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Venture capitalist and founder of popular US seed fund Y Combinator Paul Graham once wrote that the recipe for startup “clusters” is having a great university near a town smart people like. Premier of the Western Cape Helen Zille believes this might just be the case for Stellenbosch in South Africa, which echoed the general tone of the evening at the reopening of business incubator LaunchLab last month.
Situated about 50km outside of Cape Town in the country’s Winelands, Stellenbosch is not only home to JSE-listed giants such as Mediclinic and Distell, but also transformative tech companies like the instant messaging phenomenon, Mxit, public Wi-Fi not-for-profit Project Isizwe and microjobbing service M4JAM.
Stellenbosch University (SU) is often cited as the backbone for many of these innovations, introducing recent spinouts such as AgriProtein — a waste to protein platform backed by the Bill and Melinda Gates Foundation and has raised over US$11-million to build the world’s largest commercial fly farm.
Looking at SU graduates, the university is also responsible for some of the country’s most promising entrepreneurial minds including Dr Riaan Conradie, the co-founder of international renowned health company LifeQ, Kobus Ehlers from mobile payments startup SnapScan, co-founder of the authentication solutions Entersekt Christiaan Brand — all of whom have proved to be popular role-models in the local industry.
On a mission to further foster more of these exciting talents at a grassroots level, the Nedbank-backed Launchlab opened up its doors to a brand new work space, fitted with hot seats, a coffee shop, board rooms and some colourful beanbags of course. It’s a modern home to startup companies in industries from gaming, education to micro satellites and wind turbines.
Open to local students and budding entrepreneurs from all over, the aim of the LaunchLab is to boost entrepreneurship at in the Western Cape. It’s doing this by providing networking opportunities, mentoring and coaching through various workshops, an annual pitching den and the Lift-Off acceleration programme.
Some of the LaunchLab’s current residents include Clockwork Acorn Games, edtech startup EdgeCampus which is behind Qurio, ecommerce solutions company OrderCloud, Stellenbosch Wind Energy Technologies (SWET), micro satellite company CubeSpace, second-hand textbook trading platform Pimp My Book as well as anti-piracy startup CustosTech.
After being conceived in the SU and Naspers-backed MIH Media Lab, CustosTech is one of the companies that has received a lot of support from the university’s innovation department, InnovUS; from funding expensive patent registrations around the globe to refining its business plan.
CustosTech CEO Gert-Jan van Rooyen — who’s also also a professor at SU and one of the directors of MIH Media Lab — says that hands-on support from institutional leaders like the university’s is incredibly important for startups in South Africa:
We don’t have enormous deal-flow like you get in MIT or Stanford where you see startups spinning out of universities all the time. In South Africa it makes sense for the universities to act as a concierge for the business and help the build up the right connections and getting off the ground.
Phillip Marais, who’s the incubator manager at LaunchLab, adds that universities, business and government in the Western Cape want to work together. This sentiment takes form with initiatives like Accelerate Cape Town and Stellenbosch Innovation District, of which both set out to facilitate dialogue between business, government and higher education in the region.
Marais further reiterates Paul Graham’s belief that university towns are critical ecosystems for startups: “First of all, you’ve got all this publicly funded infrastructure which can be utilised in new ways. Secondly, you’ve got brain power and very often access to world-class researchers you can tap into.” He adds that there are other little benefits as well, like attractive intern programmes which source highly-skilled students at low-cost to help small businesses get going.
At the back of a national electricity crises, renewable energy startup SWET is developing small-scale wind turbines which can generate around 50 000 kw/h per annum, more than enough for your average South African household. While still in its prototype stage, products and skills in areas such as renewable energy are crucial given continent’s pressing challenges.
On the other far-side of the LaunchLab building you’ll find another hardware startup, with slightly larger scope than SWET. Instead of building wind turbines, CubeSpace specialises in developing small satellites. Using a modular satellite product called CubeSat, the startup develops both hardware and software to make satellite expeditions for organisations around the globe more efficient and cheap.
“CubeSats are changing the way space is being done,” says Willem Jordaan co-founder of CubeSpace. “In the past, there was big emphasis on planning and trying to identify all the risks involved, which meant the design and building of satellites usually took a number of years.” He notes that with these smaller, less expensive satellites of today, risks and costs are dramatically reduced.
With a build local think global mentality, Stellenbosch seems like a breeding ground for South African startups. At the same time though the region, like most of the country, is facing major socio-economic issues. As Premier Zille pointed out though, innovation comes from real problems, of which South Africa has a lot of. Or as Marais puts it: “Successful entrepreneurship is the intersection of your greatest gift and the greatest need out there.” It’s LaunchLab’s mission to help people find that sweet spot.