Final Report: Facilitation of International Working groups on High-growth ICT enterprise business incubation infodev Grant No.

Transcription

1 Final Report: Facilitation of International Working groups on High-growth ICT enterprise business incubation infodev Grant No. TF Prepared by: Sebastián Melín, OCTANTIS Business Accelerator March, 2010

2 Content Index 1. Introduction Main Activities Main Outcomes High growth working group Conclusions and Next Steps Annexes...24 Table Index Table 1: Participants High growth working group...4 Table 2: Interviewee information...6 Table 3: Summary of Interview Outline...6 Table 4: Incubator managers participating in Miami activities...10 Table 5: Entrepreneurs participating in Miami Activities...10 Table 6: Summary of incubator manager working sessions in Miami...12 Table 7: Agenda, networking activities Miami, October Table 8: Members of high growth group participating in Global Forum...17 Table 9: Online Discussion events...18 Table 10: Main outcomes High growth working group...21 Table 11: Entry Process Incubator

3 1. Introduction This final report has the objective of showing the activities that were developed during the Grant No. TF named Facilitation of International Working groups on Highgrowth ICT enterprise business incubation as well as the results and lessons learned which would be of interest and value to the high growth business incubation community. The 12 month project which was extended to 14 months was aimed at creating an international working group with a practical approach that would help give innovative support (means of sustainability, business models, commercialization, etc.) towards ICT related start-ups around the world. This was possible through seven areas of activities; general organization, exchange of portfolio information, interviews with world class references, Linkedin networking group, networking events, management guide/toolkit and discussion events. The proposal was lead by Octantis, Business Accelerator a business unit of Universidad Adolfo Ibáñez located in Chile along with Enterprise Incubator Foundation from Armenia. The initial participants are the following; New Zealand Trade and Enterprise, LATU Ingenio, Uruguay, Ayala Foundation, Philippines, TRINUS Soluções Empresariais FUMSOFT, Brazil, Crea-me, Colombia, University of Guadalajara Technology Incubator, México, Instituto Gênesis - PUC-Rio, Brazil, Technology and Business Incubator Center- CITAf, Romania, The Innovation Hub, South Africa, Palestine Information and Communications Technology Incubator During the development of the project four other organizations (ICT4EDC, St. Kitts and Nevis, Arc Fund, Bulgaria, Agribusiness Support Fund, Pakistan and Timisoara Software Business Incubator, Romania) around the world joined the group, adding value and enriching the group with there participation. Facilitation of International Working groups on High-growth ICT enterprise business incubation 2

4 2. Main Activities This section will describe the activities developed in the project, how they were developed, the value they add to the participants and the main outcomes. The section is divided into the seven main activities of the project which have been defined as the following; general organization, exchange of portfolio information, interviews with world class references, Linkedin networking group, networking events, management guide/toolkit and discussion events. 2.1 General organization The initial organization of the working group was all done through messaging as well as conference calls set up mainly between the project leaders as well as with the infodev regional facilitator 1. The main challenges were demonstrating the value that the project can have for incubators along with motivating them to dedicate time and contribute to the project. Each participant received an overview of the project and was invited to create there profiles on the Global Network, idisc platform 2 and to form part of the High growth working group 3 which is a platform designed by infodev to share information that each participant can access with a username and password. This platform was useful through the entire project to exchange information between the participants such as; literature related to ICT start-ups, presentations, profiles of supported ICT start-ups, summaries of discussion forums and even pictures from networking events. Today there are 32 participants from the different member incubators. 1 Cesar Yammal is infodev Incubator Initiative Facilitator for Latin America and the Caribbean Region Facilitation of International Working groups on High-growth ICT enterprise business incubation 3

5 The participants of the working group are presented in the following table: Table 1: Participants High growth working group Contact Organization Country Bagrat Yengibaryan Enterprise Incubator Foundation Armenia Richard White New Zealand Trade and New Zealand Enterprise Manuel Bello LATU Ingenio Uruguay Michi Barcelon Ayala Foundation Philippines Alexander Prado TRINUS Soluções Empresariais - Brazil FUMSOFT Catalina Escobar Creame Colombia Juan Villalvazo University of Guadalajara Mexico Technology Incubator Vanessa Eleutheriou Instituto Gênesis - PUC-Rio Brazil Domnica Cotet Technology and Business Romania Incubator Center - CITAf Patricia Dlamini The Innovation Hub South Africa Laith Kassis Palestine Information and Palestine Communications Technology Incubator Sebastián Melin OCTANTIS Business Accelerator Chile Uwe Seidel VDI/VDE Innovation Germany Telojo Onu St. Vincent Chamber of Commerce and Industry St. Vincent and the Grenadines ICT4EDC Nicolás Llano Parquesoft Colombia Todor Yalamov Arc Fund Bulgaria Cao Cong Minh CRC TOPIC Business Incubator Vietnam Wang Zhen Shanghai Technology Innovation China Center Kamran Niazi Agribusiness Support Fund Pakistan Kheeran Bahadoor Mational Computer Board ICT Mauritius Incubator Centre Radu Ticiu Timisoara Software Business Incubator Romania 2.2 Exchange of participating organization portfolios This activity consists of each participating incubator creating a profile of the most promising start-ups that they support in order to give these companies global visibility through the rest of the participants with the objective of detecting Facilitation of International Working groups on High-growth ICT enterprise business incubation 4

