South Africa is having something of an entrepreneurship boom. Last year startups in the country raised more than $250 million across 37 deals – a burst of capital that is sure to accelerate creative solutions to urgent problems around energy (see Kazang Solar) financial access for the unbanked (see MFS Africa), and more.
Part of the credit certainly goes to South Africa’s booming “entrepreneur support” scene – the incubators, accelerators and seed funds that help entrepreneurs build their business and get it to the point where investors are interested. Ten years ago this was a relatively new concept; at the latest count, there were more than 50 tech hubs (the most prevalent kind of entrepreneur support organisation) in South Africa alone, and nearly 500 across the continent, whose mission is often driving more investment to entrepreneurs.
But not all incubators and accelerators are created equal. Last year we held a series of convenings for incubators and accelerators from across the continent, so that they could share best practices around entrepreneur support. We’ve compiled a playbook that draws on interviews with 80 such organisations, as well as conversations with more than 1 000 stakeholders across Africa, from entrepreneurs to investors.
If you’re an early-stage entrepreneur in Africa, you might want to work with an incubator or accelerator. Read on for the top four traits you should look out for that the best share. (You can read the full report here).
1. Look for programmes with a specific, targeted focus
There are endless choices and considerations that go into selecting cohorts of qualified and complementary entrepreneurs. We’ve learned that specificity is key: broad accelerators focused around “tech” are less effective than targeted programmes focused on a specific sector. In the words of Aboubaker Benslimane, who leads Morocco’s accelerator Jokkolabs: “It’s always easier to run a programme in a specific sector because you have specific experiences that the entrepreneurs can share – there is more opportunity for cross-fertilisation. If you put a fintech startup in a room with another fintech startup, they have a lot to learn from each other.”
2. Be wary of the “Demo Day”
Many accelerators close out their programmes with an on-stage pitch competition, where investors in the audience will pick a “winner”. When we surveyed our companies and asked them where they met investors, it was rarely at an actual pitch event. The format privileges the ones who pitch well, rather than the ones who have the highest potential. At Village Capital we have replaced demo days entirely with 1-1 investor meetings.
3. Look for programs with partners and mentors who will roll up their sleeves
Every entrepreneur who’s been through an accelerator programme has a story about nearly falling asleep through a lecture by a corporate partner. Our advice for accelerator leaders: select mentors, speakers and even corporate partners who are prepared to get involved in programming – even if they lack a brand name. In fact, try to avoid lectures altogether: entrepreneurs learn better and faster in sessions where they interact with mentors or peers.
4. Look for programs that emphasize peer collaboration
According to a 2018 study by the Global Accelerator Learning Initiative, accelerators that place a heavy importance on peer collaboration between startups tend to outperform. Look for programmes that bake in as many opportunities for interaction and collaboration as possible.
About the authors: Brenda Wangari is a Programme Associate and Rachel Crawford is a Manager of Emerging Markets at Village Capital, which helps entrepreneurs bring big ideas from vision to scale. Since 2009, it has supported more than 1 000 early-stage entrepreneurs through its investment readiness programmes.