2 nd Global Forum: Nov 2006
Business of Incubation An African perspective on using ICTs for reaching out to communities
Proposition Business incubation initiatives provide a valuable and sustainable model for the development and support of entrepreneurs. Business incubation takes on many forms and structures. There is a suitable incubation model for each facet of entrepreneurial development The services of incubators are varied in form, content and scope in the different market sectors.
Significance Tornatzky, Sherman and Adkins Only a small body of research on business incubation has emerged. Research has focussed on some fundamental questions about the practice, including: Does business incubation work? Are different outcomes achieved with different kinds of incubators? What services define business incubation? What is the relationship between services and outcomes? Nieman, Hough and Nieuwenhuizen Incubation is a fascinating concept, and one in which a great deal of research needs to be undertaken. Business incubation is still in its infancy and we can benefit from world experience in incubation.
Business Incubation Defined A business incubator defined by Wolfe as: A program where young businesses can receive support that accelerates their time to market, establishes a sound operational foundation, increases their access to capital, and improves their opportunities for success. An incubator offers critical tools, information, contacts and resources (that may be otherwise unaffordable, inaccessible or unknown) through coaching, mentoring, and networking in a proactive manner that provides value to both incubator clients and those who support the program.
Incubator Study Space Types of Incubators Real Estate Virtual Incubation Tech Transfer Centers Education Institutions Corporate Markets Business Phase Concept Pre-startup Start-up Growth Mature Pre-listing Services Business Coaching - Business Basics - Marketing - Financial - Production General Office Resources Business Networking
Incubator Services Limited Service delivery Business Development Services Business Development Services required for growth of small business. Counseling Advice Training Mentoring Finance New Venture Development & Growth Information Research Networking Incubators Clusters Extract from Entrepreneurial Enabling Environment. Nieman. (2004)
What then is Incubation? Coaching Information & Advice Training Mentoring Access to Loans/Finance Softstart Business & Technology Incubation Services Events & Workshops Links to HEI Networking Facilities & Infrastructure Clustering
Incubation Models and Differentiation Facility-based incubation program Multi tenant facility Real estate Shared facilities, Mentoring and coaching, Networking, Referrals, Access to capital, Training, etc. Services-based incubation program Virtual incubation Structured services program, no facility space. Affiliates incubation program Hybrid of above Also geographical, industry, sector, associate and profit orientations
Services of incubators Business assistance services General services:- Marketing assistance Financial, Accounting/Financial Management Products and Production:- Funding, access to loans / funding / VC Legal Networking Networking activities, Links to higher education institutions, affiliate programs, investor/strategic partner linkages, government contract procurement assistance, international trade assistance General Office Services
Developed vs. Developing Developed Countries Incubators are closely associated with and supported by universities. Africa Incubation / South Africa Associations with Universities exist but the link is very weak.
Developed vs. Developing Developed Countries Incubators are closely associated with and supported by universities. Funding for business development is generally available and abundant. Africa Incubation / South Africa Associations with Universities exist but the link is very weak. Very few resources exist for entrepreneurial funding especially early stage or seed funding.
Developed vs. Developing Developed Countries Incubators are closely associated with and supported by universities. Funding for business development is generally available and abundant. Africa Incubation / South Africa Associations with Universities exist but the link is very weak. Very few resources exist for entrepreneurial funding especially early stage or seed funding. The culture of plowing back into the community without expecting a monetary return is common place. What is in it for me? Our philanthropic culture is poorly developed.
Developed vs. Developing Developed Countries Incubators are closely associated with and supported by universities. Funding for business development is generally available and abundant. Africa Incubation / South Africa Associations with Universities exist but the link is very weak. Very few resources exist for entrepreneurial funding especially early stage or seed funding. The culture of plowing back into the community without expecting a monetary return is common place. Incubatees are generally mature companies with professional management and funding. What is in it for me? Our philanthropic culture is poorly developed. Clients are to a large extent still preincubation.
Developed vs. Developing Developed Countries Incubators are closely associated with and supported by universities. Funding for business development is generally available and abundant. Africa Incubation / South Africa Associations with Universities exist but the link is very weak. Very few resources exist for entrepreneurial funding especially early stage or seed funding. The culture of plowing back into the community without expecting a monetary return is common place. Incubatees are generally mature companies with professional management and funding. Technology incubation is just that development of technology with the resources and infrastructure. What is in it for me? Our philanthropic culture is poorly developed. Clients are to a large extent still preincubation. Technology incubation means focusing on Business development within a technology sector.