6 synergies and possible collaboration opportunities (partnerships, lessons learned, business reality for similar projects in each country, among others). The leaders of the project developed an initial template for the summary of the ICT start-ups that was later validated by the rest of the participants. The final template for the start-ups is in Annex 4.1, this template was completed by a total of 42 start-ups from 8 incubators in 7 countries, this information is available on the idisc platform 4. The process of completing the profiles is of value to the incubators because it gives them concise, organized information that can be available for parties interested in the start-up. The process of completing the document is also valuable as a thought process, organizing the main subjects of the business and presenting them in an attractive way that will be of interest to potential value networks. The final step in this activity was not completed, it was a challenge to connect entrepreneurs from different countries and motivate them to search for opportunities in partner start-ups around the world. This leaves an opportunity for future collaboration with the steps that have already been advanced; we refer more on this in the conclusions section. 2.3 Interviews with world class references This main activity consists of interviews with world-class references in ICT incubation and acceleration. The interviews were established with IC 2 : Austin Technology Incubator, and SmartXchange, South Africa. In the following table is the information of the staff members interviewed from each organization. 4 Under the files section in the folder Profiles of supported ICT start-ups Facilitation of International Working groups on High-growth ICT enterprise business incubation 5

7 Table 2: Interviewee information Incubator Country Interviewee Contact details IC 2 : Austin Technology Incubator USA Isaac Barchas, Wales Evan Jones, Head Digital & Incubation SmartXchange South Africa Robynne Erwin, CEO ibarchas@ati.utexas.edu Evan.Jones@wales-uk.com robynne@smartxchange.co.za The main objective was to learn from the experience of the incubators that have been successful in supporting ICT start-ups in different countries around the world with diverse business realities. This activity kicked off with the project leaders developing an outline for the interviews, which was uploaded to the idisc platform and later validated by the rest of the participants. The final template for interviews can be found in Annex 4.2. The main areas of interest included in the outline are summarized in the following table. Table 3: Summary of Interview Outline Area of Interest History of incubator Business model Incubation operation Application model (dealflow generation) Management team Numbers of the Description General information related to the initial steps of the incubators. How it was financed? Who the partners are? Aspects of the generation of income of the incubator. How is it being sustainable or aiming to be sustainable? Information related to the stages of the entrepreneurs that the incubator supports. What is the methodology used to support each phase? What services are offered? Marketing efforts to attract dealflow towards the incubator. What activities are developed? How many applications are received? What is the success rate? Structure of the management team and staff. What are the roles and responsibilities? Historical and current volume of Facilitation of International Working groups on High-growth ICT enterprise business incubation 6

8 operation Financing network International operations supported start-ups, revenue generation, volume of investments in supported companies. Information on the surrounding ecosystem related to investment opportunities for start-ups. What relationships are there with capital networks? Relations with international players. What international relations/partners are there? The conferences with each organization lasted between 1 and 2 hours, discussing the main subjects of the outline previously constructed and sent to each interviewee. In this section we will show the main findings. For the complete detail of the conference calls, see Annex 4.3, 4.4 and 4.5. The diversity of the organizations that were interviewed gives a wide breadth of practices and experiences. In the case of ATI, it is an organization with over 20 years of experience that forms part of a world-renowned university (University of Texas, Austin) in a virtuous business ecosystem in Austin, Texas, where venture capital and angel investors are available and active, human talent is accessible and there is a local and state government that has supported the incubator initiative from the initial stages. The experience in Wales is quite different; the incubator industry began forming recently in the year 2000, strongly subsidized by the government as a strategy for development. The government has also established a virtuous support system towards entrepreneurs, where there is access to seed capital as well as funding for more advanced stages. There are also active business angel networks and venture capital funds (see annex 4.4 for details). The last incubator that was interviewed is SmartXchange, located in Durban, South Africa. It has been operating for 6 years with a strong subsidy from the local government. The incubator forms part of a larger initiative of the city that promotes the use of information and communication technology as a catalyst for change and development. For the long-term success of the incubator it is necessary to create capacity and mobilize the whole ecosystem to provide support towards entrepreneurs and Small Micro and Medium Enterprises (SMMEs). Large efforts have been done to align players locally to achieve the incubator goals. Facilitation of International Working groups on High-growth ICT enterprise business incubation 7

