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Startups lead Woodstock's regeneration: a technology and innovation hub is driving a recovery in a once-dilapidated Cape Town suburb.

The story of the Cape Town suburb of Woodstock, located between the Table Bay docks and the lower slopes of Devils Peak, around one kilometre east of the central business district, is one of constant change, degeneration followed by regeneration.

The third largest "town" in South Africa by 1884 and a popular seaside resort, Woodstock declined after the massive land reclamation of the 1950s that saw it lose its beach. Though it managed to remain integrated during Apartheid and retained an industrial nature, the area declined to the point that by the 21st century it was primarily known for crime and drugs.

As a destination for business and pleasure, however, the area is now back in vogue. Various media businesses have moved into the area, while old buildings have been revamped to house offices, independent shops and furniture showrooms. The 19th century Old Biscuit Mill now holds a fashionable market. New developments begin weekly and property prices are on the rise. The central aspect of this redevelopment, however, has been the growth of Woodstock as a hub for Cape Town's tech startup ecosystem, the Western Cape's equivalent of Ngong Road in Nairobi or Silicon Roundabout in London. This process began with the launch of the government-funded business incubator the Bandwidth Barn in 2000, but the community has swollen beyond that to give Woodstock one of the highest concentrations of startups in the country.

George Gabriel is group brand coordinator for the Daddy Group, which has invested extensively in Woodstock in initiatives such as the Old Biscuit Mill, co-working space Daddy O, and the Woodstock Exchange, which houses the Bandwidth Barn and a number of other co-working spaces.

He says the basic reasons for the initial growth of Woodstock are clear: low costs, given its degeneration, and proximity to all areas of the city and the airport. Ongoing development means new office space is continually being made available, and parking is easier than in town. But Gabriel says that those initial factors are only part of the reason for the ongoing development of the previously downtrodden suburb as tech hub of huge importance.

"The last decade has seen a huge shift in design-related thinking. So as Woodstock developed first as a design centre for creatives, it was only natural that this would develop into an ecosystem for startups as they play off of many of the same needs and services that the creative industries provide," he says.

There has been a snowball effect in this regard, as tech hubs and co-working spaces followed the Bandwidth Barn's lead in setting up shop in Woodstock. Sandheep Ramluckan, who runs StartUp90, the latest kid on Woodstock's block of accelerators and incubators, says it was a no-brainer to locate his programme there given the pre-existing concentration of creative industries in the area.

"In the last 10 years, a significant amount of capital has flowed into projects in which developers have converted old industrial buildings into trendy mixed-use complexes such as the Woodstock Exchange, Buchanan Square and the Old Biscuit Mill. This has resulted in a multiplier effect - attracting other small businesses and startups to the area," he said.

Hubs and startups alike are clear that the concentration of the entire ecosystem in one place--and a place as "happening" as Woodstock as that--can only be a good thing for the development of small South African businesses. Ramluckan says it is well documented that the clustering of startup businesses around similar economic activities leads to accelerated development.

"A hub makes it easier for companies to collaborate, it creates a sense of community as entrepreneurs generally have shared interests and there is greater exchange of ideas and information," he says.

Gabriel says, simply from a collaboration standpoint, the clustering makes interaction "more dynamic and organic.

"In a sense, the whole area becomes a big campus where ideas and deals can grow and flourish ... The more we collaborate and learn from each other's experience as well as support one another has become very important as we now represent a key factor in the future economic development of the country. Individually we do not have the resources to create the infrastructure that is needed, but together we can develop new tools and a political voice that should have a significant impact in the time to come."

Justin Melville, co-founder of online renting platform Ekaya, which is is based out of Woodstock, says there was something in the combination of "unchained creativity" and more reasonable prices that made Woodstock a preferred destination for younger companies.

"Community is important, it's great running into people totally by chance and one thing leads to another and collaborations are born," he said.

"In the case of Woodstock Exchange, established arms of the startup world like The Barn and 88mph Garage mean companies in those ecosystems often benefit from visits from guys at Google, Microsoft, maybe investors and the media. With a lot of innovation in one place, it's a more attractive destination for the visiting parties and that benefits the resident startups."

For Melville, the area has a unique "melting-pot vibe".

"There are other creative districts, financial districts, commercial and lifestyle districts but Woodstock blends all of these in an interesting way and its central location makes it accessible to North, South and City," he said.

"The fact that so many work outside of their offices is where a great deal of collaboration happens. It's an open-door, drop-in kind of place with a wide variety of quality open space, food and drink places to meet and engage with others."

Rahul Jain, co-founder of online payments startup Peach Payments, agrees that small businesses thrive on the collaboration Woodstock encourages.

"Working in and around the same area makes it easier for entrepreneurs to collaborate and mix. It's also about the ecosystem that the area develops to really support startups with things like co-working spaces," he says.

"It's also about the culture the area breeds. Since the early days we have seen collaboration being an essential part of the fabric of Woodstock and this is now continuously reinforced. Any new startup or business also imbibes that culture and everyone collectively carries it forward."

The emergence of Woodstock as a "startup neighbourhood" and the new spirit of collaboration encapsulated by its many startups and hubs is evidence of how far the area has come, according to Chris Steyn, an investor and board member at the 88mph accelerator programme, also based in Woodstock.

"It has changed beyond recognition compared to five or six years ago when the area was run down and home to drug dealers and homeless people," Steyn said.

"Woodstock has become established as a burgeoning centre of entrepreneurialism in the areas of arts, food and crafts. Young tech entrepreneurs and developers rub shoulders with a wide variety of their peers, facilitating vibrant cross fertilisation of business ideas, recruitment and networking. There is a tremendous spirit of collaboration, particularly in co-working spaces, and informally after hours in the numerous bars, restaurants and eateries in the area."

This collaboration is not just for show, according to Dante Roets, office manager at the Cape Town Garage.

"People are always interested and excited to see and learn about what is going on around them on a business, personal and creative level and this often contributes to collaborations or referrals that are often mutually beneficial," she says.

"It is quite a creative area, which can be great for allowing a certain level of positivity and inspiration to those who are surrounded by it daily: the normal corporate environment does not quite fit the Woodstock 'feel'."
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Title Annotation:Cover Story: Entrepreneurship
Comment:Startups lead Woodstock's regeneration: a technology and innovation hub is driving a recovery in a once-dilapidated Cape Town suburb.(Cover Story: Entrepreneurship)
Author:Jackson, Tom
Publication:African Business
Date:May 1, 2015
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