1. 1 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net 1 Suite 1 Business Incubation Basics Business Incubation Definitions and Principles 01 | WWW.INFODEV.ORG | WWW.IDISC.NET

2. 2 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Introduction to Your Module 1 Trainer(s) Trainer B Please use this bullet point format to include information about the background of each trainer. Information Trainer A Please use this bullet point format to include information about the background of each trainer. Information WWW.INFODEV.ORG | WWW.IDISC.NET

3. 3 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Our Challenge to You: ENGAGE WITH US …… INTENSELY SERIOUSLY JOYFULLY Before We Start… WWW.INFODEV.ORG | WWW.IDISC.NET

4. 4 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Before We Start… Keys to facilitating successful communication during this program. Ask us to slow down if we are speaking too fast. Stop us if you do not understand what we are saying. Please, please, please ask questions and offer comments. Our goal is to help you enhance both your knowledge and your skill. Skill development only comes with practice. Please engage in the exercise as you and your colleagues apply what you are learning. Please note that we have structured the schedule so that you have a networking break – specifically to enhance your opportunities for informal networking and also to give you time to check e-mail – and so forth. Therefore, during the rest of the session PDAs and laptops should be off. WWW.INFODEV.ORG | WWW.IDISC.NET

5. 5 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Now, let’s discuss your ideas. QsQs AsAs Five Minute Exercise What are the three most important questions you would like to have answered during this module? WWW.INFODEV.ORG | WWW.IDISC.NET

6. 6 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Incubators in Action, infoDev video case studies: http://www.infodev.org/en/Publication.241.html Module 1: Introduction WWW.INFODEV.ORG | WWW.IDISC.NET

7. 7 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Exercise 1.1: Inventory of Skills and Skill Gaps of Trainees STEP 1 (10 minutes) Write down the answers to the following two questions: 1. What are the main skills you have that allow/will allow you to be a successful business incubator manager? 2. Please identify what you think are the main gaps in your business incubation knowledge and skills. STEP 2 (10 minutes) Each trainee should stand up, present themselves and share their answers with the rest of the class. WWW.INFODEV.ORG | WWW.IDISC.NET

8. 8 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net AN INTRODUCTION TO BUSINESS INCUBATION Component 1: WWW.INFODEV.ORG | WWW.IDISC.NET

9. 9 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net An Overview of Business Incubation B) The business incubation (process) A) The wider business incubation environment C) Business incubator (a business incubation environment) WWW.INFODEV.ORG | WWW.IDISC.NET

10. 10 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net The (wider) business incubation environment… … is the wider context which should be conducive to the sustainable development of enterprises and nurturing their growth. Business incubation… … is a public and/or private, entrepreneurial, economic and social development process designed to nurture businesses from idea generation to start-up companies and, through a comprehensive business support program, help them establish and accelerate their growth and success. The business incubator…... is a physical space or facility that accommodates a business incubation process. An Overview of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

11. 11 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net An Overview of Business Incubation Business Development Service Providers Business IncubatorsTechnology Parks Target Enterprises Any SME Early-stage enterprises with high growth potential Emerging and established technology businesses Key Features  Ad hoc, demand-driven assistance.  Focused on a particular issue for which the entrepreneur asks for assistance.  Usually broad business support, including training and advisory services.  Emphasis on co-location and the “cluster” effect.  Supply and demand-driven assistance until a performance milestone has been reached.  Integrated mix of intensive strategic and operational support focused on the enterprise in its entirety.  Emphasis on co-location and the “cluster” effect between enterprises.  Demand-driven assistance.  Emphasis on provision of state-of-the-art real estate, office space, and research facilities and networking opportunities. Revenue Sources Government / donor subsidies, fee-for-service Government/ donor subsidies, fee-for-service, rent, royalties, equity Model Non-profit or profit-making WWW.INFODEV.ORG | WWW.IDISC.NET

12. 12 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net An Overview of Business Incubation Potential entrepreneur: Opportunities, knowledge and skills Owner-manager of an established business ( more than 3.5 years old) Early-stage Entrepreneurial Activity (TEA) Nascent entrepreneur: involved in setting up a business Owner-manager of a new business (up to 3.5 years old) ConceptionFirm birth Persistence WWW.INFODEV.ORG | WWW.IDISC.NET

13. 13 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Incubation and Growth Stages Idea Start up Expansion Maturity Post incubation Parks Incubation ProfitabilitySelection Pre-incubation Awareness An Overview of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