9 The main findings in the interviews are detailed in the following points: Local support through government agencies has been key to success in all cases. Not only through funding the operation of the incubator but also generating direct support towards entrepreneurs (seed capital, coinvestments) and helping in mobilizing key players in the ecosystem to align objectives, which is important for the incubator to reach its goals. Talented and well connected managers from the initial stages of the incubator are important to give visibility and credibility to the organization. The ability of the manager to create valuable links and partnerships is key to deliver the value proposition of the incubator. The incubator also requires very talented people in their staff. It is recommended to work on a talent model for incubator staff. It is extremely important to understand the incubators value proposition. How does the incubator add value to its clients? How can the incubator truly make a difference and generate impact in the development of a start-up? All of the selection criteria of the incubators that were interviewed included the item related to the value that the incubator can add to the entrepreneurs/start-ups/companies. This is important to maintain a good relationship and high satisfaction with the client companies, which will turn into effective word of mouth marketing. Both ATI support entrepreneurs that have business plans and validated business models. It is a reality in emerging economies where business ecosystems are less developed and the pool of entrepreneurs are generally less prepared in business knowledge, that incubators play a role in more early stage support. SmartXchange has a preincubation phase where they support entrepreneurs in the construction of the business plans and business models as well as in capacity building and prepare them for the next steps in the growth of their companies. Application and selection models all have a common denominator that has proven success; an initial internal review by the incubator staff that makes a first selection and then an external panel or committee of experts that makes the final decision. Of all applications received on a yearly basis, on average 5-10% meet all the selection criteria and are accepted and Facilitation of International Working groups on High-growth ICT enterprise business incubation 8

10 supported by the incubators. This means volume of dealflow is key to be able to meet incubator goals. Big part of the success of the incubator has to do with the development of the business ecosystem in general that will support and strengthen the entrepreneurial community. In all cases it has been a process to create the ecosystem, it takes time and it is part of a collaborative effort. It is necessary to have support from different players, private and public. 2.4 Linkedin Networking group This main activity had the objective of creating a Linkedin 5 group that will be able to link all project participants with peer incubators and stakeholders from the ICT business community. Linkedin is an interconnected network of experienced professionals from around the world, representing 150 industries and 200 countries. You can find, be introduced to and collaborate with qualified professionals on a global scale. The group formed is named International Working Group on High-growth ICT Enterprise Business Incubation. The first step was to have the participants create a personal profile in order to be able to participate in the group; the following step was for them to join the group, currently there are 103 members in the group from the international ICT business community coming from all the participating incubators. This gathering of incubation and ICT talent can be a source of new business opportunities and high quality global networking. The group is ongoing and will be beneficial to expand the global network of the incubators and their entrepreneurs in a very simple and low cost manner. 2.5 Networking events The project included a networking event in Miami, FL, USA, where Octantis Business Accelerator has its international branch and the participation in the 3 rd Global Forum on Innovation and Entrepreneurship organized by infodev. 5 Facilitation of International Working groups on High-growth ICT enterprise business incubation 9

11 2.5.1 Networking activities in Miami, FL, USA The objective of the meeting in Miami was to generate interaction between participants of the High-growth ICT enterprise business incubation working group, and give a practical hands-on approach to the working group through the participation of start-ups from different member incubators. The activities in Miami were necessary for participants to meet face to face and have live working sessions. The members of the incubators that participated in the activities in Miami are the following. Table 4: Incubator managers participating in Miami activities Name Organization Country Norayr Vardanyan Enterprise Incubator Foundation Armenia Michi Barcelon Ayala Foundation Philippines Sandra Ramirez Crea-me Colombia Sergio Yates Instituto Gênesis - PUC-Rio Brazil Sebastian Melin OCTANTIS Business Accelerator Chile Gaston Salinas OCTANTIS Business Accelerator Chile The activities in Miami included participation of selected entrepreneurs that were supported by participating incubators of the high growth group. The main criteria for selection was the following; start-ups in the ICT or related sector, had the US market as an attractive market to expand towards and have an interesting initial value proposition for this market. The entrepreneurs selected were the following: Table 5: Entrepreneurs participating in Miami Activities Name Start-up Country Michael Poblete Pobletech Philippines Marcio Nunes Bitix Brazil Vadim Tanasiev SoftTehnica Romania Romaine Reid Edge Source St. Vincent & the Facilitation of International Working groups on High-growth ICT enterprise business incubation 10

