Tech Grants: Boosting Startups in South Africa

Posted on August 24th, 2014
Grow Technology

A look at tech grants and how they work

Incubation is the current buzzword in entrepreneurial spaces. In South Africa, there has been no shortage of incubators cropping up to offer much-needed support and resources to entrepreneurs looking to turn their ideas into viable businesses.

In support of this, the government introduced incentives under the Seda Technology Programme (Stp) eight years ago, in what is one of the fastest-growing industries: technology.

Just recently in an interview with a local business website Moneyweb, Minister of Small Business Development Lindiwe Zulu said these incubation support programmes are very important “because that’s where you assist people who are in small and medium enterprises to get the skills, to be nursed, and how to manage their businesses”.

“The programme is responsible for both the provision technology transfer and business incubation”

The programme has assisted over 1000 businesses to date. It’s well known that many startups do not survive past the first year or two of operation – the most difficult phase of any small enterprise. However, according to Seda, 80% of the small enterprises under the Stp incubators (30 of them 4 years ago) survive the first year of trading.

What is the Seda Technology Programme?

The Seda Technology Programme (Stp) is a brainchild of the Department of Trade and Industry aimed at supporting SMEs in specific industries, such as in ICT, aluminium, platinum and bio-diesel.

The programme is responsible for the provision of both financial and non-financial technology transfer, business incubation and quality support services for small enterprises:

Technology transfer

One aspect of the programme is the transfer of technology. The programme focuses on businesses in the “second economy” – broadly referring to the mainly informal, marginalised, unskilled to semi-skilled, and those unemployable in the formal sector, who cannot afford appropriate technology to propel them into the mainstream economy.

Businesses in the “second economy” are mainly small enterprises (registered or not registered) that are marginalised concerning access to funds and markets, limited business skills and technological acumen, and also access to appropriate technology.

“Businesses within the incubator fall within various stages of being built, from the concept phase, development phase to commercial phase”

Business Incubation

The second aspect of the programmes is business incubation. Incubators countrywide are appointed to assist SMMEs with entrepreneurial development in the ICT sector. The incubators specifically focus on young IT graduates and professionals and previously disadvantaged groups, empowering them through appropriate skills development to pursue ICT-oriented entrepreneurial opportunities.

The objectives for the incubators are to improve enterprise performance, enhance profitability and growth, and offer technology and management support.

Businesses within the incubator fall within various stages of being built, from the concept phase, and development phase to the commercial phase.

Who qualifies and who doesn’t?

Businesses are incentivised according to how they aim to transfer technology skills and how they transform themselves into sustainable enterprises.

Eligible categories for funding range from those that showcase design improvement and optimisation; transferable skills, cost-cutting measures, and other requirements.

Financial assistance the government offers can go up to R600 000 per project in the form of a non-repayable grant. One of the programme’s objectives is to provide specific technology support to women-owned enterprises. These are enterprises with more than 50% women ownership.

Who is excluded?

But categories including research and development of technology, franchise agreements, patenting and licensing, marketing and others do not receive funding.

Read Also: A Guide to Technology Innovation Agency (TIA) Funding