SA’s 120 start-up and early-stage business incubators play a crucial role in providing entrepreneurs with the business and other skills needed to give them a fighting chance.
SA desperately needs to create jobs, a task for which small and medium-sized enterprises (SMEs) are eminently suited. The big challenge is that most would-be entrepreneurs lack many skills needed to succeed in business.
That is where SA’s 120 start-up and early-stage business incubators play a crucial role: providing entrepreneurs with business and other skills needed to have a fighting chance.
There’s no shortage of people wanting to start a business. “We continually see many people with great ideas,” says Nick Allen, founder and CE of Savant, a tech hardware start-up specialist.
Savant, now in its 11th year, has enjoyed remarkable success, with 89% of start-ups it has helped having become commercial successes. Contrast that with about 80% of start-ups that fail in their first year.
Among Savant’s successes is Leatt Lab, which designs, manufactures and exports protective gear used in high-impact sports. Today Leatt is listed on the US Nasdaq market and generates annual revenue of R300m.
Leatt has retained its strong links with Savant. “We build long-term relationships with businesses we assist,” says Allen.
Savant’s support for start-ups is extensive and includes advice on product design, prototype production, supply chain creation and financial and customer management. Savant also has the ability to deploy MBA graduates to assist start-ups.
Savant’s big break came in 2015 when it was approached by the department of small business development’s Small Enterprise Development Agency (Seda) to become part of its technology incubator cluster. “Seda’s financial support is allowing us to take on more start-ups,” says Allen.
In the past year 10 start-ups have gone through Savant’s hands. “Next year we will take on 15,” says Allen.
Savant’s tie-up with Seda also brings access to the Technology Innovation Agency’s seed fund, which provides funding of up to R65,000 per project. It helps but it’s not enough.
“You need up to R10m to scale up in the SA market and R50m to take a business international,” says Allen.
While Allen concedes that finding funders is a major challenge, he is optimistic. “We are getting there. We will be looking for R800m in funding over the next five years,” he says.
Allen is enthusiastic about the future of SA’s incubator sector. “People are starting to realise the importance of nurturing early-stage business,” he says. “But as a sector we need to become better at telling people about our successes.”
This is an adaptation from an article entitled, “Business incubators breeding success” on the Business Live / Financial Mail website.