Incubation Support Programme (ISP)

CONTEXT:

The objective of the ISP is to encourage private sector partnerships with Government to support incubators in order to develop SMMEs and nurture them into sustainable enterprises that can provide employment and contribute to economic growth.

SUPPORT MECHANISM:

The Incubation Support Programme (ISP) was designed to develop incubators to support Small, Micro and Medium Enterprises, in order to strengthen the local and national economy in the Republic of South Africa. 

The intention of the programme is to provide funding for incubators that over time can generate revenue through the provision of services and initiatives that can be self-sustainable.

The incubation support was made available on a cost-sharing basis between the Government and private sector partner(s). It is available for infrastructure and business development services necessary to mentor and grow enterprises to ensure that within 2 to 3 years the enterprises will graduate to a level of self-sustainability by providing products and services to the market.

Eligibility criteria inclue:

  • The programme is available to applicants that want to establish new incubators or wish to grow and expand existing ones.
  • The supported incubator may either offer physical and/or virtual incubation support services.
  • The incubator to be supported may be a corporate incubator; a private investor’s incubator; an academic or research institution incubator in partnership with industry, and must be focused on establishing and/or growing enterprises that will graduate to sustainable enterprises.

The ISP offers a cost-sharing support of 50:50 for large businesses and a cost-sharing of 40:60 for SMMEs.

IMPLEMENTING AGENCIES:

South African Department of Trade and Industry.

ELIGIBILITY:

The applicant must either be:

  • A registered legal entity in South Africa in terms of the Companies Act, 1973 (as amended) or the Companies Act, 2008 (as amended); the Close Corporations Act, 1984 (as amended) or the Co-operatives Act, 2005 (as amended); or
  • Be a registered higher or further education institution; or
  • Be a licensed and/or registered science council. The programme is available to applicants that want to establish new incubators or wish to grow and expand existing ones.

The supported incubator may either offer physical and/or virtual incubation support services. The incubator to be supported may be a corporate incubator; a private investor’s incubator; an academic or research institution incubator in partnership with industry, and must be focused on establishing and/or growing enterprises that will graduate to sustainable enterprises.

NOTES + ADDITIONAL CONTEXT:

About Accelerators

Accelerators have exploded across the startup scene in the past decade. Models and definitions vary, but most share the common features of delivering a time-limited, competitive, cohort-based training programme, often geared towards investment readiness. Although there may be substantial differences in terms of sector, mission and funding, mentoring is almost always a critical component of the programme.

Many accelerators are privately-funded, aimed either at generating investment opportunities or, as with some corporate-sponsored accelerators, encouraging new technical solutions. However, numerous publicly-funded accelerator programmes can also be found – often with an emphasis on urban regeneration rather than financial return. In addition, EU-funded initiatives such as the Accelerator Assembly exist to help accelerators share good practice (such as focusing on quality of applicants; promoting peer-learning; building entrepreneurial networks and finding the best-quality mentors possible).

Public policy here should focus first on understanding the existing distribution of privately-funded accelerators, so as to avoid competition using public funds. Co-investment of public funds may help stimulate private activity, although in such instances, alignment of the funders’ success criteria is important. These may diverge if, for instance, a VC funder wants accelerated firms to move abroad in search of funding or a higher valuation, whilst a public funder wants them to remain to aid the local economy. Various national schemes have been created to develop accelerators (e.g. the South African Department of Trade and Industry’s Incubation Support Programme, or Enterprise Ireland’s Accelerator Development Scheme). However, individual cities have also taken the initiative to fund such schemes. 

Read more about this type of policy instrument in Nesta' Idea Bank for Policymakers.

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