A pillbox that SMSes you if you’ve forgotten to take your meds, developed for tuberculosis patients.
An ultrasonic system to cut nougat and other sticky sweets. A low-dosage x-ray machine that produces an x-ray in 14 seconds, through clothing — very useful in trauma cases. A product that makes fresh flowers last for up to 6 months, saving hotels millions in florist’s bills. These are just some of the projects the Industrial Development Corporation is currently involved in.
Established in 1940, the IDC provides finance for industrial development in South Africa and the rest of Africa. Innovation is a core business for the financier.
Catalyst
“We play a catalytic role, encouraging innovation and providing financing for the development of innovative products,” says CEO Geoffrey Qhena. The innovation chain includes basic and applied research, technology development and technology transfer and proliferation, as well as business development, marketing and globalization. Significant financing is available for basic research and businesses with well-developed products and markets. However, technology businesses in the seed and start-up phases of their development can find it difficult to access funding for development and commercialisation of their technologies.
Gap funding
The IDC fills that funding gap and since its inception in 2007 the IDC’s Venture Capital business unit has invested R326 million in new technology focused start up companies. The Venture Capital business unit has a further R500 million allocated for funding technological innovations over the next 5 years. In addition IDC also manages the dti’s Support Programme for Industrial Innovation (SPII), which has funding of between R60 and R80 million available annually.
“The trick is to find applications that fulfil our requirements. The main criteria we look at are macro-economic in nature: job creation, new capacities, encouraging investment in non-urban areas. The projects also have to be sustainable, so that those jobs remain and are viable,” Qhena says. “We do take more risks than banks do, without being reckless. This allows us to foster first-time entrepreneurs, for instance, and those banks won’t finance.”
WC rules the roost
Qhena says a large proportion of applications for innovation funding currently come from the Western Cape. He ascribes this to the large number of angel investors in that province, as well as to the role universities in the province play in fostering innovation.
Qhena says the success of a project largely depends on the entrepreneur. “We provide the support, both financially and in terms of business plans and the like. But the individuals themselves have to be truly entrepreneurial, willing to try different things to solve their problems, to put in the long hours and keep on going when things get tough.”
The IDC plays in about 14 sectors. “We’ve deliberately not restricted our technology financing to IT. Amongst others, we believe that green technologies are where we’ll see new developments.” He says the IDC’s philosophy is to get involved in projects that will make a difference at a number of levels, whether that be job creation or the potential to generate foreign income.
Timing
It can take as little as a month to unlock funding. “That’s if the entrepreneur has all the information available to allow us to assess the project. However, more often than not, we have to assist the entrepreneur in researching the regulatory background in his industry, compiling a business plan. Some technologies have environmental impacts that have to be assessed before we can go ahead.
There are a number of things that may delay funding being made available.” He is of the opinion that innovation in South Africa is not at the level it should be. “There’s room to improve. I believe it may be because funding was hard to come by in the past, as the tolerance to failure was very low from financiers. This is where we play a supportive role. We’re more tolerant of failure — without being reckless about it — because we know that new technologies always have to overcome hurdles. And true entrepreneurs simply don’t give up.”
This article originally appeared in the Mail & Guardian newspaper as an advertorial supplement