South Africa must improve the commercialisation of innovation in its universities in order to boost the creation of small and medium enterprises (SMEs), according to findings from a survey conducted by startup support association SiMODiSA.
The survey – entitled “Accelerating the Growth of SMEs in South Africa”, was compiled by SiMODiSA in partnership with the Impact Trust with support from partners such as First National Bank (FNB), Omidyar Network, and the South African Venture Capital and Private Equity Association (SAVCA).
It found that in spite of entrepreneurs needing a “myriad of skills” in order to make their businesses a success, there is currently an insufficient number of South African institutions providing the necessary training and practical exposure required to support a thriving tech industry.
Though South African universities are patenting many innovations in multiple fields, few of these are successfully commercialised, with the survey also finding poor linkages and few elective relationships between academia and industry.
As with other surveys on the sector, it found there was a shortage of funding for small businesses, especially in the area of early stage angel investors and with the country’s venture capital (VC) market still in its infancy.
SiMODiSA also reported that South Africa’s relative geographical remoteness rendered access to international markets difficult for local entrepreneurs, while there is also limited support for entrepreneurs to access markets via partnerships with corporates, mentors and networks providing “soft landing” opportunities.
It also called on government to allow entrepreneurs and SMEs to be able to access and bid on government procurement opportunities in a smooth and efficient manner, saying this would enable the application of tech entrepreneurship to solve service delivery problems.
“The survey is an important intervention because it provides firsthand insights around the main factors which negatively affect entrepreneurs. We believe that the findings provide an outline of building an enabling ecosystem which will not only lead to a flourishing SMEs base but create sustainable jobs,” said Matsi Modise, managing director of SiMODiSA.
Heather Lowe, FNB head of enterprise development, said the survey’s insights provide a blueprint on the interventions required by entrepreneurs.
“We cannot continue to speak rhetorically about the challenges which have stagnated SME development over the last two decades. Both public and private sectors need to work with entrepreneurs on solutions to address these challenges,” she said.
There have been a number of surveys conducted into the South African tech startup ecosystem of late. Disrupt Africa reported earlier this month on the release of the results of one carried out by PwC, Silicon Cape and Microsoft BizSpark, which found South Africa has one of the highest business failure rates in the world at 75 per cent.
In May, South African entrepreneurship school Seed Academy released the results of its own survey, which found 70 per cent of the country’s startups said they required funding in order to grow their businesses. The survey found 83 per cent of startups were self-funded, with only three per cent saying they funded their businesses from vehicles formally established to support them.