THE LAST thing any entrepreneur will think of when looking to start or grow a business is to turn to their city for help. Metros and municipalities are good at churning out red tape, just don’t ask them to help you draft a business plan or link you to an angel investor. Yet Cape Town is looking to change all that.
At first the city, more known for its laid back culture and beautiful beaches, might seem an unlikely place to start a entrepreneurial revolution, but led by a one-time entrepreneur the city has already begun an initiative modeled on the recent success of Barcelona’s Activa agency.
Cape Town is well placed to do so, as it was ranked the country’s most entrepreneurial city, according to a 2008 study by the Global Entrepreneurship Monitor (Gem) report.
The City of Cape Town last year signed a co-operation agreement with the Barcelona municipality and has since set up Cape Town Activa, driven by city official Mansoor Mohamed, a former franchisee also credited with the invention of a USB phone.
Barcelona Activa is now a much studied model across the world. When the agency was set up in 1986, originally as a municipal business incubator, the Spanish city was suffering from an unemployment rate of over 21%.
But interventions including the setting up of an incubator, science park and programmes aimed at mentoring businesses and innovative start-ups, helped to bring the jobless rate down to six percent in 2007, while radically increasing the number of businesses in the city.
Since starting out, the agency has helped entrepreneurs craft 11 892 business plans of which about 6 000 have come to fruition. It now oversees 1 000 business plans a year.
Mohamed, the city’s executive director of economic, social development and tourism, said Cape Town Activa would significantly improve the co-ordination of existing support to entrepreneurs.
The aim was to use it as a platform to link banks, venture capitalists and angel investors with entrepreneurs.
He said a review last year of the city by Barcelona Activa found there to be no shortage of entrepreneurs, but that there was a lack of co-ordination of activities and support and that many entrepreneurs don’t know where to get support and funding.
Cape Town already has a private-sector social-networking platform - the Silicon Cape Initiative - which was launched last year and aims to turn the city into a hub for high-tech companies. But Mohamed said the city’s initiative would go further, embracing entrepreneurs in key areas in other areas such as health care, new media and clean tech sectors
He said Cape Town Activa would look particularly at helping to support those businesses that had been in operation for three years and had between 10 and 100 employees, so that they could create more jobs.
The initiative would also see the setting up of science park, incubators, possible tax rebates, coaching and mentoring as well as easier access to working capital for start-ups.
The city is already in talks with Tsinghua University in Beijing, which has one of the largest science parks in the word, to gain from lessons learned there.
The plan was also to get Cape Town Activa to attract more head offices to the city and then look at ways of building and supporting these large companies’ supply chains so that more small businesses were fostered.
Cape Town’s initiative is an encouraging sign for entrepreneurs as cities are probably the best place start an entrepreneurial revolution, according to Dan Isenberg who heads up the Babson Entrepreneurship Ecosystem Project.
If we are to radically reduce unemployment and create more equitable economic growth, more cities and town should be looking at setting up entrepreneurial ecosystems.
This column was originally featured in the December 2010 issue of Entrepreneurship (SA) magazine.
Stephen Timm is a