Picture a two-person startup that’s been operational for 5 years; they have 15 paying SME customers and a product that clearly works. Yet whenever it bids for a large corporate or government contract, it loses not necessarily on price or quality, but because it lacks the required capacity or references.
The problem is circular. To build capacity, it needs bigger contracts. But to win bigger contracts, it must first demonstrate that capacity. So, unsurprisingly, it remains small. This is the fate of many South African technology startups that survive but can't scale. They do not necessarily need another accelerator. They need bigger customers.
I have been thinking about this problem since around 2017. GHEA was beginning to take shape, and I found myself sitting across from a senior public-policy official, one of the many people I probably had no business meeting at that stage - asking what felt like a simple question:
Why don't we deliberately use a portion of public procurement to help young technology businesses grow?
His answer was equally simple:
It is easier for the state to manage one large service provider than four small ones.
He had a point. Managing many small suppliers creates real administrative costs. But it also explains why procurement systems naturally favour firms that are already large.
Nearly a decade later, I was reading the Startup Act Movement's Startup Policy and Global Competitiveness Report, and there it was again: insufficient attention to using procurement as a lever for startup opportunity. The criticism is aimed partly at the Startup Act Movement itself, which is commendable. But it applies just as much to those of us who call ourselves ecosystem builders.
South Africa is currently redesigning its public-procurement framework.
The Public Procurement Act was signed into law in 2024. Draft regulations published in 2026 contemplate measures to increase participation by smaller and historically excluded businesses, while proposed legislative amendments continue to shape what those measures will eventually look like.
This means the country is deciding now how public purchasing power should contribute to economic inclusion.
The startup ecosystem should be part of that conversation.
What would a procurement system look like if one of its objectives was deliberately helping capable young companies become larger companies?
South Africa has spent decades using procurement policy to influence supplier ownership through the PPPFA, B-BBEE codes, and enterprise and supplier development programmes.
What we have done far less deliberately is use procurement to develop new productive capability.
These are different objectives. A young company may satisfy ownership requirements and still be excluded because it has never delivered a contract of sufficient size. But that creates an obvious problem: how does a company develop a large-contract track record if every large contract requires an existing large-contract track record?
This matters particularly in a highly concentrated economy. The Competition Commission's 2026 concentration research found substantial levels of concentration across many of the sectors it examined, with smaller firms often participating at the margins.
When a relatively small number of institutions control much of the demand in a market, access to those buyers can determine whether a company remains a two-person business or becomes a twenty-person one.
And exclusion rarely sounds like exclusion. It often sounds like :
'You don't yet have the capacity.'
Other startup ecosystems have recognised this problem and the opportunity it presents. Dubai Future Accelerators pairs startups with government entities to test emerging technologies against real public-sector challenges. Singapore has similarly built institutions that connect startups with corporates, government agencies and international markets.
The lesson is not that South Africa should copy another country's institutions. It is much simpler:
Someone must own the task of converting institutional problems into opportunities for innovative young companies.
Where nobody owns it, it rarely happens.
South Africa already has enough institutions designed to support entrepreneurs. The missing piece is a procurement pathway that allows capable young companies to compete for meaningful institutional demand.
The National Treasury's draft procurement regulations already provide mechanisms that could be used more deliberately. Through competitive dialogue, a department can define a problem without prescribing exactly how to solve it. This creates room for startups to compete on the strength of their solutions rather than on their ability to mirror an incumbent supplier.
Successful solutions could then be placed on framework agreements, allowing multiple qualified suppliers to compete for work as needs arise. Other public institutions could procure from the same framework without repeatedly running entirely new processes. This reduces the administrative burden that often makes one large supplier easier to manage than several smaller ones.
But the critical issue is how startups qualify in the first place. If entry requirements are built around turnover, company size and previous contracts of comparable value, the same established firms will continue winning. If they instead recognise demonstrated capability as a working product, paying customers and evidence of successful delivery, smaller companies have a realistic route into institutional procurement.
For the state, a R4 million contract may be immaterial. For a young company, it can be transformational. It can finance new hires, create institutional references, strengthen its balance sheet and make the company credible to customers and investors that previously considered it too small.
That is what market access looks like; the question is who will own it?
South Africa does not need another entrepreneurship intervention whose headline numbers are people trained, workshops held or entrepreneurs "supported".
Those numbers tell us that a programme happened. They do not tell us whether a company grew. What we need to start looking at is:
South Africa does not lack young people capable of identifying meaningful problems and building companies around them.
What we have is an economy in which significant demand remains concentrated in relatively few hands, while much of the entrepreneurship-support ecosystem is incentivised to measure participation rather than conversion.
If we are serious about creating scalable South African technology companies, the most useful intervention may not always be another workshop, accelerator or pitch competition.
