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.
[dropcap]F[/dropcap]aced 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 early-stage 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 business-friendly 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.”