Developed vs. Developing Developed Countries Incubators are closely associated with and supported by universities. Funding for business development is generally available and abundant. Africa Incubation / South Africa Associations with Universities exist but the link is very weak. Very few resources exist for entrepreneurial funding especially early stage or seed funding. The culture of plowing back into the community without expecting a monetary return is common place. Incubatees are generally mature companies with professional management and funding. Technology incubation is just that development of technology with the resources and infrastructure. Incubators are very community focused and have a strong sense of belonging What is in it for me? Our philanthropic culture is poorly developed. Clients are to a large extent still preincubation. Technology incubation means focusing on Business development within a technology sector. Incubators are few and far between and try to service a very large geographical area.
Beware of being blinded Considering the differences can we just adapt these models?
SBTI History
What we do 80 seat physical tenant facility 19 companies 43 companies being incubated 1200 listed clients 260 virtual interactions per annum 50% black businesses and 8% women owned SMMEs. KPIs Promotion of BEE Economic growth and new SMME creation Job creation (406 direct jobs) Sector development Improving business performance & profitability Technology transfer and diffusion Promoting technology Innovation Building linkages and Networks
Client Profile EARNINGS R5-R10 mil 4% R1- R5 mil 18% R10mil + 9% Zero 34% Zero less 1 million R1- R5 mil R5-R10 mil R10mil + less 1 million 35%
Business Building Model Stages Technical Market Business Operational Concept Phase Stage 1: Investigation Technical Analysis Market Needs Assessment Venture Assessment Business Structuring Development Phase Stage 2: Feasibility Technical Feasibility Market Study Economic Feasibility Systems & policies Stage 3: Development Engineering Prototype Strategic Market Plan Strategic Business Plan HR capacity building Stage 4: Go to market Pre-production Prototype Market Validation Funding & Business Leverage Commercial Capacity Commercial Phase Stage 5: Growth Production Sales & Distribution Business Growth Strategies Management Systems Stages 6: Maturity Production Support Market Diversification Business Maturity Management Systems
What If: We could take our services to every town? We did not have to travel? We could share our limited resources (of the incubator and the country or the continent) with more people? We could access all our friends cumulative knowledge at a click of a button. We could fit 16 people from anywhere in the world into the same boardroom at the same time? We could track the progress of each small business in every detail and from a distance? We could actually get feedback from the people getting the service as to the quality of that service? Our stakeholders could in real time see where and how their money is being invested? This support infrastructure could be set up at low cost? We did not need to write any more reports?
We were given these:- models structures. best practices. Adapt them to your circumstances before you adopt them.
Consider the concept of Satellite incubation Main Centre with satellites reaching out to every corner of the country - at universities, schools or community centres. Linked to not just one technology centre but a multi disciplinary network of support centres.
What would you need? A main incubation centre(s) Some pretty fancy software Some friends/associates who believe in what you want to do. 2 or more PC s, access to the internet Technical assistance in remote areas
Government SEDA LEDA Universities Incubators Industry/Market Private TESIP Model Univ 1 Univ 2 Univ 3 Faculty Incubator IP Office University Enterprise Other e.g. Industryspecific Incubator Satellite Incubation Understanding of university business creation, student innovation, R&D and knowledge creation Virtual Interface/Portal/Gateway Incubator 1 (e.g. Softstart BTI ) Incubator 2 (e.g.egolibio) Incubator 3 (e.g. Chemin) Others Understanding of sector-specific needs, industry culture, financing Sector 1 (e.g. ICT) Sector 2 (e.g. Biotechnology) Sector 3 (e.g. Manufacturing) Others Knowledge Disciplines SMME Business Phase Pre-incubation (Nursery/Hatchery) Innovation Business Creation Incubation Graduation Solutions Business Sustainability Preliminary Business Plan Business Plan Business Development Commercialisation Maintenance and Logistics
Conclusion Incubator models can / should be structured and adapted to suite our needs. Technology changes every day It is always possible, maybe not cost effective now Don t despair it will change tomorrow
Open your mind, know what you want to achieve think what is possible.. Limitations only exist in our minds Thank you Contacts: Leon Lourens: + 27 011 695 4800 or leon@sbti.co.za