2 - 4 November 2020 | Hosted by the University of the Free State

What to look out for as a tech-based entrepreneur

Mr Brandon Paschal

At last week's Student Entrepreneurship Week, Mr Brandon Paschal (left), Vice President of Innovation at Stellenbosch University's LaunchLab, shared rich insights drawn from years of running a university incubator facility.

Some background

Since its inception six years ago, the LaunchLab has worked with 214 businesses. Over the years they have:

  • Helped more than 25 companies raise R310-million in risk capital from actual investors who need a return on their money
  • Primarily worked with first time founders who are highly technical but are leading a business for the first time
  • Been named the #1 university incubator in Africa 2017-2020 by Universities Business Incubators (UBI) Global

Paschal had a wealth of advice to studentpreneurs, most of which we share below, verbatim.

Things to be mindful of, when starting a tech-venture

1. Don't let "perfect" be the enemy of good
Often highly skilled engineers, software developers and technical people want to get the product "just right" before it gets out there to the market and before it interacts with the customer for the first time. The reality is that if you are not a little embarrassed and if it's not a little unpolished for your first version that hits the public, then you've likely waited too long. You've spent too much time perfecting something without your user or customer interacting with it for the first time. If you're trying to get it perfect before your first interaction, it's never going to be perfect. So, instead of trying to provide a perfect product for an imperfect system, get something out there early enough that you might be a little bit embarrassed about – you know there are bugs and some issues – but get it out there in its context, where it needs to be operated and engaged with, and get your feedback.

  • Story from the LaunchLab:
    Sxuirrel was a peer-to-peer storage company in Stellenbosch founded by students. They raised money with an App and an idea from a corporate venturing source. They started to find out that though they had an App and had raised money, there was no actual traction in the market; they never found product market fit. While the student market might be interesting and lucrative, is too small to take on risk capital, to take on investment and to be able to grow that investment over time. Sxuirrel's feedback, as to why they hadn't launched this product and why they had not engaged with the customer, was that the product wasn't ready yet; they wanted to get it just right. And so they spent months and months trying to perfect the product when they didn't know if the solution would actually work in the market at all. In the end they found out it didn't work and the guys have gone on to do other interesting things. They learned a lot from that start-up failure but they could have learned those lessons earlier, without spending that much money, without the headache that they went through. So, don't let perfect be the enemy of good enough, get the thing out there in the market.

2. Ignore the context of the use case at your own risk
You might have an idea: here's an app, here's a product with which we are going to solve this solution; but you ignore the environment around where the solution has to actually work. You need to map out the value chain: what comes before and what happens after the engagement, so that you look at the time line before where your solution comes in; what happens before your market engages with the product. One of the companies that I'm working with is a research spinout called Phagoflux (I won't go into their solutions) but they are now interviewing customers asking what leads to this moment in your process so that I can be aware of the context that comes before the solution. Also, what could this enable after this problem is solved, and the solution is there in your process. They've learned a lot about what comes after the problem that they're solving just by asking those questions and engaging with the customer. It's important to know what it is that you depend on that is out of your control. You cannot control the context but you can be aware of it. Don't be blind to what is happening to your solution in the broader context in which it needs to operate.

3. Hobbies make the best ventures
I have a personal passion: I want people to enjoy the work that they do every day. If you are going to spend a third of your awake-life in your most fruitful and impactful years you should enjoy that work that you do. Hobbies make the best ventures. You should enjoy the actual work and have a passion for the problem that you're solving, not just the possibility of the financial reward.

  • Stories from the LaunchLab
    Story One:Cassidy is the founder of Tjaarge and he loves skateboards, and he loves tinkering with technology and electronics. He's built electronic skateboards and scooters for public use. He sells his electric skateboards directly to the public; they're remote controlled and re-chargeable. Tinkering with electronics is a hobby for him so he built his own skateboards, started selling them to friends in the neighbourhood, then graduated university and decided to do this as a business for a time. It might not be a business that sells massive amounts, or one he stays in for very long, but he's having fun now doing what he loves.
    Story Two: Fred at Custos has a sister who is an artist and he had a passion to protect her copyright. A lot of plagiarism happens in the arts, especially in digital media, and Fred found a way to protect digital media files with a bit coin block chain embedded as a forensic watermark. He had a passion to solve a problem that he saw – the property rights issue – that was affecting the ability to make money in the people that he loved.
    Story Three: Paul Kim had a passion to empower low-income workers – financially, with the ability to save and provide for their families and send their children to school and then to university. He built a company called Picsa that provides financial services to low income workers – like farm workers and mine workers and retail shop workers – where there is not really a savings culture. He turned a passion to solve this problem into an extremely profitable venture that has been invested in by a large agricultural corporate in South Africa.
    Passion is an important ingredient. Financial reward can only motivate you to a certain level. If your work is not fun, if the problem you're solving is not a hobby or a passion, it's not going to have a long shelf life.

