1 February 2017

Africa: The African University That Runs an Incubator for Early Stage Start-Ups and Spin-Off Companies Using Its Research IP

Elsewhere globally universities have both fostered technology transfer and start-ups. With certain exceptions, this approach in Africa has been less common. Stellenbosch University runs Launchlab and Russell Southwood spoke to its Operations Manager Brandon Paschal.

Launchlab came out of the work of Stellenbosch University's Technology Transfer Office. It saw the need to incubate businesses based on the IP they were commercialising out of research that had taken place at the University.

It used 5 spin-off companies to start Launchlab in 2014 and now there are 6 companies that have come out of the University and 70 non-University companies. Nedbank is the incubator's sponsor. The incubator focuses on six sectors including fintech, media, clean tech and education.

"We focus on very early stage start-ups and our work is modeled on the Stanford University Ideation process. People pitch ideas and we match them with vertical partners. We also have scientists training for business skills. There's also an acceleration module."

It has 4 Portfolio Managers with entrepreneurial experience and they help the start-ups connect with corporate partners and find investment:"We took a decision not to have these managers based on our sector verticals but to have cross-pollination." It uses the due diligence checklist for VC investment developed by Cape Town VC fund Knife Capital.

One of its start-ups is Order Cloud which focuses on "on simplifying your business' ecosystem, helping it reach its full potential". It has built middleware to help smaller players and is dealing with 600 outlets for a Nedbank client: "We have been working with Nedbank to promote that success story."

Another of its start-ups is PICSA which offers financial services to agricultural workers and "we're busy with a potential acquisition with a large global company." It works with dozens of farms in the Cape offering financial services to farm workers. They can save for things like university fees for their children or a car with a savings account with a 10% return and they can put in as little as R10 per month.

In the food sector, it has ButtaNutt which handcrafts a series of authentic tree nut butters using natural and organic nuts like pecans and macadamias. The spreads are free of sugars, stabilisers and preservatives.

"South Africa exports more macadamias than any other country in the world. ButtaNutt exploits this surplus and explains the health benefits. We made connections with the larger food companies here like PicknPay, the largest retail grocer in the country... The Chair of our Board is the Executive Director of a food investment company and Boss Tree is one of their investments. We're working to get investment from them for another of our start-ups in the food field."

The University has lots of IP it would like to commercialise but not many start-ups: "There's lots of licensing of IP but the preferred option is a start-up company as it brings both financial and profile benefits. One of the University spin-off companies builds cube satellites." As Brandon Paschal observes: "There's no other incubator doing what we're doing."

So what are the qualities it looks for in a start-up company?: "They have to be in our six vertical sectors unless they are really successful. Can we add value to it? Does it have legs? Do we need to run the business for them or can they run it and we advise? I've had an application today and it sounds interesting but I'm not going to run the business. The person didn't have experience, it was a one-person team and there was no coder to do development. There's a massive shortage of software developer skills, good "jockeys", people with the perseverance to push it".

There are other examples of African universities working in this way like Strathmore University in Nairobi and Buea University in Cameroon. But this kind of incubating scientific IP and start-ups should be central to the way more African universities work.

See also what the UCT Graduate Business School is doing with incubation:

https://www.youtube.com/watch?v=hhw05Qn1aFA

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