Enhancing Small Medium Enterprises and Their Role in Innovation McLean Sibanda Chief Executive Officer: The Innovation Hub Presentation to Science, Technology and Innovation Summit Legend Gold & Safari Resort, Limpopo 20 th July 2013

Overview  Introduction  Challenges Faced by SMEs  Rethinking Enterprise Development  Financing  Support  Markets  Concluding Remarks

Market Rules Information overload Lack of proper standards Generic tools I need mentoring! I need mentoring! Don’t realise full potential Don’t realise full potential Expensive Lack of funding Lack of funding Don’t know where to start Need support & guidance Business Rules Did you know… If entrepreneurs had access to the right tools + right support structure, they would be more willing to start or grow their businesses and hence be significantly more bankable. Did you know… If entrepreneurs had access to the right tools + right support structure, they would be more willing to start or grow their businesses and hence be significantly more bankable. 3 Challenges Facing Entrepreneurs Lots of Options - Little Results

4 Challenges Facing Entrepreneurs OECD Territorial Review of Gauteng Province  Low levels of entrepreneurial activity / Culture  Low survival rate of start-up companies  Access to appropriate financing instruments  Underdeveloped entrepreneurial skills  Poor R&D pipeline  Access to facilities and infrastructure  Highly concentrated market structure  Access to Markets  Dominance by established enterprises  Insufficient and highly domesticated partnerships  Inter-firm linkages  Linkages with Higher Education and R&D Institutions

5 Rethinking Financing of Innovation Based SMEs Need to increase funding for technology and intellectual property development  High non- residents filings (life sciences)  Low contribution by SMEs, universities, Science councils  Biggest contributor for resident filings large corporates

6 Rethinking Financing of Innovation Based SMEs Lessons from USA’s Small Business Innovation Research Grants  Objectives of SBIR Program:  Stimulate technological innovations in private sector  Strengthen role of small businesses in meeting R&D needs  Increase private sector commercialisation of innovations derived from USDA-supported R&D efforts  foster and encourage participation by socially and economically disadvantaged small business firms in technological innovations  Right mix of high risk funding  Phased incremental grants depending on stage of development  Phase I:  US$100,000  8 months  Phase II:  US$450,000  24 months  Need for right mix of funding instruments  SPII  TIA  THRIP

7 Rethinking Support of Innovation Based SMEs Role of Science and Technology Parks and Incubators "A Science Park is an organisation managed by specialised professionals, whose main aim is to increase the wealth of its community by promoting the culture of innovation and the competitiveness of its associated businesses and knowledge-based institutions”. To enable these goals to be met, a Science Park:  stimulates and manages the flow of knowledge and technology amongst universities, R&D institutions, companies and markets;  it facilitates the creation and growth of innovation based companies through incubation and spin-off processes; and  provides other value-added services together with high quality space and facilities.” Catalysts / enablers for socio economic development through innovation

Rethinking Support of Innovation Based SMEs African STP’s- “Hundred Flowers Bloom”

Entrp1 Lead Mentor Entrp2Entrp3 Highly Skilled Mentor Entrp1 Lead Mentor Entrp2Entrp3 Highly Skilled Mentor Entrp1 Lead Mentor Entrp2Entrp3 Highly Skilled Mentor Entrp1 Lead Mentor Entrp2Entrp3 Highly Skilled Mentor 1 INDUSTRIALS ICT and MOBILE GREEN ECONOMY BIOSCIENCES External Industry Strategic Partnership INCLUSIVE INNOVATION INCLUSIVE INNOVATION Rethinking Support of Innovation Based SMEs Case Study: The Innovation Hub Cluster Approach

Rethinking Support of Innovation Based SMEs Case Study: The Innovation Hub Enterprise Development Approach Climate Innovation Centre: accelerating local innovations Maxum: Technology and Business Incubation Support  Support of locally developed climate innovations  Linkages to infoDev network  5 service offerings  Access to finance, business advisory and incubation, policy advisory, access to facilities and equipment, access to networks and partnerships  Technology Business Incubator to fast track the establishment and growth of early stage technology and knowledge based businesses  Pre-incubation and business incubation Gauteng Accelerator Programme – Mobile & Green: Fostering Service Delivery  Provincial Innovation Competition  Platform to source local innovations to improve government service delivery  Prize money used as seed capital to grow enterprises from innovations  Procurement of innovations for government service delivery challenges Gauteng Accelerator Programme - Biosciences: Entrepreneurship  Year long entrepreneurial and business development support  Executive Education Programme  4 month intensive mentorship to develop business plan  Business Plan competition with prize money & incubation  Supported by TIA