12 Grenadines John Francis CaribbeanDownload.com St. Kitts and Nevis The activities kicked off Wednesday October 21 st, 2009 at the Miami campus of Universidad Adolfo Ibáñez, located at 1200 Brickell Avenue Suite 300. The initial activity was a brief introduction of the activities to come in the three days in Miami and then presentations of each incubator and a final space for questions and answers. The presentation of each incubator was a good opportunity to quickly get an idea of spaces for collaboration between organizations. All the presentations of incubators are uploaded on the idisc platform. The next activity Wednesday was focused on the entrepreneurs. It was identified that the selected entrepreneurs were not totally ready to enter the US market and it would not be of value to connect them with potential partners, clients, etc. because they were not ready for that type of conversation yet. The decision was to work with the entrepreneurs on a world-class presentation focused on investors that would define a truly attractive value proposition and clear steps to satisfy future clients needs. A member of the Octantis team, Gastón Salinas, gave a brief presentation on the value of a good elevator pitch and the main elements it contains. This was followed by a presentation 6 of each entrepreneur, which was followed by feedback that was given by all the incubator managers as well as his peer entrepreneurs. After the workshop at the end of Wednesday, the entrepreneurs left with feedback and homework to complete their presentations and have a final version to present on Friday. The three main weaknesses in the presentations of entrepreneurs and where the feedback was focused were the following: Entrepreneurs focused on the technology and its characteristics more than the benefits it can bring to the potential clients. More of a technology push than a market oriented focus. Lack of focus on a specific business, entrepreneurs are constantly searching for new opportunities, which is positive, but they need to generate and 6 Entrepreneurs had been given the instructions to prepare a presentation of their start-ups. Facilitation of International Working groups on High-growth ICT enterprise business incubation 11

13 package a final product (even if it is not perfect) that they can get to a client and generate revenues. All initial presentations lacked a financial model and a clear offer towards potential investors. The first activity for Thursday was a Presentation of advances in the Technology Business Incubators Management Guide developed by EIF, Armenia. Valuable feedback from the incubator managers was incorporated to the final product, for more details please see section 2.6. During the rest of the day, entrepreneurs worked on their presentations guided by Gastón Salinas from Octantis. In parallel, incubator managers participated in working sessions sharing experiences, methodologies and challenges faced in the support of ICT business and specifically high growth potential ICT start-ups. A summary of these discussions is presented in the following table: Table 6: Summary of incubator manager working sessions in Miami Subject Key Findings/Issues Attracting quality dealflow, marketing Window of opportunity, time to market for ICT start-ups may be very short. Can be a show stopper! Early stage financing. Investment gap present in most emerging countries that difficult dynamic growth. Core Challenges to incubation of high-growth ICT enterprise Maintaining focus with entrepreneurs Entrepreneur s connection with the market. Are they solving a real pain in the market? Effective presentations to investors, key to attracting investors. Generation of first sales Building teams, incorporating talent, management teams High growth and high performance Lessons learned Importance of ecosystem in supporting ICT start-ups Facilitation of International Working groups on High-growth ICT enterprise business incubation 12

14 Peer to Peer value, learning many-to-many Access to capital is good, but smart money is much better Innovation is not about technology, but about creating value to clients and to gather some of that value for the company. Team is critical. No good opportunity can be reached by a weak team. Team can grow and change if necessary. Matchmaking and incorporating co-entrepreneurs as a means to strengthen teams. Innovative methodologies and tools Sustainability in tutoring and mentoring, possibility of future investors, directors, other valuable roles. Exploration of co-incubation opportunities Importance of a practical approach to sales. P2P training sessions Web 2.0 tools for marketing incubator; twitter, facebook, blogs and others. On Friday the first activity was a roundtable with Matthew Cole, manager at North Bay Equity Partners 7, organization that provides financial advisory to businesses that are seeking to raise venture capital in the US, generally clients are searching between US$ 500,000 and US$ 5 million. The main findings from the meeting with Matthew Cole are the following: Organizations such as North Bay, at this phase of financing are open to partner with incubators to support their dealflow. Investing in emerging markets is also about macroeconomic cycles; entrepreneurs need to explain to investor s local cycles and situations and demonstrate that they are the experts in their backyard. It is important to search for Venture Capital that can add value to your start-up, not only capital. Single most important thing investors are looking for is the Management team. Then the focus is in the following questions: o Will customers buy? Is there a demand? o How much will they pay? o How much does it cost? 7 Facilitation of International Working groups on High-growth ICT enterprise business incubation 13

15 o What is the profit? o Who are your lawyers? Who are your accountants? Who is on your advisory board? All of the information provided by Mr. Cole was of great value to the participating entrepreneurs, as well as to the shaping of the future support provided by incubators towards entrepreneurs that have in their plans an international expansion towards the US market. The final activity of the week was the final presentations of each start-up that had been worked on with the guide of Gastón Salinas from Octantis. The final results were positive; the presentations had improved significantly, incorporating feedback from incubator managers and peers. The process of building the new presentation also put the entrepreneurs in difficult situations where they were obligated to make decisions of different nature that focus the business and raise their chances of success. The agenda of the three-day activity is in the following table: Table 7: Agenda, networking activities Miami, October am 10 am 11 am 12 pm 1 pm 2 pm 3 pm 4 pm 5 pm Wednesday October 21 st Welcome and introduction. Presentations by each incubator manager Thursday October Friday October 22 nd 23 rd Presentation Meeting Matthew Management Cole, manager Guide/Toolkit, North Bay Equity Norayr Vardanyan, Partners EIF, Armenia, feedback Q&A Working sessions Final presentations of each start-up LUNCH LUNCH LUNCH Elevator pitch Workshop: Presentations of each start-up Working sessions Final presentations of each start-up Departure from Miami A major outcome of the networking activities in Miami is that the participants were able to meet face to face and get to know more about their organizations and Facilitation of International Working groups on High-growth ICT enterprise business incubation 14