14. 14 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net An Overview of Business Incubation www.infodev.org|www.idisc.net SERVICES INFRASTRUCTURE e.g. office space, meeting rooms, eletricity, phone, Internet, lab facilities, etc. BUSINESS SERVICES e.g. help with registration, licenses, accounting, strategy advice, market research, exporting facilitation, etc. FINANCING e.g. brokering and/or providing financial services such as equity, credit and guarantees PEOPLE CONNECTIVITY e.g. mentoring, coaching and interaction with fellow entrepreneurs (a micro cluster), market linkages VALUE TO THE ENTREPRENEUR Economies of scale decrease the cost of starting a business + benefits from a professional look and brand Help with non-core business activities saves time and money. Leveraging the credibility of the incubator and the portfolio of entrepreneurs to overcome financing gaps. Learning, exchange of ideas, psychological support, partnerships, business relationships. WWW.INFODEV.ORG | WWW.IDISC.NET

15. 15 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net LACK OF BUSINESS KNOWLEDGE & EXPERIENCE Information and guidance towards the establishment of the business Finding a business partner UNREALISTIC EXPECTATIONS Share experiences with other entrepreneurs that have overcome challenges. LACK OF MANAGEMENT AWARENESS & EXPERIENCE Information and pro-active support towards attracting, recruiting and retaining adequate staff LACK OF SOCIAL CAPITAL Access to relevant contacts and networks The Added Value of Business Incubation Incubation as the answer to common challenges of early developed businesses WWW.INFODEV.ORG | WWW.IDISC.NET

16. 16 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Business mentoring, coaching an counseling; Business management advice including human resources management; Business training workshops such as how to close a deal; Business planning advice to secure the success and sustainability of the business; Networking opportunities including access to technical advisors with regard to product development; Market research and marketing advice to identify the most appropriate market segment and pitch the product; Help in finding new markets to access market opportunities; Help with sales by accessing professional business advisors; Help with raising finance to access an adequate source of finance; Financial management advice to secure the smooth financial management of the business; and ICT and office facilities such as office space, fax and photocopying machines, internet and e-mail access, meeting room, and car parking. Incubation as the answer to common challenges of growing businesses The Added Value of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

17. 17 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Different Perspectives between Small and Large Firms Small firmsLarge Firms Planning timeframe Short-termLong-term Knowledge base LimitedSophisticated, extensive, widely dispersed Communication Informal, personalisedSystematic and structured Management skills Jack of all tradesSpecialist, technical skills focus Firm objectives Highly personally biasedSet by corporation and shareholders Prof. Michael Schaper, Dean of Business Murdoch University The Added Value of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

18. 18 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Learning styles, which differ from large businesses: “Most business incubators provide office space, funding, and basic services. The better ones also offer an extensive network of powerful business connections, enabling fledgling start-ups to beat their competitors to market.”……and to learn The Added Value of Business Incubation Personal From trusted sources (incl. Peers) Ad Hoc Needs-based Rarely systematic Rarely structured Intuitive WWW.INFODEV.ORG | WWW.IDISC.NET

19. 19 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net LONG TERM RETURN ON INVESTMENT Incubators have a broader long term return on investment on the enabling environment due to their involvement in: Brokering relationships between entrepreneurs and financiers; Advocating policy and regulatory change on behalf of their entrepreneurs; Promoting entrepreneur success stories, raising the awareness of entrepreneurship and cultural acceptance of risk-taking. CORE PART OF THE INNOVATION AND ENTREPRENEURSHIP VALUE CHAIN Incubators are a core part of the innovation and entrepreneurship value chain as they can be a source of: Pooled lower risk start-up investment opportunities for financiers; Clients for technology parks, and innovative products/services for larger companies; Information for policymakers on barriers to entrepreneurship and SME growth. Does incubation impact more than business and job creation? The Added Value of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

20. 20 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net The Added Value of Business Incubation INCUBATION SERVICES MarketingStrategic Networking Human Resource Development Commercialization Funding Networking Business Development Liaising with external resources to achieve: Idea Generation Marketing Links with TEIs Links with industry Idea Definition Technical review Business potential review Financial potential review Support requirement identifications Development Support Accommodation Virtual support Technical assistance Business assistance Linkages to governmen officials, financiers, customers, suppliers and other stakeholders Application Support Business planning Linkages to markets Prototyping and testing facilities Business Support Mentorship through links with area experts Facilities Coaching Innovation Driven New Business Growth WWW.INFODEV.ORG | WWW.IDISC.NET

21. 21 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Incubator Client Success Stories infoDev entrepreneur case studies: http://www.idisc.net/en/SuccessStories.html http://www.idisc.net/en/SuccessStories.html WWW.INFODEV.ORG | WWW.IDISC.NET

22. 22 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net The History of Business Incubation Description of ServicesGeneration 1 st Generation 2 nd Generation 3 rd Generation Office rental and shared office services Reactive business support 1st Generation services plus Proactive business support Business coaching and mentoring 1st and 2nd Generation services plus In-house debt/equity finance for clients Channels to external financiers Partnering with businesses to achieve critical mass for contracts, products and services WWW.INFODEV.ORG | WWW.IDISC.NET