Rethinking Support of Innovation Based SMEs Case Study: Mobile Applications Labs (mLab) Hackathon: Nokia & Microsoft: 22 – 24 June 2012 Nokia Test mLab Fostering mobile applications development and entrepreneurship

Maxum Business Incubation Inputs Outputs Value Added Services Enterprise Development Value Added Services CIC MLABBIOPark Maxum (ICT, Manufacturing, Industrials) Rethinking Support of Innovation Based SMEs Case Study: The Innovation Hub Enterprise Development Approach

Rethinking Support of Innovation Based SMEs Value Added Services  Access to Spaces and Prototyping Infrastructure  ICT: state of the art enabling ICT environment with free / afforable bandwidth  Access to Markets:  Collaborations and soft-landing opportunities  International opportunities for companies through the Open Innovation portal and linkages to the IASP network (including open innovation programmes)  Export support programmes  Market research reports and business networks  Innovation specialists: access to various sector networks, sector specific support programmes, conferences and workshops  Research support and access to equipments + specialists through partner institutions  Networking functions and events: experts networks, trends, etc.  Access to network of service providers (IP, HR, Legal, Finance, etc)  Intellectual Property Advisory Services

Rethinking Markets for Innovation Based SMEs Case Study: The Innovation Hub Open Innovation Solution Exchange.. 1/5 NeedSolution Solution Exchange SeekersProviders A Gauteng Innovation Strategy Initiative: OI Solution Exchange Large, diverse, engaged solution provider community = high probability of finding a unique solution in short time – often outside ‘normal’ supplier network Why unique? Well-defined challenges posted by organisations within a genuine need = committed buyers with high probability of procurement

Seekers Local SME ’ s Local corporation s Local trade associations Local- Regional- State Governmen t Local target industries Providers Solution Space OI Need OI Need OI Solution OI Solution Local Research Institutes Local universities Local SME’s Local universities Local target industries Local corporations Local- Regional- State Government Campaign Media events /Live Outreach Corporate campaign Press Release Proactive Search Common Workspace Rethinking Markets for Innovation Based SMEs Case Study: The Innovation Hub Open Innovation Solution Exchange..2/5

Active Traffic Control Device to Minimise the Risk of Vehicles entering Railway Crossings Challenge Owner: Transnet SOC Deadline: 5 February 2013 Business Opportunity: Product acquisition, proof of concept leading to commercial application, joint development, supplier agreement and license to manufacture. Rethinking Markets for Innovation Based SMEs Case Study: The Innovation Hub Open Innovation Solution Exchange.. 3/5

Overview

Rethinking Markets for Knowledge Based SMEs Case Study: The Innovation Hub Open Innovation Solution Exchange.. 5/5

1 2 3 SME success is really based on the following three critical (3) elements: 1.The ‘Jockey’: Develop The Entrepreneurial Mindset  Development of entrepreneurial skills  Entrepreneurial culture 2.The ‘Horse’: Develop The Business Model & Business  Provision of a pipeline of intellectual property and technologies 3.The ‘Racecourse’: Access to market, access to resources, access to finance  Right mix of financing instruments  Enabling infrastructure  Market structure / government procurement as source of stimulating innovation  Relook Procurement Regulations 19 Concluding Remarks Enhancing SMEs and Their Role in Innovation

Concluding Remarks Changing faces of South Africa presenting numerous opportunities  Youthful population / unemployment (49.6% under age of 25 years)  Urbanisation / stretched resources / service delivery (projected to be >50% by 2020)  Connectivity (>50% smartphones by 2017)  Burden of disease / new drugs and diagnostics  Climate change / renewable energy / clean water

The Innovation Hub Innovation Catalyst for a Smart Province: Gauteng, Republic of South Africa