16 explore potential areas of collaboration. The entrepreneurs were trained to present in a world-class investors atmosphere. Some of the comments that were received through from entrepreneurs that show clearly the value that was added and the impact it had in their business are the following: From: Romaine Reid, St. Vincent & the Grenadines To: Sebastián Melín Date: November 6 th, 2009 I had a great time with you in Miami sharing and learning from you guys. The work shop definitely inspired and educated me on how to better prepare a proposal that will be compelling to investors and enticing for clients. Since my return to St. Vincent, my partners and I have begun to take steps in reshaping our approach towards our business so that we can be competitive in the Caribbean Call Center industry and an attractive option for investors. It was a well worth it trip. I hope all is well with you and I look forward to hearing from you all in the future. From: Vadim Tanasiev, Romania To: Sebastián Melín Date: November 24 th, 2009 during my stay in Miami I learned many things that will help me continue to find and develop new strategies based on strong increase in sales. One important thing that I understood is to not be very meticulous because that will hold you back, another thing I understood is that you have share with others if you want to bring more capital and as a united team is possible to achieve spectacular results. But the thing that seemed very interesting is to identify the pain and how I fix this pain, I rebuilt under this system my power point presentation. We have signed several agreements of cooperation in the region with 5 producers of fiscal printers, and things are starting to work rd Global Forum on Innovation and Entrepreneurship This event took place October 26-30, 2009 in Florianopolis, Brazil. There was a participation of over 1,000 leaders, entrepreneurs and professionals from around the world. Specifically on day 4, Thursday, October 29 th in the break-out sessions Facilitation of International Working groups on High-growth ICT enterprise business incubation 15

17 the high-growth ICT enterprise incubation working group hosted a panel that was moderated by Cesar Yammal, incubator initiative facilitator for Latin America and the Caribbean region. The objective of this session was to present the advances of the infodev international working group on incubation of high growth ICT companies, and to discuss these in light of relevant success cases taken from the experience of Jeff Milanette (Innovative Partners) and the specific experience of SmartXchange, an ICT hub in South Africa. Sebastian Melin, leader of the high growth Group gave an introduction to the working team, highlighted core challenges to ICT business incubation, identified lessons learned, and concluded with methodologies and tools that should help with the incubation of high growth ICT-based companies. Jeffrey Milanette focused his presentation on the importance of sustainability of the ICT incubator to produce in turn high growth companies. The objectives of a sustainable ICT incubator include the following: (i) provide a safe, stable and secure place to start and grow ICT companies; (ii) create employment in both ICT and other markets; (iii) promote development through training and education; (iv) provide strong management and leadership; (v) provide access to equipment required by the client companies; (vi) be a focal point of entrepreneurial activity and networking, providing access to the business community and potential partners; and (vii) provide referrals to sources of capital. Finally, Robynne Erwin explained the experience of her organization in fostering the growth of small, micro and medium size (SMME) ICT enterprises in the region of KwaZulu-Natal (KZN), South Africa. More than an incubator, SmartXchange is an ICT hub, whose strategic objectives are to: (i) identify and assist in developing a quality ICT SMME base in KZN; (ii) be a vehicle for public and private organizations to work through to realize the vision of KwaZulu-Natal becoming Africa s ICT Hub; (iii) build a pool of skilled ICT workers that will enable KwaZulu-Natal ICT businesses to flourish; and (iv) support initiatives that work to bridge the digital Facilitation of International Working groups on High-growth ICT enterprise business incubation 16

18 divide 8. For the complete details of the presentations please visit the idisc platform in the files section under the folder Presentation 3 rd Global Forum. Participants of the high growth group that were able to participate at the Global Forum are in the following table: Table 8: Members of high growth group participating in Global Forum Name Organization Country Sebastian Melin OCTANTIS Business Chile Accelerator Bagrat Enterprise Incubator Armenia Yengibaryan Foundation Sophia Muradyan Enterprise Incubator Armenia Foundation Michi Barcelon Ayala Foundation Philippines Sergio Yates Instituto Gênesis - Brazil PUC-Rio Radu Ticiu Timisoara Software Romania Business Incubator Todor Yalamov ARC Fund Bulgaria Through the Global Forum it was possible to meet and attract two new members of the high growth group, Radu Ticiu from Romania and Todor Yalamov from Bulgaria who later contributed actively in the group. 2.6 Technology Business Incubator s Management Guide The Management Guide is intended to be a resource that summarizes existing experience and presents an analysis and recommendations on technology business incubation that can be beneficial to incubators, start-ups, and other key stakeholders. The document is designed and prepared as a management guide reference for business incubators involved in ICT business incubation and is based on a research and analysis of existing best practices and incubation models. The guide has the following general outline; general discussion of business incubators and technology incubators, incubation strategy in the long term which includes, finding niche in services, financing incubators, managing the incubator 8 Taken from Rapporteur Report High Growth Enterprise Incubation, Cesar Yammal Facilitation of International Working groups on High-growth ICT enterprise business incubation 17