23. 23 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Adapted from infoDev Presentation Approximately 7,000 business incubators around the world. NBIA, 2009 The History of Business Incubation North America Asia (excluding ME) Western Europe South and Central America Eastern Europe Africa, ME, and Others WWW.INFODEV.ORG | WWW.IDISC.NET

24. 24 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net The History of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

25. 25 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Exit Hot-Desking Growth Space for Post Incubation Graduate Anchor Tenant Resident Client Entry/Selection Virtual Business Incubation Business Incubation Business Incubator Business Incubation Key Terms Angel Investor Business Model Enabled Environment Incubatee Mixed-Use Incubator Non-Resident Client Outreach Business Incubation Physical Business Incubation Tele Center Trade Sale WWW.INFODEV.ORG | WWW.IDISC.NET

26. 26 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Exercise 1.2: Business Incubation Definitions 1. Business Incubation I A client being incubated (resident or non-resident) i.e. a client who is participating in the incubation on-site or off-site. 2. Business Incubator F The process by which a client leaves the incubator without graduating. 3. Physical Business Incubation C The process of joining an incubator. 4. Outreach Business Incubation M A client who has successfully completed the business incubation program by notably reaching financial sustainability. 5. Virtual Business Incubation B An incubator tenant that is not an incubatee. It is normally an established company that adds credibility to the incubator through its association with it, collaborates with incubatees, and provides regular rental income. 6. Entry/Selection D Accommodation for graduates made available for those businesses that successfully grow beyond the incubation stage. 7. Resident Client K Rental of desk and on-line PC on a flexible, short term or even hourly basis. It is the provision of desk space, incorporating telephone and internet access, in an open-plan environment including sometimes meeting spaces and reception services. WWW.INFODEV.ORG | WWW.IDISC.NET

27. 27 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Exercise 1.2: Business Incubation Definitions 8. Non-resident Client E A public and/or private, entrepreneurial, economic and social development process designed to nurture business ideas and start-up companies and, through a comprehensive business support program, help them establish and accelerate their growth and success. 9. Incubatee A Business incubation with clients not located in the incubator and implies that incubation services are delivered to non-resident clients or ‘out of wall’ clients. It combines traditional incubation space and services with virtual services offered to both on-site tenants and off-site clients. 10. Anchor Tenant L A client renting accommodation in the incubator, sometimes called “tenant” or “on-site client.” 11. Graduate N Business incubation with clients accommodated in the business incubation environment’s building. 12. Exit H A physical space or facility that accommodates a business incubation process. 13. Hot Desking J On-line business incubation. Sometimes, the term is used to refer to what is called “outreach business incubation.” 14. Growth Space for Post Incubation G A client not located in the incubator building, sometimes called “affiliate client”, or an “off site client” or commonly a virtual client. WWW.INFODEV.ORG | WWW.IDISC.NET

28. 28 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net PRINCIPLES AND GOOD PRACTICES OF BUSINESS INCUBATION Component 2: WWW.INFODEV.ORG | WWW.IDISC.NET

29. 29 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net The necessity entrepreneur (NE), who is a person who started a business because he/ she “has no better choices for work”. The opportunity entrepreneur (OE), who is a person who started a business to take advantage of a business opportunity. The Importance of Entrepreneurship Two types of entrepreneurs: But only a small percentage of new businesses go on to achieve substantial growth The Global Entrepreneurship Monitor (GEM) estimates only 3% of start ups are those with high growth potential OE enterprises are more likely to scale and grow than NE enterprises Incubation supports growth oriented enterprises WWW.INFODEV.ORG | WWW.IDISC.NET

30. 30 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net True Entrepreneurs show: Autonomy and independence; A high need for achievement; Dominance; A strong internal locus of control; Perception of change as an opportunity; Characteristics of measured risk taking; High energy and good health; Social adroitness; and A preference for intuition and thinking. The Importance of Entrepreneurship WWW.INFODEV.ORG | WWW.IDISC.NET

31. 31 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Behaviour of successful entrepreneurs Proactively scan the environment to develop a sense of what is happening in the bigger picture and gather information about developments and change; Analyze and calculate risk associated with opportunities; Make effective decisions quickly; Focus on detail and striving for excellence; Initiate creative actions and longer term strategic responses; The Importance of Entrepreneurship WWW.INFODEV.ORG | WWW.IDISC.NET

