Do Startup Support Programmes Work? A Challenge to SA Incubators, Accelerators and ED Programmes
Do incubation and acceleration programmes work? This was the question that Vuyisa Qabaka, Partner at Entrepreneur Traction, a venture studio that builds and funds African technology startups commented on earlier this year in an article for Brainstorm magazine titled ‘Why incubators don’t work‘.
In it Qabaka argues that despite claims by incubators to have helped startups, there is little evidence of that success in the economy. “Where are the businesses today? Where are the jobs? I love supporting early-stage companies, but where are they (in South Africa)?”
Where most programmes go wrong, says Qabaka, is their focus on “finicky things” and not delivering value.
Do we need to evaluate the performance of incubation programmes?
“Typically, incubators will provide academic, classroom-based learning. They focus on finicky things, like logo design and website layout, but these are not core to the functioning of a business. Incubators need to prepare entrepreneurs for investment. They need to teach them about customer acquisition, about having a value proposition that’s aligned to their market segment, about benchmarking their product at the right price. That’s how they’ll make money and profit, and that’s ultimately why they have a business. The rest is simply bells and whistles.”
In a followup made in a LinkedIn post, Qabaka issues a challenge to South African incubators, Enterprise Development programmes and accelerators, arguing for greater transparency in the sector.
Going further to ask “Do we need to evaluate the performance of incubation programmes?” Here are Qabaka’s suggestions of where to start:
1. Publish your results, regardless of whether you’re a private or publicly funded programme, but especially if you’re publicly funded.
2. Voluntary participate in an independently conducted sector survey, by a reputable audit or economic research firm – we can crowdsource a common set of matrices for sectorial benchmarking.
3. Public (government or SoE) funded programmes should be independently audited against national needs for job creation and GDP contribution.
These audits should be made available to National Planning in the Department of the Presidency, SARS, Auditor General and office of the Statistician General to compile performance reports.
4. Entrepreneurs (beneficiaries) should be given a free public platform (both digital and offline) to share their experiences, rate a programme and easily discover programmes aligned to their ambitions, especially publicly funded programmes.
He adds that these should be non-negotiable. Optional extras could include additional funding support incentives for performing programmes, replication of models that deliver effectively especially on job creation and innovation, etc.