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An analysis of models of incubators before and after the New Economy
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26.09.2007 – Session 1 Incubators
Incubators: typology, models and examplesESCP-EAP Option Entrepreneuriat
Session 1Paris, September 26th 2007
26.09.2007 – Incubators session 1 2
26.09.2007 – Incubators session 1
Foreword
This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported license. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/ or send a lettre to Creative Commons, 171 2nd street, Suite 300, San Francisco, California, 94105, USA.
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26.09.2007 – Incubators session 1
Summary
Incubators : what for ?
Models of Incubators
Incubators in Paris
ESCP-EAP Academic Incubator
4
26.09.2007 – Incubators session 1
Summary
Incubators : what for ?
Models of Incubators
Incubators in Paris
ESCP-EAP Academic Incubator
5
26.09.2007 – Incubators session 1
A definition :
« Incubator : one that incubates, as
(a) an apparatus by which eggs are hatched artificially
(b) an apparatus with a chamber used to provide controlled environmental conditions especially for the cultivation of microorganisms or the care and protection of premature or sick babies »
Webster dictionary
Premature or early stage ?
Incubators after the New Economy
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26.09.2007 – Incubators session 1
Types of Incubators in the New Economy
Venture Incubator : the incubator as we know it
Campsix, Cambridge Incubator, IdeaLab !, eCompanies
Venture Accelerator : consulting services
IntendChange, Reactivity, Mc Kinsey, Yankee Tek
Venture Portal : online self service
NVST.com, TheElevator.com, Garage.com
Venture Network : portfolio of investments + synergies
Internet Capital Group, Net Value Holdings, CMGI
Source : Oonut Mac Chinsonboom, MIT, 2000
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26.09.2007 – Incubators session 1
Incubators : why do we need them ?
Capture potentially successful deals missed by VCs
Facilitate idea creation
Enhance product and service
Accelerate speed of implementation
Provide supplemental management
Offer more « hand holding » than a typical VC
Give access to expertise in marketing, operations, HR, technical, management, strategy, business development, financial, and others
Facilitate business development and partnerships
Help in finding clients
Facilitate sources of fundings, now and later stage
Portfolioize seed-stage ventures
Provide additional deal-flow and vetting of deals for later-stage investors
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26.09.2007 – Incubators session 1
Incubators : why should an entrepreneur go to them ?
– Assistance in brainstorming a concept or application for a new technology
– Provide additional validation
– Assist in creating the business model and plan
– Facilitate seed funding
– Offer more « hands » to the new entrepreneur
– Provide an option for ventures that were too early or were missed by VC
– Provide unique access to services in a resource-deficient region (e.g. shortage of office space in Silicon Valley)
– Financial advantage in that cost savings in a contracted time frame are more than the cost of equity that must be given to the incubator
– Offer access to uniquely positioned/qualified domain experts or advisors
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26.09.2007 – Incubators session 1
Incubators : different natures for a common objective
Before or after the company creation :
US : before and after the creation of a company, an ‘innovation center’
France : only before (followed by the ‘pepinière’)
Walled or unwalled
Public or Private
Technological or generalist
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26.09.2007 – Incubators session 1
Criterias to analyze incubators
PromotersPublic : region, state, universities / schools, chambers of commerce, …Private : large companies, individuals, foundations / trusts, associations, research centers, …
Mission and objectivesJob creation, business activity, transfer of technologies, profit, revitalization of regions, promotion of specific sectors, …
Type of projectsGeneralist, or specialized on one sector (crafts, technology, services, …)To specific populations : students, people in reconversion, …Before, during or after the company creation
Type of services offeredReal estate, administrative services, consulting and support, training and coaching, networking
Financial / business modelRent or services billed to incubated companies, external services, subventions or donations, sponsoring, royalties / dividends / equity
EnvironmentGeographical area (rural, industrial, large city …) and network of partners (companies, research centers, business angels / VCs, …)
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26.09.2007 – Incubators session 1
Where are we on the learning curve ?
