The Enterprise Incubation Program is market driven and prepares early stage entities to supply to local markets.
This programme is centered on the securement of a market/s, by the applicant (incubator), to transfer skills to small businesses and cooperatives (incubatees), with an effort of attaining the expectant quality standards and specifications of firms. The operational model for the incubator programme will be inclined towards physical incubation- provision of incubation services from a physical site as opposed to virtual or remote support provision.
The Enterprise Incubation Program (EIP)
The Enterprise Incubation Programme (EIP) runs for three years. It strengthens technology commercialisation and supports entrepreneurship in South Africa’s technology sector. Furthermore, it builds the capacity of incubators to support early-stage enterprises.
The EIP targets South African registered and tax-compliant entities. These entities must have strong experience in developing and mentoring early-stage enterprises and co-operatives. In addition, they must support businesses that supply goods and services to the local economy on a sustainable basis.
The programme also supports both new and existing incubators. However, it excludes incubators previously funded by the Department of Trade, Industry and Competition’s Incubator Support Programme and the SEDA Transfer Programme.
The EIP provides funding between R5 million and R10 million. In addition, it caps feasibility study funding at R1.5 million.
During the pilot year, the programme offers a 100% subsidy. This approach reduces risk and supports early programme performance.
Thereafter, the programme introduces cost sharing. The Department of Small Business Development (DSBD) contributes 90%, while eligible applicants contribute 10%. Applicants may provide their 10% contribution in cash or in assets linked to the incubator and its activities.
The Enterprise Incubation Programme (EIP) strengthens economic development by broadening participation in the economy. Furthermore, it supports small, micro, and medium enterprises (SMMEs) through incubators. As a result, SMMEs can graduate into the mainstream economy and grow sustainably.
In addition, the Incubator Support Programme (ISP) encourages partnerships between the private sector and government. These partnerships support incubators in developing SMMEs. Moreover, they help transform SMMEs into sustainable enterprises that create employment and contribute to economic growth.
The programme also provides funding to incubators. It enables incubators to generate revenue over time through services and initiatives. Consequently, incubators can become self-sustainable and reduce reliance on external funding.
Qualifying Criteria for the Enterprise Incubation Program
The programme accepts applicants with viable business ideas or registered SMMEs that struggle to grow. In addition, each of the 54 SEDA-supported incubators applies its own recruitment and selection process based on its sector.
The applicant must meet one of the following requirements. Firstly, the applicant must be a registered legal entity in South Africa under the Companies Act, Close Corporations Act, or Co-operatives Act. Alternatively, the applicant may be a registered higher or further education institution. Furthermore, a licensed or registered science council may also apply.
- The following costs are eligible for support:
- Business development services (e.g. business advisory services, coaching and mentoring, training, facilitation of funding, production efficiency and improvement, quality and standards acquisition);
- Market access;
- Machinery, equipment and tools;
- Infrastructure linked to incubator (buildings, furniture);
- Feasibility studies for establishing and expanding incubators;
- Product or service development;
- Information and Communication Technology (ICT); and
- Operational costs.
The Adjudication Panel may consider for support, any other costs related to the activities of the incubator.
Benefits of the Enterprise Incubation Program
- Through Incubation, enterprises develop skills, knowledge and markets. These improvements are intended to lead to increased profitability and growth.
- Enterprises will be able to employ more people and enter new markets with cutting-edge products and services.
- The grant approval will be based on projections for the first year at application stage whereas the approval for subsequent year(s) will be dependent on the review of actual performance of the preceding year against agreed milestones.
- All payments will be made directly to the incubator’s primary account.
- The grant approval is capped at a maximum of R10 million (VAT inclusive) per financial year over a three (3) year period and is subject to the availability of funds.
- The EIP offers a cost-sharing support of 50:50 for large businesses and a cost-sharing of 40:60 for SMMEs.
At Dream Team Capital (DTC), we build mutual trust with each client. We work with international companies as well as small and medium-sized enterprises. In addition, we carefully consider each client’s activities, products, and professional environment. As a result, we develop tailored solutions that meet specific business and corporate needs.
Contact us for further information and assistance regarding the Enterprise Incubation Program.
