Incubatee Selection and Mentoring Strategy for Technology Business Incubator (TBI) Management

Transcription

1 NURTURING THE GROWTH OF NEW TECHNOLOGY-BASED FIRMS IN THE ASIA-PACIFIC REGION WORKSHOP ON Incubatee Selection and Mentoring Strategy for Technology Business Incubator (TBI) Management 9 10 July 2012, Jakarta, INDONESIA The Role of TBIs in Promoting New Technology-Based Firms K. Ramanathan Asian and Pacific Centre for Transfer of Technology (APCTT) of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

2 1. Conceptualizing the Role of Technology Business Incubators (TBIs) The concept of a TBI is popularly used to refer to an organizational infrastructure that offers a supportive environment that is conducive to the hatching and development of new firms (Bergek and Normann, 2008). Today, policy-makers have come to view TBIs as a tool for promoting economic development, innovativeness, and the emergence of new technology-based firms. The evaluation of TBIs has therefore attracted great attention.

3 The vast literature on TBIs has focused mainly on four components: Shared office space made available to incubatees on favourable terms Shared support services to reduce overhead costs Mentoring, coaching and advisory business support Facilitating networking both internally and externally Many researchers and practitioners argue that the role of TBIs should be on closing the gap between a new idea and proof stage. They state that it should not be confused with technology parks which are aimed at supporting more mature firms.

4 Trends in incubator models appear to be based essentially on five elements. Selection Infrastructure Business support Mediation Graduation Selection Requires a sophisticated understanding of the market and the process of new venture creation Selection could be based on the idea or selection based on the entrepreneur or both How should incubatees be selected? Should winners be picked or should market forces determine the survival of the fittest? This decision will determine the nature and scope of incubatee mentoring.

5 Infrastructure Generally refers to localities, office facilities, equipment related support, and administrative services. Studies have shown that these are generally standard and do not cause concern if funding is available Business Support Entrepreneurial training Business development advice and counseling General business services dealing with accounting, legal, financial, marketing and promotional matters The success of incubator tenants (incubatees) depends on the comprehensiveness, quality and timeliness of the provision of these business services

6 Counseling can be reactive and episodic when it is initiated by the incubatee or can be continual and proactive when initiated by the incubator. Some incubators exhibit strong intervention in terms of providing business services while others can be more laissez-faire. Mediation An important incubator role is to act as an intermediary between the incubatee and relevant innovation systems. To leverage entrepreneurial talent, the incubator may provide links to sources of knowledge, technology, market intelligence, and finance. The links may be established through informal and formal mechanisms (institutional mediation) Effective mediation efforts enhances the capacity, visibility and credibility of the incubatees.

7 Graduation Studies have shown that most incubators have formal exit rules that make it mandatory for incubatees to leave after 3 to 5 years. Such a rule is needed to weed out those that lack promise and release incubator facilities and resources for new comers Thus it may be said that three important incubator components are: Selection Business services Mediation Incubatee selection and mentoring approaches will depend to a great extent on how these three components are operationalized.

8 2. Good Practices in Incubatee Selection and Nurturing A common mistake made, especially in some developing countries, is to emphasize the infrastructure and not pay adequate attention to the selection, business services, and mediation components. Vast sums of money are spent on the physical facilities but no eggs are hatched because of the lack of attention paid to the selection and nurturing of the incubatees. Studies carried by the OECD and other international agencies such as ESCAP appear to suggest that support for incubatees need to be managed at three levels: Policy and structuring Incubatee selection and nurturing Continuous improvement

9 Policy and Structuring Ensure clear objectives of the TBI right at the beginning Economic development focus? Promoting innovation? What types of innovation? Only new technology-based firms (NTBF) or all? Hiring of managers to run the TBI Depending on the objectives, managers with the right profile should be selected to run the TBI Industry experience, innovation track record, links to business and investors etc. Cluster-based TBI or General TBI Critical mass can be achieved if there is a focus on technology clusters (software, biotechnology, nanotechnology etc.)

