Media Release

Business incubation is boosting SME development

12 April 2006

Seven Gauteng-based high-tech start-up companies that have successfully established businesses as a result of incubation attested to its value at the Maxum Business Incubator’s first graduation event held in the Conference Venue at The Innovation Hub in Pretoria this week.

With a reported annual turnover of between R1.5 million and R30 million since exiting the Maxum incubation programme over the last two years, all seven SMEs – Automated Product Development (APD), Mohwiti Technologies, Spline Technologies, the Expertron Group, the Naledi3d Factory, TCI Thoreb and VASTech SA – have launched and successfully commercialised a number of innovative new products in local, as well as regional and international markets.

These include:

  • the Cell Power pre-paid electricity vending system, developed by the Expertron Group and commissioned by the City of Tshwane Metropolitan Municipality to provide communities with convenient access to prepaid electricity vending points and business opportunities to become vendors
  • an e-Education software tool by Mowhiti Technologies that is being rolled out to 70 schools to improve overall school management and has created collaboration opportunities with Finland
  • the Synapses automatic electricity meter reading and control system that allows remote meter reading and accurate and timely billing, which was developed by Spline Technologies and partner Romulus Computer & Electronic Systesms and has been installed in a thousand houses in Midrand
  • TCI Thoreb has been sub-contracted by Gautrain consortium partner Bombardier Transportation to manage and implement a number of functions, with a specific focus on technology applications and systems integration
  • the Naledi3d Factory’s virtual reality modelled education and training programmes are being to uplift local and regional communities, such as training beekeepers in Zimbabwe, and education on hygiene, HIV/AIDS and malaria
  • VASTech’s small footprint, ultra-high capacity 3rd generation network recording systems for law enforcement agencies and commercial recording applications, and
  • APD’s rotary bottle filler and cap sterilisation unit for the packaging industry.

The achievements notched up by these young companies are significant, given their recent exit from incubation. In additional to their contribution to job creation – VASTech for instance has created 28 full- and part-time jobs - it confirms the international experience over the last two decades that effective incubation enhances the successful development and growth of small and medium enterprises by helping them survive during the start-up period when they are most vulnerable.

Since inception in 2000, the Maxum Business Incubator has supported the development of 30 companies, where 183 jobs have been created. Of these companies two have female ownership and six have at least 30% BEE ownership. The overall success rate of growing the start-ups to levels of self-sustainability where they can exit the Incubator has been 80 percent, according to Jill Sawers, Incubator Manager.

"We are proud to showcase this first group of successful start-ups and the significant progress made by these companies. Sharing their excitement as they developed and launched new products and witnessing their journey from the innovative idea stage to business competence and market acceptance has been a wonderful privilege," says Sawers.

Executives from the graduate companies spoke about the innovative spirit at the Hub and how, through incubation, their access to top quality infrastructure, resources and existing networks helped to leverage their business efforts.

Expertron founding members, Walter Smuts and Gavin Ehlers referred to the way the affordable and flexible infrastructure helped to present a professional image to clients, and the importance of being in close proximity to other entrepreneurs to share ideas and learning with like-minded people who are facing similar challenges.

Mohwiti Technologies CEO Thabo Mogaswa and Naledi3d Factory’s MD, Dave Lockwood agreed that close contact with other entrepreneurs with whom experiences could be shared – the highs and the lows – helped them to better understand how to make their businesses work and has been inspiring and conducive to their own business aspirations.

Spline Technologies MD, Johann Weidemann and Frans Dreyer, MD of VASTech, believe the benefits lie in the enabling environment, where business growth is fast tracked and support provided to help companies produce high quality products at competitive prices with which they can make inroads into the highly competitive technology industries.

Access to networks and business support were some of the benefits cited by APD CEO Jannie Loubser, and reiterated by TCI-Thoreb CEO Mthembeni Mkhize. The company joined the incubation programme at Maxum directly after its launch at the World Summit for Sustainable Development in 2002. Mkhize believes that the business mentorship has been invaluable and that access to the Hub’s networks helped to create awareness about their products.

According to Sawers, effective incubation should result in an 80 percent chance of success. Internationally statistics show that about 60 percent of business start-ups fail within the first five years. Locally, anecdotal evidence indicates that the numbers are much higher – closer to an 80 percent failure rate. "Our experience has shown a success rate of 75-81 percent for companies participating in our incubation programmes."

The seven start-ups, whose business activities range across the ICT, electronics and materials and value-added manufacturing sectors, have all spent at least three to four years in incubation. During that time, with the assistance of business mentors and the enabling, shared services environment at the Hub, their businesses grew to self-sustaining levels that enabled them to exit incubation as successful business entities.

"Start-ups can become members at any time during the three to four year start-up period, and they exit when we feel we cannot add more value, by which time they should be sustainable business entities," says Sawers. Mentors and coaches help strategise and act as sounding boards for new ideas. "They keep a 360 degree eye on a company in the Incubator, while our networks link them to their markets and create visibility through media exposure and credibility," says Sawers.

The results that we are seeing today bear testimony to the success of incubation. It is exciting to witness start-ups manoeuvre their businesses onto the road of success. This makes our objective of providing an empowering environment for the development of SMEs, which leads to job creation and economic growth, all the more worthwhile."

Ends

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