19 and sustainability. A second main topic is related to key challenges in technology start-up incubation focusing on the generation and management of deal flow and other areas such as team and management, financing the start-up and others. The guide finishes with an analysis of three business cases focusing on sustainability, incubator development and internationalization. The complete study is available in the idisc platform in the files section under the folder Management Guide. 2.7 Discussion events The objective of the discussion events is to create a virtual space to exchange ideas, opinions, questions, doubts and debates on a subject of common interest. This has been an opportunity for participants to give their opinion and share their experiences with the rest of the incubation community in the high growth group, generating a learning experience from each other s peers. The team in charge of the discussion events was Crea-me from Colombia; specifically the team behind this activity was Catalina Escobar, Claire Philippoteaux and Sandra Ramirez. The five online discussions that were held are summarized in the following table: Table 9: Online Discussion events Subject Key Findings Date Preparation is key for success. Incubators need to know what potential investors are searching for and act as a bridge between entrepreneurs and investors. Access to financing sources in the different stages of ICT entrepreneurship Looking at investment as a first step is not a good strategy: entrepreneurs should be looking for opportunities to grow their business, networking, coaching and other support that will lead them to access financing sources that will in turn lead them to a more successful company. Large quantities of meetings with investors are necessary to become invested in. Makes networking even more important. April 17 th, 2009 Facilitation of International Working groups on High-growth ICT enterprise business incubation 18

20 Importance of angel investment networks in the development of high-growth ICT entrepreneurship What determines the level of investment readiness for ICT startup Core challenges unique to incubation of high growth ICT enterprise Angel investment networks are key for the development of high growth entrepreneurship initiatives. In general angel investing networks have appeared after the business incubators are formed. Many incubators have supported the beginning of angel investing networks (OCTANTIS and Genesis PUC- Rio). In participating countries (Brazil, Colombia, Chile, Romania, Philippines, others) business angels are either recently established or in the process of establishing formally. Cases with public or multilateral support (IADB, infodev, Corfo in the case of Chile) towards the creation of Angel Networks have been successful. Investors are searching for large markets as well as growth potential. Entrepreneurial teams are many times the most important at the moment of making an investment (skills, experience, can they make the delivery?). Areas where incubators can help entrepreneurs get investment ready : technical and market validation, connecting entrepreneurs to potential clients and industry experts, attracting talent to the team, conforming advisory bards that can add credibility to the start-up. Attracting quality dealflow is a main challenge for ICT incubation. This has lead to many different approaches at all participating incubators: o At Octantis they developed a business plan competition named ChileEmpresario that mixes workshops, networking and tutoring in a 5-6 month process. Facebook has also been a novel way to reach out to entrepreneurs. o Timisoara Software Business incubator is actively using a Twitter account tu promote their events and attracting high value networks for their projects. They are also promoting Incubated Coffee events, which is an open house once a week for an open discussion on relevant subjects. o In St. Vincent they are using Technology Breakfast events to facilitate networking. Entrepreneurs showcase their innovations and receive feedback from peers as well as mentors and investors that are invited. Another interesting methodology adopted is The Knowledge Cafe which serves as June 19th, 2009 September 28 th, 2009 December 21 st, 2009 Facilitation of International Working groups on High-growth ICT enterprise business incubation 19

21 Next steps for the working group, how to develop a High Growth International Institute? knowledge sharing between mentors, potential investors and enterprises in participatory interactive sessions focused on specific topics creating possibilities for action in groups. Financial support must be a key issue for incubators to consider in the support process. Not only because this is a means of growth but also because when entrepreneurs run put of cash they must look for alternate ways of generating income which does not allow them to focus on their core business. For a continuing group it is necessary to be more active in each region and clearly state benefits for participants and attractiveness to become a member. Suggestion of having two lines of work; incubators and entrepreneurs. o Incubators: activities to improve quality of performance, international task force formed by incubator managers that can share strengths with the rest of the group, selected webinars of topics of interest, online capacity building for managers, management exchange program between incubators. o Entrepreneurs: Promotion of incubator clients. Matchmaking services for start-ups. Create linkages between incubated companies. Proposal of the creation of a wiki portal that will serve as a collaborative website to power the high growth community. Some content can be open to all and the rest only for members. January 25 th, 2010 The first online discussion was initiated through a forum on the Linkedin group, which was available during one week for comments by the members, following that week there was an online discussion through Skype. Participation in the forum through Linkedin was low and the following conversation through Skype was difficult to moderate and follow. The decision that was taken for the rest of the online discussions was to initiate and inform through the Linkedin forum and then have the interaction through a Skype chat, which is more organized and worked effectively. The summary of the five online discussions can be found in individual documents on the idisc platform. Facilitation of International Working groups on High-growth ICT enterprise business incubation 20

