There’s a sign outside Allon Raiz’s door that reads, “If you row someone across a river you also get there”. While such signs are very frequently trite, you only need to spend a few minutes in Raizcorp to know that this one is not. It’s a business incubator where entrepreneurs are nurtured and given the opportunity to learn and grow, and it contains a secret ingredient that creates what Raiz calls “the magic”.
The incubator, now in its fifth year, has been a resounding success. The company started when Raiz first became involved in mentoring the two pioneering companies of Raizcorp. “I realised I was repeating myself. They were experiencing the same challenges and problems, and I was having to repeat the same training. So I sold them the idea of moving in together.” Raiz hadn’t yet heard of an incubator. “I was trying to explain to someone what it was that I did, and he said, ‘Oh, you run an incubator’. That was the first time I had heard the term. So we’re an incubator by mistake, if you like.” Amused, he adds: “Incubators in theory aren’t supposed to make money, but I didn’t know that either, so we made money.” Raizcorp now consists of 14 companies with over 70 people. By joining the incubator, each one of those businesses has enjoyed increased growth and success, so it’s not surprising that Raizcorp receives over 60 applications from fledgling companies every month. Where it previously only chose one, the group is now on a growth path and chooses two or three.
If applicants are successful, Raizcorp takes a minority equity stake and a profit share in the business. In return, the business has access to the considerable infrastructure on offer, as well as the incubator’s core offering – training and mentorship. The business is charged for the services it receives, but Raizcorp absorbs 75% of what it charges in the first year, and if the business isn’t more profitable than when it joined, Raizcorp returns everything. So it’s understandable that the company is very careful about choosing the right people to join. “The number one thing we’re looking for is the ability and willingness to learn,” says Raiz. “I want to know that the people who join are true entrepreneurs, not just people who are self-employed, and there is a big difference. When speaking to an entrepreneur, you can feel the burn, the desire to succeed. That’s what I’m looking for. The business itself doesn’t even necessarily need to be profitable when it comes to us. But I want the person to have the hunger.” How do you tell if that’s there? “You can feel it when they talk to you. And you can tell the difference between put-on passion and real passion. There’s a fullness to the sound – it has depth. An entrepreneur is willing to sacrifice, to live below the breadline, in order to be able to grow their dream.”
Above all, though, the people who join Raizcorp have to buy into its culture of sharing. “Everything else is worthless if we don’t have that,” says Raiz. “It’s what creates the magic and we guard it very jealously. “Entrepreneurs are incredibly lonely people,” he continues. “There is no one with whom they can share their highs and lows. When businesses come into Raizcorp, they share everything – successes, failures, frustrations, challenges, the space, the facilities, the support staff, business contacts – everything.” The result is unique – businesses that would ordinarily have nothing to do with one another (they include advertising and PR agencies, a detergents manufacturer, a 3D animation company, a milk pasteurisation business, a web design company and an IT company) interact, almost as if they were part of the same company. And there are real benefits, such as those derived from the strong emphasis on cross-selling between the companies. “One company here gets 50% of its business through contacts inside the incubator,” says Raiz. “Another really small advertising agency here got on the BMW pitch list that included only eight advertising agencies, simply because it worked with other people here and used the resources others had to offer.” But even with this winning formula, you won’t find Raizcorp resting on its laurels, and perhaps that’s where the real magic lies. The incubator itself leads by example, ever hungry to grow and learn. As Raiz sums it up: “Our attitude is that this is the answer for today but tomorrow we must be better.”
