GenAI takes off in South Africa with Stellenbosch firm netting R60m investment

Several South African companies have already embarked on the generative AI journey, and at least one large venture capital fund has put R60-million into the Stellenbosch-based technology company Spatialedge.

Founded in 2017, Spatialedge already brings in an annual revenue of more than R300-million. Brett Commaille, the chief executive officer of Hlayisani Capital said Spatialedge fitted into the “sweet spot” that the Hlayisani Venture Capital Fund II was looking for.

“We are looking for venture capital assets that are already revenue-producing. Spatialedge has already proven that the business model works, but now they need funding to grow. That growth could be into the rest of the country or ideally into new and international markets as well.

“It’s a few years old; they’ve spent that time building both their product and a customer base and now they have something they can actually grow into multiple new customers,” he said.

Commaille pointed out that South Africa’s venture capital industry was still fairly young and there was currently “a lot of tech-driven opportunity”.

“We are looking at tech-enabled growth businesses for investments and that’s quite a broad ambit, but AI is one of the more exciting sectors,” he said.

However, he pointed out that there was a lot of noise around generative AI in particular.

“You have everything from AI being used to create new graphics and to create silly pictures at a consumer level to AI being able to process vast amounts of information and provide really useful corporate insights. That’s far harder to do and that’s what excited us about Spatialedge, they are a team of problem solvers,” he said.

Retief Gerber, the founder of Spatialedge, said that since 2017, the company had grown to 105 employees, at least five of whom have PhD degrees.

“With the new funding, our plan is to accelerate our research and development and look at expansion. We are a group of engineers focused on developing solutions that help businesses make money,” he says.

Spatialedge is growing revenue and employees at a rate of approximately 40% a year. “With this investment, our focus will be mainly South Africa. Our next investment round will be focused on international expansion and expanding the product range and industry focus,” Gerber said.

How are South African companies using GenAI?

The SA Generative AI study released by World Wide Worx this week shows that the key factors for successful AI deployment include strategy, cybersecurity, budget, culture and data analysis skills.

The study was based on interviews with IT decision-makers at 100 large enterprises. Of those, half the respondents were companies with up to 1,000 employees and the other half companies with more than 1,000 employees. A quarter of the respondents in the study indicated that AI was being used in their businesses in an unofficial capacity and was not budgeted for.

“In other words, companies understand the importance of shadow AI, and while they may not want to budget for it formally, they see the value of their staff trying out various tools,” said Arthur Goldstuck, the chief executive of World Wide Worx.

Goldstuck said it was fascinating that only 10% of respondents were not using generative AI in some way, particularly given the relative newness of GenAI, which “exploded into the public consciousness around 2022”.

He noted that around 2019, one of the factors holding back the use of AI was that it was too expensive in terms of skills and the tools available to companies.

“With generative AI, those issues go out the window because it’s available to anyone who wants to use it and it’s an indication of the democratisation of AI,” he said.

The study showed that 33% of companies use GenAI for text/written copy, followed by 27.8% for video creation, 24.4% for code generation, 23% for audio creation and 21% for chatbots.

The main AI platforms South Africans are using

Source: SA AI Regenerative study 2024, by World Wide Worx.

When it came to the actual AI tools/platforms being used, ChatGPT led the pack, followed by names that have become increasingly familiar over the last year, such as Microsoft Copilot, Bard, Scribe, Duet AI, Dall-E2, Midjourney and Synthesia. DM