32. 32 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Behaviour of successful entrepreneurs (2) Take a persistent and creative approach to problem solving; Constantly seek feedback and information; Manage time effectively; Network to support actions and problem solving; Motivate and inspire others; Achieve a flexible lifestyle; Deal effectively with fatigue; and Change and develop behaviours and skills with the changing needs of the business The Importance of Entrepreneurship WWW.INFODEV.ORG | WWW.IDISC.NET

33. 33 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net KEY PRINCIPLES 1.Realize the incubator itself is a dynamic model of a sustainable and efficient business operation, and must be managed as a business-like organization. 2.Focus the energy and resources of the incubator on assisting companies throughout their growth process, thereby maximizing the companies’ chances of success and their positive impact on the community’s economy. 3.Develop a sophisticated range of services and programs directed at companies according to their needs and stage of development. 4.Develop a network that the incubator can rely on. Key Principles and Elements of Business Incubation WWW.INFODEV.ORG | WWW.IDISC.NET

34. 34 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Part 1 - Objectives Entry/Selection & Exit/Graduation Outreach & Virtual Services Elements of Incubation Key Principles and Elements of Business Incubation Access to Finance Business Support Linkages WWW.INFODEV.ORG | WWW.IDISC.NET

35. 35 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Benefiting Incubatees Benefiting Relevant Stakeholder Groups & Policy Makers An Enabled Environment An Enabling Environment WWW.INFODEV.ORG | WWW.IDISC.NET

36. 36 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net An Enabling Environment Helping to change the local culture in order to promote entrepreneurial and economic growth. Improving social capital and trust, and fostering innovation and entrepreneurship. Providing a dynamic learning environment to foster innovation, entrepreneurship, and technology transfer. Reducing costs by joint procurement. Providing access to reliable energy providers with a backup generator if necessary. Assisting incubatees to navigate through regulatory environments. Benefiting Incubatees Benefiting Relevant Stakeholder Groups & Policy Makers An Enabled Environment WWW.INFODEV.ORG | WWW.IDISC.NET

37. 37 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Serving as a test bed for stakeholders and policymakers interested in new ways of growing, regulating, and/or supporting businesses; and Acting as an effective means of advocacy for increased awareness of business and regulatory change, as well as allow incubator staff to raise specific issues which are impeding incubatee development with policymakers. An Enabling Environment Benefiting Incubatees Benefiting Relevant Stakeholder Groups & Policy Makers An Enabled Environment WWW.INFODEV.ORG | WWW.IDISC.NET

38. 38 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Good Business Incubation Practices GOOD PRACTICES 1.Commit to the four key principles of business incubation, as presented earlier. 2.Obtain consensus on a mission that defines the incubator’s role in the community and develop a strategy plan containing quantifiable objectives to achieve the mission. 3.Plan for financial sustainability by developing and implementing a realistic business plan. 4.Recruit and appropriately compensate an incubator management team and board of directors. 5.Prioritize management time to place the greatest emphasis on client assistance. WWW.INFODEV.ORG | WWW.IDISC.NET

39. 39 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Good Business Incubation Practices 6.Develop the incubator’s facilities, resources, methods and tools to address the evolving needs of each client. 7.Seek to integrate the incubator program and activities into the fabric of the community. 8.Develop stakeholder support including a resource network that helps the incubation program’s incubatees. 9.Maintain a management information system and collect statistics and other data necessary for ongoing program evaluation. GOOD PRACTICES WWW.INFODEV.ORG | WWW.IDISC.NET

40. 40 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Phases of Incubator Development Foundation Phase Development Phase Phases of Incubator Development Mature Incubation Phase WWW.INFODEV.ORG | WWW.IDISC.NET

41. 41 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Exercise 1.3: Barriers to Incubatees’ Success STEP 1 (5 minutes) Participants should gather in groups and elect a spokesperson. STEP 6 (20 minutes) Group discussion. STEP 2 (10 minutes) Working individually, trainees should write answers to the discussion question below. There should be one answer per post-it note. Discussion Question: “What are the greatest barriers to incubatee success in a business incubator?” STEP 3 (20 minutes) Each trainee shall read out their answers in turns, aggregating similar answers near each other, on the board. Once this has been done, trainees should discuss their answers. STEP 4 (5 minutes) Each trainee should then stick their sticky dot next to the cluster that best represents their priority ranking of the relative importance of the challenges that must be overcome. STEP 5 (10 minutes) Facilitation of the aggregation of responses. WWW.INFODEV.ORG | WWW.IDISC.NET

42. 42 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Module 1: Training WRAP UP Key Insight #1: Key Insight #2: Key Insight #3: Key Insight #4: Key Insight #5: Any others? WWW.INFODEV.ORG | WWW.IDISC.NET

43. 43 01 | Business Incubation Definitions and Principles www.infodev.org|www.idisc.net Stay Tuned! www.idisc.net www.infodev.org