THE BUSI­NESS OF BUSI­NESS INCUBATORS

Start-ups of­ten turn to busi­ness incubators to grow, de­velop and po­si­tion them­selves for profit but this tem­plate has been un­der-used in the Caribbean

The Star (St. Lucia) - Business Week - - FRONT PAGE - BY CATHER­INE MOR­RIS, STAR BUSINESSWEEK COR­RE­SPON­DENT

Faced with an un­for­giv­ing busi­ness land­scape, many of the Caribbean’s en­trepreneurs could use a help­ing hand. This help is usu­ally de­liv­ered piece­meal, how­ever, through de­vel­op­ment agen­cies of­fer­ing tech­ni­cal sup­port and fi­nan­cial as­sis­tance such as grants or loans. Ded­i­cated busi­ness incubators are few and far be­tween yet they have the po­ten­tial to bridge the skills gap, cre­ate sus­tain­able em­ploy­ment and de­liver spe­cialised ser­vices.

WHAT IS A BUSI­NESS IN­CU­BA­TOR?

Incubators are, first and fore­most, con­cerned with nur­tur­ing ideas. While tech­ni­cal work­shops and grant schemes fo­cus on pro­vid­ing spe­cific in­struc­tion or one-off fi­nan­cial sup­port, incubators are in it for the long haul, through­out the en­tire life­cy­cle of an idea.

From a start-up’s in­cep­tion to its first en­try into the mar­ket, incubators can help with le­gal re­quire­ments, book-keep­ing, net­work­ing, men­tor­ship, mar­ket­ing and pro­mo­tion. Incubators are usu­ally housed in a sin­gle fa­cil­ity that pro­vides earlystage com­pa­nies with ev­ery­thing they need in­clud­ing of­fice space, wifi and equip­ment. In many cases, incubators host more than one start-up in the same build­ing - giv­ing the busi­nesses a chance to share, net­work and learn from each other in a col­lab­o­ra­tive and open en­vi­ron­ment.

Incubators can be funded pri­vately or through pub­lic fi­nanc­ing, and op­er­ated at a re­gional level or even in­ter­na­tion­ally. In the Caribbean they can be driv­ers of south-south co-op­er­a­tion as the re­gion’s en­trepreneurs bat­tle sim­i­lar is­sues and so­cial ob­sta­cles.

The model can also be used to target cer­tain in­dus­tries and has proven very suc­cess­ful in the field of emerg­ing tech as com­pa­nies on the cut­ting-edge have the chance to test their plat­forms in a flex­i­ble en­vi­ron­ment. Incubators can also be used to ad­dress so­cial prob­lems, such as a lack of women en­ter­ing the en­tre­pre­neur­ial in­dus­tries, by invit­ing ap­pli­cants from cer­tain back­grounds or groups.

As incubators help en­trepreneurs de­velop their ideas into a work­able prod­uct, they pave the way for fur­ther fund­ing. Hav­ing honed their skills and tal­ents in a busi­ness­friendly set­ting, en­trepreneurs are of­ten more ca­pa­ble and con­fi­dent when it comes to con­nect­ing with an­gel in­vestors or fi­nan­cial in­sti­tu­tions down the road.

Be­ing part of a busi­ness in­cu­ba­tor scheme could be the dif­fer­ence be­tween suc­cess and fail­ure for SMEs – most of which fail in their first three years. Us­ing an in­cu­ba­tor can cut the costs of launch­ing and start­ing a busi­ness by 40 to 50 per cent, ac­cord­ing to busi­ness ad­vo­cacy group The In­no­va­tion Clus­ter, and the five-year sur­vival rate for in­cu­ba­tor clients is as high as 87 per cent.

And the ben­e­fits of incubators ex­tend be­yond en­trepreneurs. Pro­vid­ing a sup­port­ive space for start-ups al­lows them to reach their po­ten­tial and be­come prof­itable com­pa­nies, em­ploy­ing lo­cal work­ers and pro­vid­ing ser­vices to their com­mu­ni­ties. Those en­trepreneurs that target spe­cialised niches en­cour­age the ac­qui­si­tion of new skills in the lo­cal job mar­ket, bridg­ing skills gaps and en­hanc­ing a coun­try’s rep­u­ta­tion within that in­dus­try.