22 3. Main Outcomes High growth working group The main outcomes of the high growth working group are summarized in the following table: Table 10: Main outcomes High growth working group General Activity General organization Exchange of participating organizations portfolios Interviews with world class references Outcomes 32 participants on the high growth working group on idisc platform 21 organizations participating from 18 countries 42 start-ups from 8 incubators in 7 countries completed profile template and on idisc platform 3 documented interviews with Austin Technology Incubator (Texas, and SmartXchange (South Africa). Valuable best practices and lessons learned. Linkedin group formed with over 100 members. Linkedin Networking group Ongoing group oriented to expand global network of participants and generate unimaginable business connections 6 incubator managers from 5 countries participating in networking activities in Miami Networking events Technology Business Incubator s Management guide Discussion events 5 entrepreneurs in ICT related field with a high growth potential from 5 countries trained to present to investors Participation in break-out session in 3 rd Global Forum on Innovation & Entrepreneurship, proved an opportunity to transmit advances of the working group and raise awareness and interest in the group. Management guide completed and available on idisc platform 5 online discussion events took place, contributing valuable insights on topics such as; Core challenges unique to incubation of high growth ICT enterprise, Access to financing sources in the different stages of ICT entrepreneurship and others. Facilitation of International Working groups on High-growth ICT enterprise business incubation 21

23 4. Conclusions and Next Steps The project participants hope to have been able to contribute in offering novel insights that will be of interest to those involved in high growth ICT business incubation (incubator managers, service providers, policymakers and others). The first step has been taken in conforming a group that has reached a level of outcomes detailed in the previous section that can be expanded; this section focuses on the next steps that can be taken with the support of infodev. It has been agreed by the most active participants of the group that there is interest to give continuity to the high growth working group which will also take advantage of the momentum generated up to now. The experience with this working group hands us elements to improve activities, general management and group in general. For a continuing group it is necessary to be more active in each region and clearly state benefits for participants and attractiveness to become a member or keep being a member. One of the main challenges was to be able to generate interest and motivation in the members of the group, there was a learning aspect in this area. The project leader(s) must focus on having a few committed followers that in turn become leaders of the group and are capable of motivating others 9. The challenges are to build an identity of the group, commit to the cause of the group and to the people who form part of the group. It is suggested to have two lines of work, incubators and entrepreneurs. Specifically for incubators the following activities are proposed: activities to improve quality of performance, creation of an international task force formed by incubator managers that can share strengths with the rest of the group, development of selected webinars on topics of interest, online capacity building for managers and management exchange programs between incubators. In the case of entrepreneurs activities aimed at promoting incubator clients, matchmaking services for start-ups and the creation of 9 Facilitation of International Working groups on High-growth ICT enterprise business incubation 22

24 linkages between incubated companies in different countries. It is proposed to create a Wiki portal that will serve as a collaborative website to power the high growth community. Some content can be open to all and the rest only for members. Some parallel activities that are suggested are the following: Find the best way to establish business opportunities by connecting entrepreneurs from different countries, always with the aim of accelerating growth of start-ups. A good place to start is following up on the start-ups that participated in the Miami networking activities and also the start-ups that have uploaded their profiles on the idisc platform. An interesting activity to support would be to help incubators in discovering and understanding the international requirements of their supported start-ups, this information can be useful as input for a larger project aimed at supporting specific internationalization efforts of selected high growth potential start-ups. This can also lead to co-incubation and softlanding initiatives, because incubators will understand international requirements of their start-ups and have at their hand the international incubation network to explore these collaborative opportunities. Facilitation of International Working groups on High-growth ICT enterprise business incubation 23

25 5. Annexes 5.1 Template for profiles of ICT Start-ups Name of the Project City, Country Logo Website Incubator Executive Summary Summary of the business. Describe the products and/or services that are offered and the different parties that are involved in the business process. Main Innovation / core comparative advantage Facilitation of International Working groups on High-growth ICT enterprise business incubation 24

26 Description of the solution that is provided revealing important basics about the technology that is being used. Description of how this solution is better than previous solutions / solution of the concurrence. Patents / Trademarks / Copyrights filed / owned Business Opportunity Identify the client segment and explain why they will be interested in the products and/or services. Describe the necessity that is being satisfied and the objective market. Future Developments / Trends What are the entrepreneur s ideas to work with international partners? What contacts serve the entrepreneur? What are areas where a collaborative development adds value for the company / project? Possible International Collaborations / Partnerships Facilitation of International Working groups on High-growth ICT enterprise business incubation 25

