a phenomenon often referred to as "semigration." Additionally, Cape Town is gaining traction as a sought-after retirement destination, attracting migrating millionaires from Europe and other African countries such as Nigeria, Egypt, Morocco, Ghana, Kenya, Zimbabwe and Namibia.

The report projects that by 2033, Cape Town will have attracted 85% more dollar millionaires. “We expect several major Johannesburg-based companies to move their head offices to Cape Town over the next decade, which should help to drive wealth growth. Lifestyle estates on the outskirts of the city are projected to perform especially well in attracting new HNWIs,” the report states.

While wealth is a crucial factor, Cape Town offers a unique value proposition beyond financial considerations. The city boasts breathtaking scenery, a vibrant cultural scene, and a slower pace of life compared to Johannesburg. This combination is a major draw for HNWIs seeking a luxurious yet balanced lifestyle.

Cape Town's thriving property market and growing tech sector present lucrative investment opportunities for HNWIs looking to diversify their portfolios. As HNWIs settle in Cape Town, they bring with them investment capital, business expertise, and a demand for high-end services. This fuels the growth of luxury real estate, private wealth management firms, and exclusive concierge services, further solidifying Cape Town's position as a premier destination for the affluent.

HNWIs are Investing in Web3 Startups in Cape Town

Cape Town socializing

The influx of millionaires interested in Web3 is having a significant impact on the Cape Town startup scene. These HNWIs are providing vital funding for startups, acting as mentors and advisors, and helping to connect them with potential partners and investors.

This growing interest in Web3 is fostering a thriving ecosystem in Cape Town. Incubators and co-working spaces dedicated to blockchain startups are popping up, and there is a growing community of developers, entrepreneurs, and investors collaborating on innovative projects.

Many HNWIs are acting as angel investors, providing not only capital but also valuable mentorship and guidance to Web3 entrepreneurs. Their experience in traditional finance and business is invaluable for navigating the complexities of the blockchain space.

Some HNWIs are even establishing their own venture capital firms dedicated to investing in Web3 startups. This allows them to pool their resources and expertise to identify and support high-growth potential ventures. HNWIs are playing a role in funding and supporting incubators and accelerators that provide Web3 startups with the resources, mentorship, and network connections they need to succeed.

Many HNWIs have experience in sectors that are ripe for disruption by Web3 technologies, such as finance, supply-chain management, and entertainment. This expertise is invaluable for startups developing solutions in these areas.

Cape Town boasts a highly skilled tech talent pool, making it easier for startups to find the necessary expertise to build and develop blockchain-based applications.

This influx of investment from HNWIs is mutually beneficial. Startups gain the resources they need to grow, while HNWIs gain exposure to the potentially high returns of the Web3 space. As Cape Town's Web3 ecosystem continues to mature, this collaboration between HNWIs and entrepreneurs promises to be a key driver of innovation and success.

Top 10 Web3 Startups in Cape Town

  • Luno: Founded in Cape Town in 2013 by South Africans Marcus Swanepoel and Timothy Stranex, Luno is a crypto exchange that allows South Africans to trade various cryptocurrencies, some of which may be directly tied to Web3 projects. This enables them to invest in and participate in the growth of the Web3 space.
  • Carry1st: A leading Web3 game publisher and digital commerce platform founded in 2018. By developing their Pay1st platform, Carry1st is contributing to the infrastructure needed for a thriving Web3 ecosystem in South Africa. Pay1st is designed to power in-game purchases, facilitating seamless digital transactions.
  • Jambo Technology: Established in 2022, Jambo is dedicated to crafting a Web3 super app aimed at delivering educational resources, banking services, and entertainment options to the African continent. Jambo is building the Web3 mobile infrastructure for the African market, and has designed JamboPhone, a special smartphone for web3 gaming.
  • Web3 Sanctuary: It offers educational and training resources to help South Africans understand blockchain technology, decentralized applications (dApps), and other aspects of the Web3 space. This is to equip them with the skills necessary to participate in and contribute to the growing Web3 industry. It was founded in 2023.
  • Wilcards.world: It's a platform where users can exchange digital collectibles of endangered animals using a groundbreaking economic model known as radical markets. These collectibles combine the concepts of Harberger tax and non-fungible tokens (NFTs), resulting in crypto collectibles that are always available for sale. It was founded in 2019.
  • Altify: Offers one of the most extensive range of ETF-style crypto bundles globally, allowing users to access the crypto market with the same ease as with the stock market. With a minimum investment requirement of just $10, Altify's platform simplifies the purchase, sale, and yield generation from a diverse array of assets previously accessible only to the affluent. Founded in 2018, Altify offers access to an extensive selection of investment opportunities, spanning from gold and cryptocurrencies to forthcoming additions like private credit, real estate, and venture capital.
  • Kee Studios: Founded in 2022, this platform stands at the forefront of web3 game development, innovating immersive gaming experiences for a diverse global clientele. Alongside crafting tailor-made games for clients, we are fervently dedicated to pioneering our own cutting-edge gaming titles.
  • The Sun Exchange: Leverages blockchain technology to allow individuals to purchase and lease solar panels. Since 2014, it has tokenized solar panel ownership down to a single solar cell. Users earn a predictable financial return from their solar panels paid out in cryptocurrency.
  • AnkerPay: This startup’s point-of-sale API integrates with pre-existing point-of-sale software, enabling merchants to accept Bitcoin and other cryptocurrencies. Merchants receive payments in their local currency, providing a comprehensive end-to-end solution. Currently, AnkerPay is in the process of integration with 3000 retail stores. It was founded in 2019.
  • Helixa TCG: A trading card game built on blockchain technology, offering players a rich and immersive world-building experience. Established in 2022, the game follows a free-to-play model and is crafted to empower players with ownership and control over their assets and royalties via a decentralized platform.

Crypto Regulation is Driving the Web3 Investment Boom in Cape Town

Unlike some African countries with a more restrictive stance on crypto, South Africa's regulatory framework provides a degree of certainty and clarity for Web3 startups. This allows them to operate with a clearer understanding of the legal landscape, fostering innovation and investment.

South Africa's Financial Sector Conduct Authority (FSCA) regulates cryptocurrency, which the country considers a financial product and taxable asset. In March, FSCA approved 59 operating licenses for cryptocurrency businesses in the country. Regulating the assets also gives the central bank's Financial Surveillance Department explicit powers to require South African crypto asset trading platforms to report transactions involving crypto assets.

Cape Town's position as a hub with a clear, yet adaptable, regulatory environment gives it a significant edge over other African cities with stricter regulations. This makes it a more attractive location for Web3 startups looking to scale their businesses and attract global investment. Web3 startups can test and develop new technologies without the immediate fear of regulatory roadblocks, fostering a more dynamic and innovative ecosystem.

The absence of a heavy-handed regulatory approach reduces the perceived risk for investors venturing into the Web3 space. This makes Cape Town a more attractive destination for HNWIs and venture capitalists looking to invest in Web3 startups.

DISCLAIMER: The information in this content (website or other form) does not represent an offer or commitment to provide any product or service. The analysis, opinions and estimates expressed in this content are those of the respective authors, and may differ from those of EMURGO Africa and/or other EMURGO Africa employees and affiliates. Copying, re-publishing or using this material or any of its contents for any other purpose is strictly prohibited without prior written consent from EMURGO Africa.

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