A LO­CAL AP­PROACH

De­spite the ob­vi­ous ad­van­tages, busi­ness incubators in the Caribbean have a dis­cour­ag­ing his­tory. In 2009 the World Bank Group launched the re­gion’s first in­cu­ba­tor net­work through its de­vel­op­ment agency, in­foDev. In­ti­tally funded by in­foDev, the Euro­pean Com­mis­sion and the Com­mon­wealth Sec­re­tariat, the Caribbean Busi­ness In­cu­ba­tion As­so­ci­a­tion soon stalled and is now dor­mant due to lack of in­ter­est and fund­ing. Ac­cel­er­ate Caribbean, cre­ated in 2014 by the En­trepreneur­ship Pro­gram for In­no­va­tion in the Caribbean, met the same fate just two years later.

While suc­cess has been muted at the re­gional level, work is pro­gress­ing in Saint Lu­cia on an in­cu­ba­tor scheme to ben­e­fit lo­cal en­trepreneurs. Startup St Lu­cia, an ac­cel­er­a­tor for early-stage tech com­pa­nies cre­ated by TeleCarib Labs, hopes to launch next year and will of­fer prod­uct and busi­ness de­vel­op­ment, ac­cess to men­tors from tech hubs around the world and as­sis­tance with ac­cess­ing fi­nance. Founder and Di­rec­tor of TeleCarib Labs Chris­tian Wayne says the fa­cil­ity will act as “a sanc­tu­ary for learners, pro­fes­sion­als, start-ups and cor­po­rates to be able to co-min­gle in an en­gag­ing, pro­fes­sional at­mos­phere”.

Open to tech en­trepreneurs with a vi­able prod­uct and cus­tomer base, the ac­cel­er­a­tor will link start-ups with es­tab­lished com­pa­nies who have a need for their ser­vices. These cor­po­rate pro­fes­sion­als will help to fund the in­cu­ba­tor, pay­ing to at­tach their brand to the scheme and be­com­ing pilot cus­tomers for the end prod­ucts and ser­vices. The team be­hind Startup St Lu­cia hopes to ex­pand its ef­forts across the Eastern Caribbean, with Saint Lu­cia serv­ing as a hub and a tem­plate for the rest of the re­gion.

The fo­cus of Startup St Lu­cia is very much ed­u­ca­tion, ac­cord­ing to Wayne who says: “Pri­mar­ily, tech in­cu­ba­tion/ ac­cel­er­a­tion thrives in mar­kets where there is an in­her­ent cul­ture of in­no­va­tion. This is fun­da­men­tal and some­thing that tends to be lack­ing in the Caribbean. Here in Saint Lu­cia we have zero uni­ver­si­ties, so there is a sig­nif­i­cant level of ca­pac­ity-build­ing which needs to take place. The truth is that many of our en­trepreneurs are just not ready to take on in­vestor money.”

Startup St Lu­cia will aim to get its par­tic­i­pants in­vestor-ready through an in­ten­sive two-tier sys­tem. Early stage com­pa­nies will have their busi­ness mod­els rig­or­ously tested and vet­ted be­fore ‘grad­u­at­ing’ and mov­ing on to a cor­po­rate ac­cel­er­a­tor which will give them di­rect ac­cess to the need in the mar­ket. It’s a win-win for both en­trepreneurs and in­dus­try, ac­cord­ing to Wayne who adds: “Caribbean cor­po­ra­tions have tended to view work­ing with lo­cal en­trepreneurs and start-ups from a phil­an­thropic per­spec­tive [but] work­ing with in­no­va­tors and start-ups can in­crease their com­pet­i­tive edge in the mar­ket­place, as op­posed to just be­ing part of their Cor­po­rate So­cial Re­spon­si­bil­ity.”

Or­gan­i­sa­tions like Hacker Hos­tel (www.hack­er­hos­tel.com.jm) are play­ing an im­por­tant role in con­nect­ing cor­po­ra­tions with high-po­ten­tial tal­ent through cou­pling in­ten­sive train­ing, men­tor­ship and em­ployer ex­po­sure to build a cul­ture of in­no­va­tion in the Caribbean

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