SA incubator targets emerging markets

2013-03-04 14:13
The 88mph incubator is focused on emerging markets. (Duncan Alfreds, News24)

The 88mph incubator is focused on emerging markets. (Duncan Alfreds, News24)

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Cape Town - A technology incubator is focused on start-ups that target emerging markets and is prepared to put up the money for talented developers.

"The companies we talk to here and the companies I want to invest in are companies that want to do something in emerging markets because the US and Europeans are not thinking about that," Kresten Buch, managing director of 88mph told News24.

The incubator opened a South African office in Cape Town and funds technology start-ups with between $15 000 and $60 000 in exchange for an equity stake of 14% to 20%.

The companies have to make their home in the incubator where they also receive support in terms of high-speed internet access and mentorship.

Buch, though, insisted that 88mph was no charity and that the start-ups were chosen on the basis of the talent and ability to scale their ideas.


"The start-ups don't pay to sit here; we invest in them and bring them in. We go for talent; we don't go for people who can pay, so to speak," he said.

Some of the companies, usually consisting of no more than four people, have developed local payment platforms and one has developed a system where small and medium enterprises are able to sell invoices they have to manage their cash flow.

Another has an innovative programme of linking tenants to landlords to facilitate communication, but the platform could conceivably be rolled out in schools or universities.

The primary focus of the technology companies has to be on emerging markets, Buch said.

"We're looking for start-ups who want to target emerging markets."

He warned, though, that while local technology innovation has a niche market, it could not compete with developed markets because of an earlier adoption rate in those markets.

"There are some who have global potential, but you will not find African start-ups that can go head up against European and US start-ups," said Buch.


He cited examples from his home country of Denmark where start-ups leave for the US if they hope to compete for the developed market audience.

He conceded that software company Opera, based in Norway, had found success, but indicated that it focused on mobile phone browsers in developing countries.

"Opera Mini is targeted at emerging markets and it can easily become as big as Google, but it's not targeted at the normal European and US consumer like Facebook and Twitter," Buch said.

Most of the developers working in the incubator are focused on Google's Android platform as Buch believes that the operating system will eventually dominate in emerging markets, particularly as the cost of devices and data come down.

"It makes sense to build Android for this market; it doesn't make sense to build iPhone because there's basically no iPhones."

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