Paul Jacobson

What happens to all the South African incubated startups?

Bird nest

I’ve been thinking and chatting to some people about Google’s recent announcement of its new incubator here in South Africa, Umbono. One question which has popped up and which I don’t have an answer for is what generally happens to these startups over time? They presumably reach a point where they either don’t pan out or develop well enough to leave the safety of the incubator and venture out into the world.

What happens then? There must be statistics of how many startups tend to succeed and whether they remain local or go beyond our borders? Umbono is the latest of a few great, local initiatives which include Bandwidth Barn, Silicon Cape and ISLabs, an Internet Solutions initiative, which Justin Spratt ran until his departure for Quirk a little while ago.

Does anyone have any thoughts, info or data?

Image credit: Bird nest by ianew, licensed CC BY NC SA 2.0

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  1. Vincent Maher avatar
    Vincent Maher

    Hi Paul, that a very good question and I don’t know either. It would be great if more people celebrated their successes and, more importantly, their failures. Too many talented people think its way too hard to succeed and are so paranoid about the stigma attached to failure that they never try. I am really looking forward to how this post is going to unfold over the next few days and I hope people post their stories.

    Reply
  2. Darren Smith avatar
    Darren Smith

    Good question. Like Vincent, I have no easy answer.
    That said, I have some experience in the successes & failures in business having been involved in 4 start-ups over the last 15 years, 3 as a founder, and 1 as an early employee.
    All 3 start-ups I founded were boot-strapped through working capital infusion from a strategic partner. 1 of these went on to become self-sustaining, so much so that it absorbed its boot-strapping strategic partner … and the combined businesses became another start-up.
    The 3rd start-up failed miserably, in spite of having sufficient working capital, supporting processes, and a potential pipe-line of business. Execution and timing just didn’t come together.
    The 4th start-up was ‘built’ with a massive infusion of capital (EU money), with an ostensibly good idea, and an ostensibly ready market. But failed due to poor strategic focus, poor execution, and lack of leadership. The most salient lesson being that you cannot build a business without a solid foundation … business is about people, products, relationships, processes, customers. Without those, you’re not out of the starting blocks.
    I am now working on a new media start-up … and one of the saddest conversations I had, was with the Gauteng Economic Propeller. Some 90% of the monies advanced to ‘entrepreneurs’ as working capital loans (based on submitted business plans) is written off, with little or no accountability. Shocking really … suggesting that most, if not all of the businesses being funded in this way, are failing.

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  3. pauljacobson avatar
    pauljacobson

    I would love to know what local incubated startups experience as they go through that development process and what benefits they experience from incubators.

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  4. pauljacobson avatar
    pauljacobson

    That is a pretty varied set of experiences there Darren. I like your point about how the important factors are more the people, products themselves and so on. I read recently about how Apple values its people really highly and you tend to see that with a lot of well regarded companies.

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