4. Failing is learning
When you're studying or writing an exam, you try to avoid failure. Failure is a swear word. But, in entrepreneurship, your first version won't work ideally, but it's not your final mark. You don't have a deadline for the end of the term or year.

  • Examples from the Launchlab
    Example One Martha is one of our former entrepreneurs who ended up joining our team. Through her Honours year project, she and a group of friends ran a start-up company, Vinotea, that made tea out of the skins of dried grapes left over from wine making. They tested the product with table grapes, then wine grapes but it ended up tasting really bad. She eventually learned that it was not a viable idea but failing meant that she was able to go through the process, to put together a business idea, to pitch it, and the idea won money. The tea tasted terrible but she learned what it takes to start a business, to communicate.
    Example Two: JD Naudè started a company trying to help retail shops cut down on queues and theft by having an IOT device on the trolley to scan products put in, tally up the total and automatically charge customer as they leave the store. It didn't work; the system was just too complex, but he got out there and did it. He also won some prize money. But through failing, he made connections, and then through his IOT passion - he's a mechanical engineer – he met a guy whose parents owned a farm. They found an IOT type solution for picking grapes during harvest, coming up with a crate tracking system that recorded the volume of produce as it was picked, put into crates and brought into the processing plant. They were able to track yields in certain blocks of vines, and in certain hectares in farms around the Western Cape. It's been a very lucrative business selling to agricultural companies. So, he failed in the first venture, but the networks he built, the business experience he got opened doors for him to build contacts, to build a name, to build confidence again. Now he has a really lucrative business - he's even working with Mercedes Benz in the Eastern Cape.
    The term never ends... the runway is your deadline. When you run out of money, obviously your term has ended -- so to speak. That also applies if you run out of energy. If you have a passion for something, two or three years down the line you might lose that passion. But failing is learning and you might still have the passion after you've failed a few times. Thomas Edison once said: I have not failed. I've just found 10000 ways that won't work.

Questions and Answers between the #SEW2020 host, Ms Ntsiki Mkhize and Brandon Paschal

NM: Brandon, the Launchlab works with high tech entrepreneurs. What does that mean? Does my innovation have to be fully tech operational or do I have to have a certain level of tech skills?

BP: We (LaunchLab) fall under InnovUS (SU's university-industry interaction platform for the commercialisation of SU's assets) and that's the bulk of where our businesses come from. We have three different programmes and there is one that focuses on those things. But there are two other programmes that are open and relevant for students to come and get involved with that don't have to be launching satellites into space or genetically engineering tobacco.

(By way of example) There's a company called Butternut, founded by a student we worked with, that makes a macadamia nut spread. It's just grinding up nuts and putting them into jars. So even those businesses can be interesting.

NM: What is the process of joining the incubation?

BP: Obviously everyone has been forced to go digital and virtual so there's the online application on our website. There are three different programmes to select from. We're running most things now virtually, anyway. Ideally there is some in-person stuff - we are trying to figure out how to make that work. Apply on line. (see details at bottom of story.) There are two new programmes launching in February - Countdown and Liftoff. The first one will help you see if you have a viable business. The second is for after you've figured out that people care about your business idea and want to give you money... Liftoff is a programme that shows you how to put the business building blocks around that product.

NM: If someone approaches you to see if their business idea is viable, does the incubation process take them from ideation? What kind of support exists within the programme?

BP: A disclaimer upfront: We are not technical experts, we're business experts and entrepreneur development experts, so we work with the human and then help them figure out how the business builds around it. But we're not going to help you write, code, or do technical things. But there is a design thinking process to help you gain the skills and the tools to go and talk to the customer and figure out what job you're actually helping them do (there's the buzz word: what are they hiring you for?) and what is that thing that you really need to figure out. We also have a pretty broad network of service providers: lawyers, accountants and the like. And also investors; we've seen more than R230-million invested into our companies in the last five years.

Check out their website: www.launchlab.co.za
Email them on: info@launchlab.co.za

Written by Charmain Naidoo, an independent writer commissioned by Universities South Africa.

Powered by NewsSite