FIRST STEPS VENTURE CENTRE
 

The current global economic meltdown has exacerbated the economic recession inherent in the business cycles of the free market enterprise.  These recurring and fluctuating levels of economic activity that an economy experiences often last three to five years from peak to peak. The Journal of Political Economy lists the five stages of the business cycle as growth (expansion), peak, recession (contraction), trough and recovery. At one time, business cycles were thought to be extremely regular, with predictable durations, but today they are widely believed to be irregular, varying in frequency, magnitude and duration. According to statistics published by the Oxford Bulletin of Economics and Statistics, seven out of ten new employer establishments survive at least two years and 51 percent survive at least five years. While this is a far cry from the previous long-held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years, it is worth noting that these statistics are derived from the developed world and it is safe to conclude that the scenario in Africa is much worse. 

Despite the intervention of agencies such as the Citizen Entrepreneurial Development Agency (CEDA) and the Local Enterprise Authority (LEA) the success rate of business start-ups in Botswana is very low. In the current context of considerable uncertainty in the world economy and invariably in the local economy, Government has responded to the urgent need to create a conducive policy environment for an improved business climate that sets the pace for future competitiveness and economic growth.  The reality on the ground is that many entrepreneurs don't have the space or desire to start a business out of their home, yet find that renting space and setting up essential support functions is financially overwhelming and energy draining just at a time when their financial resources and energy are most needed for development of the business itself.

The concept of business incubation was formally introduced in the United States of America in 1959 to support the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Successful completion of a business incubation programme increases the likelihood that a start-up company will stay in business for the long term: older studies found 87% of incubator graduates stayed in business, in contrast to 44% of all firms.

In addressing the country’s socio-economic challenges, Botswana Innovation Hub (BIH) was established to create a conducive national innovation ecosystem that contributes to national competitiveness, economic growth and job creation. The company serves as a unique platform and catalyser for technology-driven and knowledge intensive businesses to develop and to compete in the global market. To create such an environment, BIH has developed a technology entrepreneurship development programme, First Step Venture Centre (FSVC) to support an entrepreneurial and innovation culture through technology transfer and "one-stop shop" for entrepreneurial support. FSVC identifies, develops and nurtures viable technology oriented start-up businesses with a potential to grow into international markets. A detailed business plan for the FSVC has been developed and a Program Manager has been appointed. Plans are at an advanced stage for the technology entrepreneurship programme to commence incubation services in May 2013.

The services offered by FSVC are targeted to individuals or start-up companies with workable business ideas that have the potential to create jobs, revitalize their communities, commercialize new technologies, and strengthen/diversify the local and national economy. FSVC will help incubatees successfully navigate the common challenges that every entrepreneur must face: scarce capital, elusive markets, intense competition and limited resources. Provision of such support is essential as it has been proven that the average success rate of new start-ups going through business incubation is better than those that are not. The programme will also provide “Soft Landing” - services for foreign companies to step into the regional market.

 

Objectives  

The main objectives of FSVC therefore are aligned to the four priority sectors of the BIH with a special focus on technology oriented start-up companies. Key to these shall be:

1. To promote the development of technology & innovation at micro level.
2. To promote technology entrepreneurship
3. To provide a platform for commercialization of technology
4. To close the innovation gap
5. To expose local technology businesses to international markets and network
6. Target technology transfer companies which can provide services commonly referred to as low hanging fruits to targeted programmes such as EDD and Poverty Alleviation

The FSVC Value Proposition  

The FSVC’s value propositions to the incubatee companies comprise the following:

-          Ready to use offices (plug and play) e.g. readily available internet/telephone services

-          Subsidized rental – low costs due to shared services

-          Intellectual Property and legal support

-          Media and Brand support

-          Access to local and international industry networks

-          Dedicated Technology advisory services

-          Dedicated business advisory- helping combine business plan and strategy

-          Entrepreneurship development training

-          Access to international markets

-          Access to Innovation Fund subject to meeting qualification criteria

  FSVC Programme Manager Tshepo Tsheko

 

Incubator Parnerships

 Other initiatives include registration with regional and international incubation organizations for networking and internationalization purposes. These would also facilitate the development, growth and success of the incubatees in the programme.

 

The Southern Africa Innovation Support (SAiS) programme sponsored by Government of Finland, operating from BIH, shall be a pillar of support for FSVC, especially with regard to capacity building through regional networks, training and access to incubation experience.

BIH Incubation Process

The incubation process comprises three stages, namely pre- incubation, incubation and post incubation.

The pre-incubation stage forms a basis for generation of deal flow into the BIH’s FStVC and as such has to be supported. This initiative includes the support of national and regional innovation competitions with special emphasis on the BIH key sector areas. Examples include the Botswana Health information innovations competition. A partnership that is being proposed to BIH by the University of Pennsylvania and UN partners would identify the talent and skills base that would be encouraged to apply to the FSVC for example. FSVC shall also have to form agreements with national and international programmes that nurture start-ups with potential for growing globally. Examples include the Apps4Africa initiative and Microsoft Challenge Cup through the MIC. 

 

Therefore there is need for First Steps Venture Centre to be marketed well into the stakeholders for their appreciation of the value chain of the facility. Although FSCV shall not enroll pre-incubation companies, it does offer support to assist entrepreneurs to prepare their businesses for full time incubation. Additionally virtual incubation services will be availed for entrepreneurs who are unable to relocate their businesses to FSVC due to unavailability of space.

 

Candidates enrolled in the incubation phase continue to develop their businesses by building the team, closing deals with financiers, completing product development and bringing their products to help clients to grow, FSVC will provide business consulting services outsourced for a period of two years while the Incubator is being developed.

The incubation period shall be 3 years at the end of which the incubatee company is to graduate into the BIH Science and Technology Park.

 

Adminsion Criteria

FSVC has a pool of potential incubates and will look for start-ups and spin-offs through numerous avenues including the public and private learning institutions including universities recruiting existing young Small Medium Enterprises (SME’s) and access to local and international companies from other incubation programmes. FSVC will consider ventures with proven viable businesses and traceable financial records for the purpose of establishing ability for paying subsidised rent and services. All applications shall be evaluated using a standard     procedure to determine the most appropriate proposals. The facility reserves the right, in its sole discretion to accept or to reject participants into the programme.

The selection criteria shall be based on the following:

1.      A Project proposals aligned to the BIH focus areas,

2.      Funding availability,

3.      Registered business under the Companies Act or licensed to carry out specialized procedures.

4.      Business scalability.

5.      High growth potential in Global markets.

6.      Carrying local cultural values and look

 

Special focus on entrepreneurial and business skills, looking specifically at Entrepreneurial initiative, Role model potential, values and ethics, business innovation, development impact and fitting the sectors. The Companies shall generally have among its members sound Curriculum Vitae with a broad expertise to ensure complementarity in the business development, e.g. the right mix of technical and managerial skills.

FSVC’s first intake of full and ready incubatee companies will be limited to between five and eight companies, each with between 1 and 5 employees and increased from there onwards. The initial intake shall be based in rented space on a temporary basis hence the limitation. The initial address for the facility shall be sought based on affordability and flexible contractual obligations. Future intakes will be based in the BIH buildings to be constructed near the airport.