10 Incubatee Selection and Nurturing Selection of incubatees according to needs and fits Clear criteria needed to create a preferred incubatee profile Business Plans? Entrepreneurial experience? Marketability of envisaged product or service? Overall fit with other incubatees from a synergy perspective? Only NTBF? Customizing business services and mediation support Services should be customized Brokering and networking services to access resources (within the TBI, other TBIs, and R&D institutions) for technology development and commercialization Coaching and mentoring incubatees depending on their profile Building linkages Providing links to local community (universities, firms, individuals) Providing links to national, regional, and global sources of technologies and markets Providing links to diverse sources of finance (VC funds, business angels, equity/rolaty financing, soft loans, specialized government funding schemes etc.)

11 Continuous Improvement Sharing experiences TBI management should become members of national, regional, and international TBI associations to share own experience and learn from others (what works?) Evaluation Encourage a culture of international evaluation and benchmarking of best practices

12 3. An Example from Australia ATP Innovations (ATPi) is located in the Australian Technology Park (ATP) in Redfern, Sydney. Its four major shareholders are leading universities recognized for their research orientation (UNSW, UoS, UTS, ANU). Over the years since its inception ATPi has undergone major changes. Details of its current operations may be found at

13 In 2003, when ATPi was establishing its TBI, it provided four main services to foster entrepreneurial start-ups bizoffice Location advantage bizstart Early stage commercialisation program biznetclub Learning networks bizconnect Business acceleration program bizoffice Establish business presence without staff Quality branding Basic ICT infrastructure Initiate networking

14 bizstart Concept testing Market validation Strategic thinking (IP issues, finance structuring, globalization, etc.) Multiple business checkpoint reviews Market exposure through ATPi advocacy biznetclub Promotes networking, facilitates strategic thinking, deal-making, and professional skills development Free attendance at monthly skill forums, panel-lead discussion workshops Access to newsletters, business directories, databases

15 bizconnect Supports core programs that have passed bizstart Advice from those who have done it before Networking with venture capital community, government grant awarding agencies, strategic partners, overseas trade opportunities etc. Peer support from co-located technology businesses Through these portfolio of services, ATPi, managed to attract several NTBF in selected high-value added areas of IT, engineering, and life sciences. Over the years ATPi has refined its services and reinvented itself. Today helps its incubatees in the areas of raising capital, accessing grants, growing revenue, building the team, developing products, and selling the business.

16 4. Concluding Remarks A common mistake made, especially in some developing countries, is to emphasize the infrastructure and not pay adequate attention to incubatee selection and in mentoring and nurturing them. Vast sums of money are spent on the physical facilities but no eggs are hatched because of this weakness. This workshop has been structured to highlight the importance of the ensuring that a TBI has a sound strategy for incubatee selection and mentoring. APCTT is grateful to all the resource persons for agreeing to share their experience and expertise on the theme of this workshop.

17 References quoted Bergek, A., and Norman, C. (2008), Incubator best practice: A framework, Technovation, Vol. 28, pp

18 Disclaimer The views expressed in this session are those of the author and do not necessarily reflect the views of the Secretariat of the United Nations Economic and Social Commission for Asia and the Pacific. The description and classification of countries and territories used, and the arrangements of the material, do not imply the expression of any opinion whatsoever on the part of the Secretariat concerning the legal status of any country, territory, city or area, of its authorities, concerning the delineation of its frontiers or boundaries, or regarding its economic system or degree of development. Designations such as developed, industrialised and developing are intended for convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. Mention of firm names, commercial products and/or technologies does not imply the endorsement of the United Nations Economic and Social Commission for Asia and the Pacific.

19 Thank you Reach us at UNESCAP-APCTT APCTT Building, C-2, Qutab Institutional Area, New Delhi Tel : , (Ext: 3751) Fax : ramanathan@un.org Website :