Measuring the Direct and Positive Impact of Investment in Incubators and Accelerators
As part of the company’s BBEEE compliance requirements, as well as the industry sector’s transformation requirements, our client developed a shared value beneficiation strategy to extend their supply chain.
The client is located in a peri-urban area, with high unemployment levels. The company requires highly skilled employees. There are also high expectations from the local community to support economic development initiatives in the local economy.
The client’s objective is to stimulate economic (rural) growth and create small businesses, which in turn will create jobs and simultaneously enable them to procure more from local suppliers.
The client wanted to measure the impact of their incubator on individuals, businesses, the local economy and the sector.
What we did
- We started the impact design process by conducting a comparative benchmark study to review and study the impact of incubators & accelerators globally.
- We conducted a review of existing performance data including baseline studies.
- Based on the research, we developed an impact matrix and framework. We then conducted stakeholder engagement to measure and validate the impact and return achieved.
The impact and return on investment
Our impact analysis indicated the following impacts:
- Impact for entrepreneurs/incubatee’s:
The intended outcomes of the incubator included: short term impacts such as improved business knowledge and skills in the areas of business plan development and financial planning & management. Medium term impacts included increased access to business opportunities, finance, and growth in business turnover. Finally, longer term impacts included incubatee’s achieving sustainable business employment growth and profitability.
Unintended negative impact that was noted included increased expectations and disappointment in the programs’ ability to facilitate transactions (guarantee contracts/procurement), introduce incubatee’s to other investors and help raise additional investments, capital, loans or grants.
Quantitative impacts included:
- Between 75% - 88% of incubatee’s reported increases in business turnover as a direct result of the incubation process.
- More than 70% of incubatee’s indicated that the incubator had a high impact on the development of a range of personal qualities and attitudes. Some of these effects included an increase in the incubatees’ motivation to do business, self-discipline and determination to succeed in business. Confidence, self-belief, creativity, ability to keep trying when dealing with obstacles, willingness to take risks, and ability to deal with failure were also reported.
- Between 33% - 70% of incubatee’s indicated that the incubator had increased their business knowledge and skills.
- Between 50 - 60% of incubatee’s generally found the impact of the incubator to be either ‘good’ or ‘excellent’ on a range of dimensions. These dimensions included finding information on business opportunities, identifying market trends and selecting market entry strategies.
2. Return for the investor:
Improved stakeholder relationships, procurement from designated groups and enterprises, compliance, and reputation.
Increased social and economic value/capital generated by helping to strengthen the local economy and entrepreneurial ecosystem.