Coffee Shops – The New Entrepreneurs’ Incubators

Entrepreneurship and small businesses can be used to stimulate economic growth, sustainable employment, socio-economic development and improve overall quality of life of the people. Therefore, a robust support system is required to nurture the right type of culture that inculcates entrepreneurship and innovation. We have seen an emergence of technology incubators and workspaces for startup innovators or entrepreneurs especially in areas such as Cape Town and Johannesburg. However, in recent times I have come to questions the basis of how these incubators/ workspaces are operated in relation to the demands and expectations of startup entrepreneurs. This is informed by a very interesting trend wherein some flagship incubation centres are closing and/or several startups prefer coffee shops as workspaces. Incubators or working spaces can no longer add value to entrepreneurs through a plethora of events disguised as access to markets or skills capacitation intervention.

 

It is therefore important that the operating models of entrepreneurship workspaces or generic incubation centres for startups need to be reengineered in line with the practical demands of small businesses and the economy at large. If that doesn’t happen, corporate funders risk losing their investments as these spaces become white elephants and eventually forced to shut down. And given our fragile entrepreneurship ecosystem, we certainly cannot afford to close these facilities. The operating model of every incubator, aggregator or entrepreneurs’ working space should ideally be reviewed every 3 years. From incubation criteria, incubation team and their skill set, pipeline creation strategies, content offering to small businesses right up until exit management as well as impact based performance indicators; all these need to be reviewed in the context of continuous value add.

 

We need incubators and workspaces that are demand-driven and can deliver demonstrable shared value in specialised sectors known to have high economic multiplier. The contribution of incubators to the economy of South Africa is through production of quality pipeline of high growth small businesses that will serve clearly defined market opportunities. And incubators must start acting as deliberate deal maker between small businesses and investors. The management of incubatees can no longer be generic. A systematic framework that filters startup entrepreneurs to understand their capacitation and technical skill constraints will unlock exciting potential for all stakeholders involved. The continuous development of incubation administration team contributes to the potential of success.

 

It is evident that most incubations or workspaces are not investing time and money in constantly evaluating their operating model and what I call EVP – entrepreneur value proposition. It is critical to also measure the impact of incubation support periodically through leading research techniques. If these do not transpire, we will unfortunately continue to see incubators and workspaces close while startup entrepreneurs resort to coffee shops like Starbucks due to proximity of expert knowledge and network of product development, marketing, focus groups, networking, and collaborations. 

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