1. Metro and Non-Metro Business Incubators: Similarities and Critical Differences Peter Schaeffer, WVU Randall Jackson, WVU Mark Middleton, WVU Shaoming Cheng, FIU Kingsley Haynes, GMU James Riggle, GMU This research was supported by USDA/CSREES, National Research Initiative Competitive Grant #2008-55401-04487

2. Business incubators Facilities & equipment Access to capital Access to business network(s) Business services & support Management consulting & training Know-how & technology

3. Why rural incubators? Rural economies differ significantly from urban economies (scale, market access,…) Starting new business in rural environment may pose a bigger challenge Hence, to assess the efficacy of rural vs. urban incubators, we need different standards and criteria* * This was one of our hypotheses and is partly a conclusion we reached based on our research

4. The data: survey Metro vs. micropolitan distinctions Metropolitan counties (1089 in US – 35%) – Urban core > 50,000 population Micropolitan counties (674 in US – 21%) – 10,000 < urban core < 50,000 OCBSA counties (1378 in US – 44%) – Outside Core Basic Statistical Areas

5. 29% Response rate Sample universe: 719 identified from an initial list of 1,100+ Respondents: 209 (156 Metro, 37 Micro, 16 OCBSA)

6. Business incubator locations 719 from over 1,100 in initial database could be verified All 48 lower states were home to at least one incubator We did not find a rural incubator in 9 of 48 states

7. 15 Clusters at 1.5 standard deviation. These clusters span 17 states and represent 33.6% of 716 incubators included in study

8. Presentation outline* 1.Legal organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

9. 1. Organization Legal organization Co-located with college/university (percentage of incubators)

10. Presentation outline* 1.Organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

11. 2.a Income: service fees and rent

12. 2.b Government financial support Financial support from any level of government Government financial support during last 12 months (percent of responses)

13. 2.c Financial support by government(s)

14. 2.d Lenders

15. 2.d Assistance from university/college Assisted by university, college or technical school Rely on university knowledge, skill, physical facility and human resources

16. 2.e Financial support from venture capital firm or angel fund (angel fund refers to individual venture capitalist)

17. Presentation outline* 1.Organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” (National Business Incubation Association, NBIA)

18. 3.a Annual operating budget (in $1,000) (156) (37) (16) (Total no. of incubators) Budget Budget trend

19. 3.b Regular contact with venture capitalists (156) (37) (16) (Total no. of incubators)

20. 3.c Years of operation (156) (37) (16) (Total no. of incubators)

21. 3.d Full-time employees or positions (numbers)

22. 3.e Waiting list of prospective tenants? (in percent) Ever had a waiting list? Currently (2010) have a waiting list?

23. 3.f Tenants at full capacity and leasable area Number of tenants at full capacity Leasable area

24. 3.g Services offered (in percent) Basic services (Receptionist, copier, meeting space, etc.) Advanced services (Access to equipment, teleconferencing, management consulting, etc.)

25. Presentation outline* 1.Legal organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

26. 4.a Existing strategic plan Has strategic plan Principal mission JC = job creation, FC = firm creation (%)

27. 4.b Self-evaluation? Regular Self-EvaluationAnnual Self-Evaluation (%)

28. 4.c Annual evaluation* Assessment of current and future finances Assessment of client feedback * of incubator

29. 4.d Evaluation of process, learning capacity Incubator evaluates internal business process Incubator evaluates its ability to learn

30. 4.e Incubator evaluation conforms to BSC standards (BSC: balanced scorecard [method])

31. Presentation outline* 1.Legal organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

32. 5. Incubator’s foci Industry or sector focusOther foci

33. Presentation outline* 1.Legal organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

34. 6.a Admission requirement? No formal admission requirements Formal business plan required

35. 6.b Client screening Admission depends on review of business plan Business plan must meet specific requirements

36. Presentation outline* 1.Legal organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

37. 7.a Graduation requirements? Specific graduation standards? Graduation standards

38. 7.b Graduation and graduates Must graduate upon reaching graduation standards Who is counted?

39. 7.c Tenants and graduates Average length of stay Survival rate of graduates

40. Presentation outline* 1.Legal organization 2.Revenues and funding sources 3.Size and capacity 4.Strategy and mission 5.Industry or sector focus 6.Admission requirements 7.Graduation requirements 8.Reporting and tracking * Based on “best practices” National Business Incubation Association (NBIA)

41. 8.a Incubator tracks tenant‘s performance

42. 8.b Tenant achievements: patents Total number of patents, 2010 Firms receiving patents 1 7 60 All firms

43. 8.c Tenant achievements: licenses sold Number of licenses soldValue of licenses

44. Tenants reporting sales last Year Dollar value of the sales 8.d Tenant achievements: sales

45. Tenants hired new full time employee last year Number of employees hired 8.e Full-time employees hired

46. 8.f Loans Loans awarded to tenants last year (2010) Loan amount in $1,000 (percent of tenants)

47. Percent of tenants receiving investment capital last year (2010) Investment amount (in $) 8.g Investment capital received

48. 9. Summary, findings, and conclusions

49. 9.a Findings (selected) Systematic differences by location Only a small number of, mostly metro, incubators are private No “official” standard for data collection [challenge for evaluation, which usually involves comparison] Self-evaluation by incubators is frequently deficient Reliance on local/regional resources looks promising [e.g., Energy Xchange, Burnsville, NC] Universities, colleges and/or professional/ technical schools provide a home for and support many incubators, particularly in rural areas

50. 9.b Commonalities and implications Rental income is important source of revenue Leaving at graduation vs. rental income trade-off Existing buildings constrain incubator to activities that can be accommodated within the building’s capacity Serve as centers for business/entrepreneurship education Specialized building capacities may keep tenants from leaving incubator or from staying in the region Many executive directors are part-timers (funding?) Incubators, particularly rural incubators, serve multiple needs and/or have several “sponsors”

51. Questions or comments? Old high school, home of (private) incubator in Keyser, WV We gratefully acknowledge the financial support from a USDA/CSREES, National Research Initiative Competitive Grant and the organizational and technical support from NCRCRD.