Africa is home to 442 tech hubs, this is according to research by the GSMA Ecosystem Accelerator.
This includes everything from incubators, accelerators, co-working spaces, fab labs, makerspaces, hackerspaces, and other innovation centre. South Africa alone is home to 59 such hubs.
There has, however been questions around whether incubators in particular are fulfilling their purpose? Are incubators just glorified internet cafes or are they an integral part of the local entrepreneurship ecosystem? To find out we turn to influencers within the entrepreneurship space.
We speak to Andrew Simelani, entrepreneur and MD of BlackNation Video Network; venture capitalist, Abu Bakr Cassim who is the founder of Ground Flr and Jozi Angels and a representative from an incubator, Kendal Makgamathe who is head of marketing at Tshimologong Digital Innovation Precinct.
What’s your overall opinion of South Africa’s incubators?
‘Not there yet’ – Incubators are a great way of igniting the entrepreneurial spirit in the country, especially amongst the youth. I’d admit that our understanding and strategies are not yet on point, but I’m confident that we’re heading the right direction. The incubators provide budding entrepreneurs with resources that were never readily available in the past. Some of these resources include mentorship or expert advice, finance, facilities and more. The incubators also have to define growth differently and understand that there are a lot of lessons we can pick up from failed attempts in entrepreneurship or maybe start to budget for trial and error in their endeavour to acquire finance to operate such spaces. – Simelani
‘Quality of startups is improving’ – It’s a growing space a lot of new places opening up. I think the quality of startups is getting better and it’s going to keep improving. There has never been a better time to be an investor in South Africa. – Cassim
Incubators should not glorified internet cafes with fast internet speed or a nursery for people that intentionally refuse to grow and become independent
‘Misguided intentions’ – The current situation around local incubators is that those who run the incubators use it to get skills development funding and they don’t do it with a bigger picture in mind and it is evident in the quality of the startups they produce. You don’t have startups that scale up out of those incubators. Some have been through programs but the program themselves are not identifying what these startups need. You will find programs that will teach them business 101, which is irrelevant to them, they need to learn necessary skills to make their business sustainable and profitable. – Makgamathe
What can be done to improve the effectiveness of our incubators?
‘Experience trumps all’ – It’ll be better for incubators to either be run by “failed” entrepreneurs or individuals that have their own businesses that are thriving. Academics are an essential part of this ecosystem, however – I highly disagree that they should be playing a lead role.
In addition, we see a lot of incubators opening up and then shutting down within a few years of operation, and this is due to the fact that these spaces are highly dependent on donor funding. I think this business model needs to be looked into and new solutions of self-sustainability introduced. – Simelani
‘A local model’ – Initially, local incubators started out by copying other ecosystems in other parts of the world but now we are finding out feet. It’s a process that every ecosystem has to go through. I believe we will start seeing more progress because of that process. – Cassim
‘Let’s make our own’ – Incubators are about helping startups get a good foundation. Learn how to pitch, learn how to test hypothesis re-work their models until they scale up. They need to help entrepreneurs get access to market. In many cases entrepreneurs find themselves struggling to get access to their customers due to red tape for them to get their solution at the door of that big corporation or organization. Incubators should play a vital role in mediating that relationship. – Makgamathe
What misconceptions about incubators do entrepreneurs have that contribute to their lack of growth?
‘Keep focused’ – Most entrepreneurs expect incubators to run their businesses and generally get lazy. It’s very important that roles are clearly defined within this environment and entrepreneurs have goals that will see them growing into bigger businesses and exiting the space to become more independent. Incubators should not glorified internet cafes with fast internet speed or a nursery for people that intentionally refuse to grow and become independent.
I’ve noticed that most businesses that are not a part of an incubator are eager to succeed and this might be attributed to the need of becoming independent as well as completely responsible for your own future instead of leaving it up to other individuals that might not fully understand your business venture. – Simelani
‘Customer is king’ – A lot has to do with customers, the ideas usually sound great until they take their products to the market. The customers are like a stamp of approval to their concept. – Cassim
Be the driving force of every element of your business. Take responsibility for all your actions
‘Red tape’ – Startups start off believing that they can build the next unicorn but along the line they lose the drive due to the red tape in the system and the red tapes along the journey.
We find ourselves with opposite extremes, before entrepreneurs were always seen as villains, and now lately they are being perceived as a superhero to save us from social and economic ills. And the transition has also not been managed properly. – Makgamathe
How can entrepreneurs better utilize the opportunities offered by incubators?
‘Take responsibility’ – Be the driving force of every element of your business. Take responsibility for all your actions. Take advantage of all the opportunities that are presented to you, i.e. networking events, seminars on business needs such as accounting, legal, HR and more. Lastly, it is imperative for entrepreneurs to have a different view of failure and use that to learn and fuel their ventures. – Simelani
‘Experiment’ – We need a focus shift from solutions to problems. As well as a lot of startups need to conduct more experiments. Local startups don’t experiment as much as they should. Startups need to be running 5-10 experiments a week and reiterating accordingly. – Cassim
‘Focus on your customer’ – Startups need to focus on their main funders being their customers, it’s that simple. – Makgamathe