Incubators, accelerators, co-working spaces, and technology hubs have sprung up all across Africa, all claiming to be the right entity to fuel entrepreneurial activity in their region. This article describes three types of institutions active in the African incubation sector.
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Since its origins, business incubation has taken many shapes and forms and the institutions claiming to ‘incubate’ provide varying services, making it difficult to compare them one to another. The term ‘incubator’ in a business sense dates back to the late 1950s and was once used to describe vacant property being subleased to multiple tenants, while providing them with basic business support. As Hackett and Dilts formulated it in their Systematic Review of Business Incubation Research (2004) the baseline for incubators is the “systematic method of providing business assistance to firms in the early stages of their development”.
Because the term incubation can be used so freely, the taxonomy of the business incubators is not always clear. Nevertheless I find institutions active in the African incubation sector can be classified in three segments, listed below.
Technology lab
The most common incubation space currently found in Sub-Saharan Africa is the technology lab. It comes closest to the original form of an incubator in providing shared office space and business assistance. Most technology labs are designed as co-working spaces and have sprung up all across the continent. Lusaka’s Bongo Hive has provided a neat map to look at the hubs across the continent. The characteristic of the technology hub is that it provides subsidised working space with the entire infrastructure you would desire at an early stage of your venture. This basic service is extended by office staff, which will support the entrepreneurs in their endeavor, yet not limiting them to certain goals or performance. To strengthen the performance of these spaces, several of them have united in the AfriLabs network.
For-profit incubator
A new kind of player in the incubation market is the for-profit incubator. This type of incubator is best characterised by two ventures in South Africa: 88mph and Seed Engine. Taking on the model of the most prominent US incubator Y Combinator, these incubators will take on high potential entrepreneurs and accelerate them in a 3 month program. Unlike the tech labs, you won’t be working on your own terms, but rather it will be expected of you to make the most during your stay and invest all your time. This rigorous approach pays off for the entrepreneurs as they are provided with seed funding, superb advisors and a network willing to fund them. The attractiveness of these accelerators is undoubtedly with several hundred applicants across the entire continent applying for the less than a dozen spots each round.
Non-profit incubators
A third type of player in the incubation market is MEST. MEST, which launched 2008, was one of the first prominent incubators in Africa, followed by many others, in different segments. MEST has merged two incubation concepts into one. By providing a two year training program before possible incubation, it could be considered a ‘university incubator’. Yet at the same time being backed by Meltwater and providing the possibility to work in their San Francisco and London offices, one could make a point to describe it as non-profit corporate incubator. The advantages of the MEST program are clear: it grants non-technical entrepreneurs a chance in an ever more computerised world, while providing them the much needed global exposure.
Corporate and university incubators?
With only three models of incubators implemented, it leaves the question why other internationally successful models haven’t come to Africa yet. For one, there would be the corporate incubator. Eyeing recent events, such as IBM looking to employ US staff in their Nairobi research lab, it seems that the time isn’t right yet. Perhaps Kenya’s Konza City and Ghana’s Hope City will attract companies who are willing to spin out research projects and support the academic system to mold a suitable workforce.
The other major incubator type is the university incubator. Commercialising university projects are especially interesting in natural science and medicine (most biotech incubators are affiliated with universities) but technical subjects have high potential as well. Imagine engineering students having access to makerspaces on campus and computing students applying their skills on ideas of their own or of others. If universities and incubators would be brought closer together, could this lead to African business students helping those with great ideas in Africa to refine their strategy and pitch? Could this even spur international students to study in Africa and become involved in the African entrepreneurial culture? University incubators could allow entrepreneurs, not enrolled in universities, to catch academic knowledge they would miss otherwise, while giving academic researchers prime access to studying entrepreneurial behavior and best practices.
Incubation research concludes that the incubator type has little effect on its success, so choosing the right support system is a decision each entrepreneur needs take on based on his personal needs. For sure Africa needs more incubators of each type, but not for the sake of having more but rather in a sense of functioning as filter for investors. Graduating from an incubator validates the idea and the team behind it.
This article by Benjamin Bertenbreiter originally appeared on VC4Africa, a Burn Media publishing partner, and was republished with permission.
