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Business Incubators Yield Results(AllAfrica.com English Via Thomson Dialog NewsEdge)Johannesburg, Apr 13, 2006 (Business Day/All Africa Global Media via COMTEX) --SEVEN start-up companies mentored at the maxum incubation centre in Pretoria have moved out to trade as self-sufficient entities, defying a trend for 80% of all fledgling companies to fail. The businesses have grown to achieve turnovers ranging from R1,5m to R30m and have all launched commercial products in local, regional or international markets. Their innovations include real-time information systems for trains and buses, an electronic system for selling pre-paid electricity and airtime via cellphones, and open source school management software. Now maxum needs them to thrive, because the companies have committed to pay the incubation centre a percentage of their turnover for the next three years to cover the cost of the support they received. International statistics show that 60% of start-ups fail within the first five years, but SA has a higher failure rate of 80%. That is because SA does not have a culture that allows failed enterprises to regain their feet and have another go, says Jill Sawers, maxum's business incubator manager. "If you have gone belly up in SA, you can't get a bank loan or credit because we don't have an environment that accepts failure. "We are not entrepreneur-friendly." The school system also does little to encourage entrepreneurs, she says. "It has a long way to go in creating a mindset that school leavers and graduates need to be job creators. " Maxum has supported 30 companies so far, of which six have failed, giving it an 80% success rate. The survivors have created 183 jobs and six are at least 30% black-owned. One graduate company, the Expertron Group, has been commissioned by the City of Tshwane to supply its Cell Power pre-paid electricity vending system to resellers throughout the municipality. Mowhiti Technologies has won a deal to supply its e-Education software to 70 schools to improve their management systems. A thousand houses in Midrand have been fitted with a remote electricity meter reading and control system developed by Spline Technologies and Romulus Computer & Electronic Systems. Expertron founders Walter Smuts and Gavin Ehlers say being based at maxum helped them present a professional image to clients. Mohwiti Technologies CEO Thabo Mogaswa said the close contact with other entrepreneurs had helped him better understand how to make a business work. Incubation centres help small businesses survive the difficult start-up years by giving them hi-tech accommodation, advice from venture capitalists, legal experts and business mentors and access to sources of funding. Because maxum is housed in the Innovation Hub business park, entrepreneurs can network with established companies based there, including Cisco and Sappi. Maxum also arranges meetings with established companies in similar fields, since larger companies that are looking for new technologies may not even open the door to an unsolicited approach, says Sawers. The start-up entrepreneurs pay an average of R700 a month for a small office and R400 for internet and telecommunications services. They do not pay for the mentoring, since that pay-back comes later with the contribution from their turnover once they have graduated. Maxum's services are similar to those of SoftStart, another hi-tech incubation centre based at the Council for Scientific and Industrial Research - also in Pretoria. While SoftStart focuses entirely on information and telecommunications ventures, maxum also grooms start-ups in the fields of biosciences, electronics and advanced materials and manufacturing. "We are playing in the same space but I wouldn't like to say we compete because we need a lot of incubation centres in SA," says Sawers. The seven start-ups spent three to four years being mentored. "They exit when we feel we cannot add more value, by which time they should be sustainable business entities." |