Entrepreneurs Should Boycott Incubators

Amandla?

Not in support of any political standpoints. But, lets enjoy the irony.

I started my first business when I was 12. I was taking photos of general labourers that worked on the farms where my uncle was a running experiments on drought resistant crops. As they were walking home after a day at work, I would wait outside the gate and ask if they wanted their picture taken over the weekend. We would schedule a time and they would come donned in their Sunday best, I’d ask for a deposit and I would use my camera that my parents bought for me as a birthday present to take a few pictures. On Monday, I would give my aunt the film to take to a film studio so they could “develop” it and she would bring back the photos. Unfortunately the business was not successful because most of my photos were either blurry or overexposed, so I would ended up paying refunds!

Fast forward to 12 years later, I started another business- this time it was something I was skilled in, which is the practice of law. I felt that I had the skills to be a lawyer after spending time in Big Law, but I needed to learn how to run a business. This was the beginning of my long relationship with incubators.

I have been an active part of the incubator ecosystem since 2014 and in the last 5 years I have collected at least 10 certificates from various incubation programs. If you can think of it, I have the certificate. I have been an incubatee, tried to start an incubator and currently provide services to incubators.

To BBBEE or not to BBBEE

I started my legal career in the mining industry, working with large mining companies to ensure compliance with the Minerals and Petroleum Resources Development Act aka the “MPRDA.” This was the first time I heard the term“tick box exercises” — this attitude was pervasive among mining companies and isn’t marginally different when companies trying to comply with the Broad Based Black Economic Empowerment Act- “BBBEE” Act and Codes of Good Practice.

BBBEE legislation aims to address the legacy of apartheid and promote economic participation of Black People in the South African economy. Every company in South Africa conducts an annual exercise — where companies with a turnover of over R10 million in that financial year, will call a meeting with the Transformation Manager, CFO, CEO and, maybe the Procurement Manager to review their BBBEE scorecard. The scorecard focuses on 5 elements: Ownership, Management Control, Skills Development, Enterprise and Supplier Development (“ESD”) and Socio-Economic Development (“SED”). The companies need to obtain a BBBEE level score between 1–4 to be considered for opportunities to supply services to the Government.

Companies in South Africa are tasked with being profitable, creating jobs, innovation in line with 4IR and transforming- this can be a tall order. Internally, they can manage things like Ownership, Management Control and maybe Skills Development- but a lot of them don’t have the capacity to manage the ESD and SED elements. Honestly, working with entrepreneurs can be like herding cats, so I don’t blame them for outsourcing.

The Cinderella Syndrome

In entrepreneurship, there is no fairy godmother because every customer is your Prince.

Entrepreneurs need to realise that the “ball” is being thrown for you; BBBEE was set up for you. Therefore, you need to find ESD programs- and incubators that work for you. As I have been involved in a number of programs and loads of WhatsApp groups- I can tell you for free : The Content is All The Same at a surface level. There will be some content on marketing, finance, personal development (eg personality tests, coaching, mentorship etc), operations/ product development, HR, a very shoddy legal module, and- the really good ones have loads of free food 🙂 What differs is how granular they get, some will give you access to software, or co-working space with wifi, a few give cash, and even fewer really help you get into the supplier chain of large companies.

In the age of the internet, all this information is available at your fingertips and at your own time. The benefit of the incubator would be that the information is contextual to South Africa, but really, entrepreneurship is binary globally. In addition, its also intuitive; when I was 12- I knew I needed marketing, logistics, finance- but my product was poor.

I would say the biggest benefit of incubation is the community — its so helpful to have peers who are going through the same issues you are facing. Having the appointment every week or every day helps to keep you accountable and the WhatsApp groups can be entertaining.Especially if you are starting out, community is essential to your sanity and morale.

Unfortunately when the course stops, you turn back into your entrepreneurial rags and a pumpkin of unprofitability is sitting at your feet.

How to Assess an Incubator

Not all incubators are bad, but rather than feeling like you have to be chosen- the power to choose is really with you! You are the Belle of the Ball.

Here are some factors to consider when assessing incubators.

  • The Track Record– Has anyone you personally know gotten the golden off-take agreement? Received substantial funding? What have the companies they incubate gone on to do? Eg looking at Y-Combinator you can see companies like Airbnb, Dropbox, Stripe, Door Dash, etc name a few. And yes, you can be part of YC! They have a free online Startup School (and yes, I have attended it), if your business is promising they will incubate you in Silicon Valley for 3 months.
  • The Leadership– Who are the people running the incubator? Have they built something, run a business, sold a business, managed a product team inside a big company? Or the very least, do they have the educational background — an MBA? PHD in business?
  • Pipeline of partners– Which companies do they work with that you can access? Where they can help you meet a real person that can give you an answer to your proposal.
  • The Schedule– Is it flexible to suit your calendar? Day time is selling hours, so sitting in a class from 9–5 may not be optimal when you are running out of rent money.
  • The Aftercare– What type of support do they offer after the program ends? Usually, incubators aren’t incentivised to keep offering you services or support once your program is over because its a bit of a batch process. I am yet to find a program that really follows up on the people it has incubated.
  • The Technology– What technology or systems do they use to track your progress? How can you collaborate with your peers? You don’t want to die from emails! So, if they should use a centrally managed platform, that streamlines communication. If there is other software they can give you access to, it would be useful.

As an entrepreneur, you have finite time, resources and energy — so it has to be spent on activities that lead to growth of whatever metrics are important to you. If you would like me to, I can give you some tea on how to leverage the BBBEE codes in your favour. Do you want that?

By Tiyani Majoko


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