Source : Philippe Albert, CERAM Sophia Antipolis for the French Ministry of Industry, 2002
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26.09.2007 – Incubators session 1
Incubators in Europe vs US
Source : Philippe Albert, CERAM Sophia Antipolis for the French Ministry of Industry, 2002
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26.09.2007 – Incubators session 1
The US : an innovative leader
Development of incubators is old (first one in 1959)
Environment is favorable to the creation of companies (culture, legal, etc…)
Entrepreneurial spirit is strong
The National Business Incubators Association (NBIA) plays a leading role
The public and private sectors are strong
VCs and BAs are key partners, especially in technological areas (Silicon Valey, …)
Universities are very often involved (research, transfer of technologies, teaching on entrepreneurship, …)
Companies plays a minor role
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26.09.2007 – Incubators session 1
The UK : a recent come-back of the government along private cies
Some icon successes, but global result is poor
Incubators are mainly « company hotels »
Many initiatives from the Department of Trade and Industry starting 1999 to improve regulations and incentives
Entrepreneurial spirit low
Development of local public / private networks and Regional Development Agencies
Many consultants selling services to incubators
Dynamic BAs network and Stock Exchange
The UKBI association plays a leading role
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26.09.2007 – Incubators session 1
Germany : a powerful engine with low return fueled by public money
The largest number of incubators in Europe
Generally a local partnership between collectivities, chamber of commerce, banks and Länder
Entrepreneurial spirit is low
Teaching of entrepreneurship is encouraged but universities are slow to adapt
Help for SMC are numerous
Bavaria and Baden-Würtemberg are leading in High Tech sectors
Internationalisation of large German companies is « exporting » incubators where their research centers are
Private incubators are in a very difficult situation
The crash of the Neuer Markt is dissuading a lot of potential investors
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26.09.2007 – Incubators session 1
France : small initiatives with high return
The French territory is covered with many “pépinières”
Quality process (ISO) has improved professionalism
Government plays a leading role (1999 Allegre law on research, 2002 law Dutreil on economic initiative)
Sensibilisation to entrepreneurial spirit is only starting, but universities and schools are slow to pick up
Private incubators are searching for a business model
VC is limited and concentrated on key industrial sectors (telecom, software, bio-tech) and spin-offs vs pure creations
Banks are reluctant
BAs are few and very often active outside of France where environment is better
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26.09.2007 – Incubators session 1
Summary
Incubators : what for ?
Models of Incubators
Incubators in Paris
ESCP-EAP Academic Incubator
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26.09.2007 – Incubators session 1 19
Definition and typology of incubators
An incubator is an entity designed to nurture business ideas or new technologies to the point that they become autonomous. An incubator typically provides physical space and some or all of the services - legal, managerial, technical - needed for a business idea to be developed
Private Incubators Public Incubators
Types of Incubators
Incubators of Ideas and Projects
Private Investors
Incubators
Corporate Incubator
Local Economic Development
Incubators
Academic and Scientific
Incubators
Actors Corporations Venture Funds Corporations Local
Government Different types
of public actors
Objectives
Business development
Return on investment by quick exit
External growth
Quick return on investment
Local economic development
Support to particular target groups or industries
Development of SMEs and clusters
Valorizing research
Technology transfer
Targets
Internal and external projects, generally related to the activity of the company.
Technological start-ups generally ICT related
Startups (external or “excubated”), generally related to the activity of the company.
Small commercial craft or service companies.
In some cases, high-tech companies.
Projects internal to institutions prior to company creation
External projects
Sources : faberNovel, Altassets
26.09.2007 – Incubators session 1 20
Typology of incubators
Private Incubators Public Incubators
Incubators Incubators of Ideas and Projects
Private Investors
Incubators
Corporate Incubator
Local Economic Development
Incubators
Academic and Scientific
Incubators
Offering Giving access to a working site, meeting rooms, communication, office services and secretariat, library, etc, in an environment that is favorable to innovation
Support for project management (business case redaction, public financing requests, IP, …)
Management and strategy advice
Supply of one or several types of financing and search of complementary financing.
Personal networks
Eventually :
Hosting and administrative assistance
Legal services, public relations, recruiting, etc…
Financial resources
Prototype and market testing
Access to commercial markets
Eventually :
Long-term strategic partnership
Access to multiple competencies
Hosting and shared services
Administrative assistance -consulting
Eventually :
Coaching - training- networking, access to financing
Financial resources
Prototype and market testing
Access to commercial markets
Eventually :
Long-term strategic partnership
Access to multiple competencies
Main Actors Big technological and pharmaceutical firms
Private investors (venture capitalists)
Big technological and pharmaceutical groups (via their investment fund)
Board of trades, local body
Laboratories of public research
Trends High levels of consolidation and restructuring of the sector
Still looking for a successful model
Testing of the concept in numerous companies
Likely to develop
Regular development
Increasing territorial coverage
Rapid development under the aegis of public programs.
