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FEATURE STORY November 1, 2018

Evolution of an mLab: Innovating and Iterating to Help South African Entrepreneurs

This feature story is an outcome of infoDev, a multi-donor program administered by the World Bank Group, with a focus on entrepreneurs in developing economies.

This story was originally published on April 9, 2018. 

In 2011, there were virtually no technology-focused start-up incubators or accelerators in South Africa. Since then, the country has become a hotbed of entrepreneurial activity, hosting high-profile conferences like the Global Entrepreneurship Congress, and convening investors, high-growth start-ups, and other stakeholders in the digital entrepreneurship space, as witnessed during the XL Africa and African Angel Investors Summit at the end of 2017. 

Throughout this time, Derrick Kotze has had a front-row seat as CEO of mLab Southern Africa. mLab SA was launched in 2011 as a mobile technology laboratory and incubator. Since then, it has grown to provide tech skills development training, and has broadened its mandate by adopting a hybrid model – skills for incubation and acceleration.

From its base in Tshwane near Pretoria, mLab has launched programs in three townships throughout the Gauteng province (which includes Pretoria and Johannesburg) as well as other cities like Cape Town in the Western Cape province. This year, the organization will continue its expansion into three other more rural provinces, primed for building new digitally focused ecosystems.

Along the way, the mLab’s leadership team has taken an iterative and agile approach to provide tailored support to different stakeholder groups and remain demand-focused in each new location. Looking back, Kotze shared some of the insights and lessons learned that have shaped the lab’s evolving business model.

Hype sells, but targeted support builds commercially viable ecosystems

“We started out with a lot of energy and riding the wave of excitement, with short-burst, high-energy events — hackathons, pitch competitions, and other platforms,” Kotze said.

These events are great for profiling your organization, gaining exposure for start-ups, and building confidence among potential entrepreneurs and developers who are considering moving into this space. However, while an important part of the ecosystem, high-profile events do not necessarily produce tangible outcomes, he said.

Kotze continued, “You can do those things, but don’t expect real ROI. The digital space is a very technical space. You need talent. You need time. You need skills and processes. There’s a lot of asset development and validation that’s required either parallel or even before you start trying to develop start-up incubation.”

mLab SA quickly became more targeted about the services it offered and more selective about the start-ups it supports.

“In the beginning, we were 100% supportive of every idea, but as an organization, we also have responsibilities to ensure results for our beneficiaries and stakeholders,” Kotze said. “So we’ve been stricter around the selection process, how we measure progress, what we expect from the teams, and where we try and focus our support.”

"The digital space is a very technical space. You need talent. You need time. You need skills and processes. "
Derrick Kotze
CEO of mLab

Supporting young and experienced entrepreneurs

As its business model has evolved, mLab SA has sought to invest in both experienced entrepreneurs and the young tech enthusiasts who might become their future hires or co-founders. Kotze explains, “Within our current strategy, we have started differentiating between two distinct groups that exist in our ecosystem who are in need of support.”

The first is a very large unemployed youth population, to which the mLab is strongly positioned to deliver support and measure its impact. Many of the young entrepreneurs and aspiring software developers are recent university graduates with little professional experience who lack many of the digital skills that local industries desperately need.

To support these young ecosystem entrants, mLab SA has launched CODE TRIBE Academies in partnership with The Innovation Hub’s eKasi Labs at four locations across Gauteng province. CODE TRIBE teaches mobile software development, scrum agile, cloud technologies, and other technical and soft skills. At the same time, the academies develop a pool of talent for start-ups.

The second cohort is experienced professionals who have worked in an industry and have identified specific gaps in their sector. “It seems that it is the group of entrepreneurs that understand where the service gaps and potential opportunities exist within industries, who are really able to develop viable solutions,” Kotze said. “So we’ve seen a shift to try and find young, more experienced entrepreneurs or at least try and match them up with individuals with great ideas, who don’t necessarily have the experience to develop or commercialize them.”

mLab SA has always provided an environment where developers, designers, and entrepreneurs can collaborate closely on projects. Today however, it requires all start-ups to have a team to share the workload, rather than a single founder who strives to become a “jack of all trades.” The lab supports more experienced entrepreneurs by connecting them with young developers.

Still Iterating…

Constantly evolving and iterating the business model hasn’t been easy, and Kotze is grateful for the support they’ve had along the way. “We’re a young organization and there was no perfect recipe for this,” Kotze said. “To the credit of infoDev and the partners that seeded these mLabs, they allowed space for our business model to evolve and iterate, while the ecosystem evolved at a rapid rate and in such diverse directions since the launch of the program.”

Recently, Kotze’s team began piloting a new program to better support high-potential ventures in the local ecosystem. He explained, “We’ve adjusted some of our programs to include an element of venture building, where we identify who the client is and what it is that they need. Then, we assist young entrepreneurs and CODE TRIBE graduates to build solutions specifically for that gap with our team directly involved in the development.” mLab SA is a non-profit and does not take equity in or royalties from supported start-ups.

mLab SA’s mandate is to strike a balance between building a digital entrepreneurial economy and adjusting for skills that are not being developed by local universities. This approach enables them to provide skills training, support existing start-up teams, and develop solutions for specific challenges, often in partnership with public and private stakeholders.

While the team is a more involved in the development process and client management, Kotze said, “We still leave the venture team to make their own decisions. We will not pressure them into doing what we tell them. And we’re not trying to take control of their future companies.”

mLab Southern Africa is supported by infoDev Digital, sponsored by the Swedish International Development Cooperation Agency, Norway’s Ministry of Foreign Affairs, the Ministry for Foreign Affairs of Finland, and Denmark’s Ministry of Foreign Affairs (DANIDA).