Springlab: a new SA incubator on the block has its sights on sub-Saharan Africa

There’s a new South African incubator on the block and its name is Springlab, and its goal is to “foster entrepreneurship in sub-Saharan Africa” by building highly scalable ventures.

Founded by ex-Rocket Internet alum Eugen Petersen (co-founder of Zando) and Sheraan Amod (co-founder of Personera), with the help from strategic advisor Randolf Jorberg, Springlab claims some unique features to separate itself from the incubator pack.

First off, Springlab co-founds every single venture it invests in — taking them right from, as Petersen tells Ventureburn, “the birth to baby steps, until it can run”.

Working closely with ventures, Springlab will generally invest between R200 000 to R2 million for “considerable” equity in the companies says Amod, this includes the use of its varied resources and services.

Not knowing what “considerable” means makes it difficult to judge, but if it is anywhere between 15% to 30% equity for that kind of investment, it could be seen as quite steep — depending on how much value Springlab can bring to the table with its resources and services.

These include all the core functions an internet business might need. According to Petersen these are, but aren’t limited to:

Strategy

Administration

Online marketing

Sales

Business and product development

Legal

Later stage fundraising

Springlab founders Eugen Petersen (left) and Sheraan Amod (right)

Springlab’s business model is pretty simple as Amod tells Ventureburn: “Build valuable companies, fast. We look out for solid business models that can lead to ongoing, sustainable profitability and growth.”

He adds that Springlab doesn’t classify itself as a VC though, so it is more flexible with its time frame to exit companies. This is great in that companies are given the space to grow and become profitable, but it might be a hard sell to prospective investors who are looking to get their money out within a specific time frame. However Amod believes that Springlab’s approach could be quite attractive to investors because they can hold onto investments in instances where selling does not make sense, and exit at the optimal time.

Refreshingly, Springlab is not interested in ecommerce startups, or rather any capital-intensive business models that require “huge sums of capital for product development or to gain a dominant foot in the space,” says Amod.

Petersen adds that until now Springlab has only had to look within its own network for ventures to fund, and wasn’t open to applications. “The startups we are looking for are very lean… those that can be bootstrapped in the first few months and are data driven.”

For example, one of the two ventures that Springlab has backed so far is RecoMed, an online booking platform that lists nearby doctors, dentists and similar healthcare professionals. Since its silent launch in December, the site has over 4000 listed doctors, and has had over 14 000 visitors per month. The company is also already generating revenue.

Scale to Africa

Amod stresses that Springlab is not really an investor, VC, or accelerator but rather a “unique incubator” — one that is “focused on the South African market first, moving upward into the entire sub-Saharan African market.” Amod believes that SA is a great place to think of as your Africa hub, as evident from the number of investors, people with pan-African relations, and corporations with offices around the continent who are head quartered there.

In this light Springlab aims to work with international companies looking to license their product, or do a joint venture with the incubator, in the sub-Saharan African market, and feels that it can add a lot of value with its contacts, experience and partners.

So far Springlab has been backed by private angel investors, and is now open for direct equity or convertible loan investments into the incubator and portfolio companies.

Situated in Observatory, Cape Town, the Springlab office and co-working space is warm and inviting. Perhaps because they have designed a “homely” environment kitted out with sofas and a fully-operational kitchen (with bi-weekly breakfasts to boot), from what was once a textile factory.

The space, filled with light from its giant windows, is reminiscent of other Cape-Town (specifically Woodstock and Observatory) tech startup spaces with foosball, couches and a killer mountain view — but its layout seems true to the incubator’s flat hierarchical setup. There’s even a studio space for video content — one of the in-house services the incubator offers.

As the new kid on the block, Springlab is currently hiring across all departments, and wants the public to know that they are open for business. It invites everybody from prospective investors, founders, co-workers, interns to get in touch, or join them for their next dinner or breakfast.

Sub-Saharan Africa is projected to experience considerable growth in the next ten or so years, especially in the internet, mobile, and entertainment sectors — but there remain some challenges.

R200 000 to R2-million could be seen as not that much money given that Springlab asks for “considerable” equity, but the incubator could prove its value beyond money: through the resources, services and connections it offers.

Amod puts it as such:

“…we don’t charge for a lot of services that we provide — a good example is Eugen and my time spent directly working on the company, which would generally exceed the time spent by a regular/institutional investor… we’re a co-founder of companies, and treat the companies we back in an incredibly high-energy, high-commitment co-founding capacity. We aren’t just ordinary investors — startups should look elsewhere for that.”

With only a short track record thus far, it’s worth watching what the incubator does with its currently backed ventures, RecoMed and SpringGeist, and how it scales them up. If it goes well over the next few years, then Springlab might well cement its place as the sub-Saharan incubator for tech ventures.