Michael Renzon | Founder | Thoughtware.lab | mail me |
South Africa’s founder-led tech ecosystem is deeper than it has ever been, but it is still structurally thin at scale.
The most recent data tells a clear story. The Southern African Venture Capital and Private Equity Association 2025 VC Industry Survey recorded R13.35 billion in active venture capital investments across 1,325 deals. ICT accounted for nearly two-thirds of total deal value.
At the same time, the Partech Africa Tech Report shows South Africa leading the continent. The country raised US$643 million across 85 rounds in 2025. On the surface, these figures signal a healthy and expanding ecosystem. However, a closer look at the revenue distribution reveals a different pattern.
The missing middle in tech growth
A large base of companies sits below R10 million. A meaningful cluster also sits in the R10 million to R20 million range. Then comes a dense and difficult founder-led middle in the R20 million to R40 million band.
Beyond that, the ecosystem becomes increasingly thin. A much smaller layer exists between R40 million and R100 million. Only a small number of companies break into the R100 million-plus category with a truly repeatable go-to-market engine.
So, what’s the constraint holding your Business-to-Business (B2B) Software as a Service (SaaS)/Artificial Intelligence (AI)/Technology business back?
Growth doesn’t scale linearly
B2B SaaS growth does not scale linearly. Instead, it scales until it reaches a constraint. The objective is to identify the binding constraint.
In reality, this is an unusually difficult problem to diagnose from inside the business. Typically, one dominant constraint limits growth. However, founders are simultaneously exposed to pockets of success, conflicting signals, and isolated wins. These factors can obscure where the real bottleneck sits.
As Jason Lemkin has repeatedly observed in SaaS scaling, founder-led sales can mask structural weaknesses far longer than most companies realise. This happens because the founder continues to compensate for gaps that the system itself cannot handle.
Dave Kellogg similarly argues that SaaS companies often struggle because they observe aggregate growth outcomes. Instead, they need to isolate conversion efficiency between stages. This approach makes it easier to distinguish whether the problem lies in pipeline creation, progression, or closing mechanics.
What founder-led growth can hide
I know this problem personally, as a seasoned entrepreneur having scaled and exited multiple companies. Retrospection makes this clarity easier. However, at the time, I wish I had an objective diagnostic and go-to-market system.
What became clear across all of these journeys is that growth problems are rarely as obvious as they appear from inside the business. We often think we have a lead-generation problem when the real issue is positioning.
Similarly, we may think we have a sales problem when the real issue involves a lack of structured momentum through the buying journey. Founder-led growth can make this distinction particularly difficult to see.
We think we need more activity when the actual constraint sits in trust, stakeholder alignment, or product-market fit. Moreover, because the founder can still “make things happen” personally, the underlying system weakness can remain hidden for years.
The companies that scale successfully beyond this phase are usually not the companies working the hardest. Instead, they are the companies that correctly identify and address the constraint first.