The best definition of a business incubator we have found is that of Allen and Rahmen (1985) which states: “The universal purpose of a business incubator is to increase the chances of a firm surviving its formative years, but the business incubator also adds value by maximizing the firms’ growth potential.”
The South African marketplace has a significant Business Incubation market. Much of this demand has been generated from the focus that the BBBEE codes has placed on Enterprise and Supplier Development. In this article we have sought to classify some of the incubation related activities in South Africa to assist you in determining what incubation activities you would focus on as part of your ESD plan. Some of this classification is based on the entrepreneurs that the incubator selects, while others might be based on the industry sector that the start-up company is in.
This section considers all those business incubators that are funded with the goal of job creation and economic development. The below enterprises are all not for profit incubators. The goal of the incubator is creating sustainable enterprises, but this does not mean that the incubators themselves are sustainable.
o SEDA (Government)
The goal of the business incubators in this category is to assist those businesses that are in the green energy field or the recycling industry.
Loan based business incubation programmes
These programmes are normally developed on the back end of a large funding programme. In some cases the programme has been developed to increase the outstanding loan payments for the company that extends the loans.
o Anglo Zimele
The supplier development incubation model is directly targeting the supply chain of a large company. With the change in the DTI codes many companies are changing their incubation activities to be directly linked to their supply chain.
In this case the company seeks to extend the reach of it’s distribution footprint while also assisting in the development of entrepreneurs. This could be the case of a financial insurance company developing broker houses or a large soft drink manufacturer developing transport companies or warehouses.
For Profit Business Incubators
Industry Specific Business Incubators
This classification covers Cluster or Industry related incubation programmes. In some cases the programme is based on a specific area, but not necessarily focused on innovation programmes normally associated with cluster development. In other cases the progamme is focused on a specific industry, but is national in nature.
- Chemical (Chemin)
- Farming (Mpumalanga agri-skills incubator)
- Biotechnology (Egoli Bio)
- Furniture (Furntech)
- Automotive (Seda Automative Technology centre)
- Construction (Seda construction incubator)
- Aluminium (The Downstream Aluminium Centre for Technology )
- Real Estate (Soft-Start Business and Technology Incubator)
- ICT (Garden Route ICT Incubator) or (SEDA NMB ICT Incubator)
Centralised or Decentralised Business Incubation
Also sometime referred to as the non-virtual or virtual programme. This mostly has to do with where the entrepreneurs are located and if they are sharing resources based on their location.
- Centralised (The incubator shares facilities such as office space, or IT infrastructure).
- Decentralised (The enterprises are spread geographically)
In the South African BBBEE landscape some incubators only accept black entrepreneurs while some specifically target youth or female entrepreneurs. In other cases there might be a specific focus on companies with a certain turnover and the exclusion of companies below a certain turnover.
- Financial background
* Please note that an incubation model is different from your ESD plan, although it might be possible that your ESD plan could only look at one single incubation model.