26.09.2007 – Incubators session 1 21
Corporate Incubators (CI)
Corporate incubators objectives are to develop knowledge and skills on new technologies, business models and markets, and to develop entrepreneurial spirit among research divisions (strategic experimentation)
Common success factors in new corporate incubators initiatives:clear, approved and communicated expectations
Corporate Innovators key success factors *
CI Culture and Rewards CI Processes CI Resources
Top Management Sponsorship
“Failure is Success”
Directly linked incentives
Efficient end-to-end process
Institutionalized internal and external idea/deal flow
Clear cut milestones and tollgates
Transparent pursue-or-exit path
Intelligent, staged funding
CI team
CI facilities
CI services
CI funds
Sources : faberNovel, Oseo
26.09.2007 – Incubators session 1 22
Examples of successful corporate incubators
Early-stage accelerator
Technology Incubator
26.09.2007 – Incubators session 1
Summary
Incubators : what for ?
Models of Incubators
Incubators in Paris
ESCP-EAP Academic Incubator
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26.09.2007 – Incubators session 1
Incubateur Académique ESCP-EAPC/o Paris Soleillet
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26.09.2007 – Incubators session 1
Paris’ incubators in 2007
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Incubateur Académique ESCP-EAP
26.09.2007 – Incubators session 1
Agoranovwww.agoranov.com
Paris Innovationwww.agoranov.com
Telecom Parishttp://www.enst.fr/creation-entreprise/incubateur/
Paris Biotechhttp://www.parisbiotech.org/
Advanciahttp://www.advancia.fr/template.asp?chapitre=60
Paris Pionnièreshttp://www.parispionnieres.org/
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ESCP-EAPhttp://www.lenouveaucourrier.ccip.fr/Article.asp?tgt=5&id=487
26.09.2007 – Incubators session 1
Summary
Incubators : what for ?
Models of Incubators
Incubators in Paris
ESCP-EAP Academic Incubator
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26.09.2007 – Incubators session 1
The ESCP-EAP Academic Incubator in one slide
Owners : ESCP-EAP et AAESCP-EAP
Mission : Research lab on the process to start a new company
Objective : Development of projects and creation of innovative and/or growth companies
Type of projects concerned : all kinds, including students, at the idea / BP stage
Services offered :
Coaching (Training, Coaching, Consulting),
Hosting in some cases (real estate and shared services in the Pépinière Paris Soleillet)
Budget : mixte :
School budget (teachers + logistics)
Sponsoring and subventions (hardware + office rent)
Voluntary (coaching + expertise)
Legal type : Internal to business school (part of ESCP-EAP Entrepreneurship Chair)
A project « launched » in 2003, the structure, the place, the logistics, the first financing, experts and coaches are in place.
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26.09.2007 – Incubators session 1
Allow us now to introduce ourselves…
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26.09.2007 – Incubators session 1 30
faberNovel’s activities are split into 3 units
Galvanize innovative genes Carry out quickly Remain entrepreneur
XP VenturiStrategy and organization for growth and innovation
Experimentation and project management
Interal project development and investment
Assisting large groups on methodology, analysis and decision making
Innovation consulting:Innovation Strategy
Organization and innovation
Change Management
Knowledge Management
R&D portfolio management
Strategic experimentationReduction of innovation risks
Fast acquisition of key know-how and skills
Conception and development of innovative products and services
Functional specification
Outsourced project management
Conception and business validation
Evaluation and identification of partners
Piloting and feedback
Venture capital, « excubation »
Investment and development of internal projects
Company creation assistance
Capital shares offering additional action leverage
TimuzoC4Mprod
Consulting
26.09.2007 – Incubators session 1 31
faberNovel oversees projects from their positioning to their realization
26.09.2007 – Incubators session 1 32
faberNovel Consulting heads all of faberNovel’s consulting activities
faberNovel Consulting’s mission: galvanize firms’ innovative genes
OrganizationParticipative innovation (Idea Management System)Collaborative innovation (Customer Relationship Innovation ®)Intrapreneurship development
Change managementSharing best practicesCommunities animationKnowledge designTechnology transfer
StrategyGrowth strategyInnovation platformProject portfolio managementInnovation management
Prospective intelligenceTechnologiesMarketsUses
ImplementationCompetitive benchmarkFunctional specificationsPartnerships / Monetization
26.09.2007 – Incubators session 1 33
42, boulevard de Sébastopol I 75003 Paris I FranceTel.: +33 1 42 72 2004 I Fax: + 33 1 42 72 2003
Web: www.fabernovel.comE-mail: [email protected]
If you want to know more on this subject, do not hesitate to contact us…