27 What are the next steps in developing the business? The Team Last Name First Name 5.2 Outline for Interview with World Class References History of incubator/accelerator: Founding date, founders, initial financing, focus on a certain project type, partners, private or public organization, for profit or non-profit? Biggest challenges to overcome and how they did it? Business model: How does your organization generate income? Equity, stock options? % of sales? Renting of space/infrastructure/labs? Royalties? Incubation operation: What phases are included in your support model towards entrepreneurs? What is the timeframe of these phases? What type of services do you offer in each phase? Application model / Deal flow generation / Selection: How does your application model work? Facilitation of International Working groups on High-growth ICT enterprise business incubation 26

28 How many applications do you receive monthly? What efforts are made in marketing? How do you structure the selection process? Management team: Structure, roles and responsibilities. Numbers: Offices, Number of employees? How many business ideas/projects have applied historically? How many companies have you supported? How many projects/companies do you currently support? What industries do they belong to (ICT)? How many patents have supported companies generated? What are current revenues of supported companies? Amount of total investment in companies supported (private vs. grants)? Financing network: Do you have relations with angel investor networks? Venture capital firms? Other public or private organizations that finance incubator/accelerator programs? International operations: Do you have offices away from your main office / outside of your borders? Have you supported companies in their internationalization process? How many supported companies have international clients / supply (or value-) chain? Does your organization have a network of international partners? Where? 5.3 Interview with IC 2 : Austin Technology Incubator Isaac Barchas, Director Date: May 1st, History of incubator/accelerator: Austin Technology Incubator (ATI) was founded in 1989 by George Kozmetsky, as part of the IC 2 institute, he had the vision of supporting the transformation of the Facilitation of International Working groups on High-growth ICT enterprise business incubation 27

29 tremendous technical talent present into companies as well as using the incubator as a lab for students who were learning about entrepreneurship. ATI was initially funded by a small grant from Austin and also the county. The first CEO, Laura Kilcrease, was able to bring in experience and an extremely valuable network to the incubator. ATI was born as a not for profit broad based incubator to support technology in general. Business model: ATI generates approximately 1.3 million in revenues annually; 30% from entrepreneurs, 50% from sponsorship (city of Austin and emerging technology fund), 10% events, 5% law firms (sponsorships) and 5% from equity. 10% 5% 5% Revenue share 50% 30% Entrepreneurs Sponsorships Events Law Oirms (sponsors) Equity Although equity is not a large portion of the revenues, it is important because it means a lot for entrepreneurs, which makes them value the partner relationship. Incubation operation: The support process at ATI does not follow any specific phases. It is much more of an art and not so much a set process. The typical profile of a team that goes to ATI is the following: 2-3 people that quit a day job, usually technologist that has a valuable technology and has put there money into it to push the technology but haven t been able to solve a business problem, mainly identifying true markets, financing and talent needs. Facilitation of International Working groups on High-growth ICT enterprise business incubation 28

30 Approximately 70% of the support is aimed towards reaching funding. Another important component is talent, ATI subsidizes talent (surrounds entrepreneurs with talent) through the following: o o o o Student faculty at University of Texas, Austin for example in developing a competitive landscape analysis. Professional staff at ATI, unique group of people. (5-6 directors, receptionist, accountant, marketing) Student interns, vary 7-15 supervised by directors, normally graduate, majority from McCombs School of Business. Entrepreneurial community Application model / Deal flow generation / Selection: Isaac Barchas, recognizes that one of the weakest areas of the incubator is the marketing towards prospective companies. Most marketing is done through face to face marketing and many talks on campus at University of Texas, Austin. Yearly approximately companies apply of those 6-7 are accepted each year. Every Friday the ATI team meets to discuss applications, those that seem interesting move on to a success committee with experts. The main criteria are; looking at market as the most important (the success committee calls potential customers), team can be coachaeble, technology is validated (back up validation with experts at the University), competitive landscape, intellectual property (experience says it is important) and finally a very important question; Can ATI help to significantly add value? Numbers: Currently supporting 21 companies a stable size for ATI is between 20 and 25. Three companies are in clean energy, six in bioscience, 11 in IT and one in wireless. Facilitation of International Working groups on High-growth ICT enterprise business incubation 29

31 Sector Distribution of Companies Information Technology Bioscience Clean energy Wireless Financing network: ATI has a close relationship with an angel investor network in central Texas and with others in Texas. The incubator knows what the investors are looking for. The state has a US$ 2 million fund, they make investments in exchange of warrants. International operations: Most entrepreneurial teams have better international networks than the incubator, although they provide international contacts as well, that can support in strategic marketing and identifying who the customers are. Many of the good contacts that are in the ATI network can help make international introductions. Final comments/recommendations: It is extremely important to understand the incubators value proposition. o How do I add value to my clients? Unless you have a fund sitting next to you, making a profit is very difficult. The incubator requires very talented people. Work on a talent model. 5.4 Interview Digital Evan Jones, Head of Digital and Incubation Date: January 20th, History of incubator/accelerator: Facilitation of International Working groups on High-growth ICT enterprise business incubation 30