Business Incubation

Business Incubation is a unique and highly flexible combination

of business development processes, infrastructure and people,
designed to nurture and grow new and small businesses, products,
innovations and entrepreneurs by supporting them through the
early stages of development and/or change.

Business incubation provide SMEs and start-ups with the ideal

location to develop and grow their businesses, offering everything
from virtual support, rent-a-desk through to state of the art
laboratories and everything in between. They provide direct
access to hands on intensive business support, access to finance
and experts and to other entrepreneurs and suppliers to really
make businesses and entrepreneurs to grow.

Starting any business is fraught with uncertainty, financial burdens

and resource issues, but more so with innovative and entrepreneurial
businesses due to the complexity of the products and services being
developed and the sheer length of time it takes to fully develop the
product. Incubators are ideally placed to remove some of the hurdles
and to negotiate a path to the all important finance and mentoring all
entrepreneurs need.

Business incubation provides a nurturing, instructive and supportive

environment for entrepreneurs during the critical stages of starting up
a new business. The goal of incubators is to increase the chance that a
start-up will succeed, and shorten the time and reduce the cost of
establishing and growing its business. If successful, business
incubators can help to nurture the companies that will form the true
creators of a region’s or nation’s future wealth and employment.

Currently, there are approximately 300 incubators in the UK,

supporting in excess of 12,000 dynamic, creative and innovative
businesses. They support all sectors, including ICT, science,
technology, creative industries, social enterprises and all manner of
entrepreneur – there is no age limit, gender or physical discrimination
– ultimately, if you have a world class idea or innovation, business
incubation is there to support you. It is important to put incubators
into perspective.

Rather than being the last hope for failing companies, incubators
serve as a launching pad for young and small businesses. Start-ups,
which are innately dynamic entities, need access to support, and
incubators are a means of providing this. Whether located in urban or
rural areas, most incubators are distinguished by the specialist
services that they offer in addition to a physical home for a budding
company.

Does Business Incubation work?

Business Incubators have been used to achieve a wide range of

objectives, primarily those that small businesses are good at—creating
jobs, developing innovative ideas, diversifying the local economy,
and broadly generating activity and wealth by creating a vibrant small
business sector.

Business Incubators have an important role to play in supporting local

and regional businesses, but entrepreneurs may ask whether they
actually work. Over the last 9 years, UK Business Incubation (the
international membership and best practice body) has measured the
impact that incubators have on the local economy and workforce. The
research proves that an incubator's client businesses provided an
average of 167 jobs (full time equivalents) per incubator and are home
to an average of 30 client businesses. Most (60%) incubators also
operate "outreach" services, helping and advising companies outside
the incubator. Those operating outreach activities support an average
of 150 additional businesses. Across the sample, an average of 75% of
client companies’ turnover up to £500,000, but only 1.5% had a
turnover of > £5 million.

Most importantly, business incubators have an average success rate of

98% of businesses succeeding whilst in the incubator (compared to a
national average of less than 50% of all small and medium sized
companies registered) and 87% surviving after 5 years of starting.

Where are these business incubators and how do they operate?

They can be stand alone business incubators, or based on a science or

business park, within a University campus, a laboratory or a private
sector large corporate - basically anywhere where there is ademand
for intensive business support. Business incubators can be found in all
regions and locations; essentially, they are located where the market
needs them. This is based upon the needs of the entrepreneur and the
sector focus of the business incubator; close proximity to research,
technical support and equipment or a dynamic business cluster. For
example, where a University has a strong bioscience offering, it is
usual to find a business incubator dedicated to commercialising bio
businesses or innovations. Similarly, incubators can be used to drive
forward the development of a strong cluster of businesses; such as IT,
creative industries, and environmental technologies, which then act as
a magnet to other innovative start-ups or entrepreneurs who want a
slice of the action.

A business incubator is established to support and nurture the next

generations of SMEs and in order to do that, they need to respond to
the needs of the entrepreneur or business. As such, flexibility is key.
Business Incubators come with or without "walls". Most incubators
provide property on a flexible basis offering easy-entry and easy-exit
tenancy terms and will offer some common facilities and services.
The level of provision depends on the individual incubator and the
types of business it targets, but frequently it will include a central
reception area, communal areas (e.g. meeting rooms, cafe/restaurant,
kitchens), access to telecommunications, and in most cases will offer
shared secretarial services. These services alleviate the administrative
burden from the tenant companies, thus reducing the need for
equipment and personnel. However, there are a growing number of
"virtual" incubators that deliver a similar package of business support
and development services, but without the physical property element.
Whilst any business starting out or growing needs the right
accommodation; a building has never grown a business. Most clients
of business incubators are attracted by the easy-in/easy out terms, but
once through the doors, it’s the access to business support that keeps
them there.

Imagine the scenario – you have developed a truly innovative product

or service and know that there is a market for it, but how do you
protect the innovation, market it out, whilst also building a business
around it? This is where business incubation holds the trump card! It
will have access to IP specialists that you probably couldn’t afford,
access to experts in the field who can help to market the product or
service, overseas partners to help you establish in international
markets and even linkages into major corporates who can either help
you to develop it further or who may want to license it from you.

Alongside this, the business incubator will help to grow you as an

entrepreneur through tailored workshops and training, support in
book-keeping and finance, assisting with the dreaded tax returns and
legislation and also to offer you a shoulder to cry on if times are hard
or will raise a glass in celebration with you when you get that much
needed order. On average, clients tend to stay within the incubation
environment for up to 3 years, but there are incubators that specialize
in accelerating the growth of your business which operate on 6 month
terms. It really depends on the nature of the business, the sector its
operating in and the demands of the product or service that have been
developed.

Added to that is the advantage of different unit sizes so that they can
fit to the needs of your business as it expands; you can start by renting
a hot-desk (usually by the hour) whilst you test your idea or take a
small workshop or office unit for yourself to start growing in. As the
demand for space for staff, equipment and stock grows, an incubator
can flex with you, offering a range of unit sizes to meet the needs of
innovative start-ups. Really innovative incubators have removable
walls that can be taken down or extended to create the space you
need.
Business incubation is truly flexible to meet the needs of the
entrepreneur or innovation and with success rates of 98%; they hold
the key to your success in growing businesses and entrepreneurs.

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SBTDC - Incubator Services

What we do

The SBTDC assists local community governments and non-profit

organizations in the process of establishing a business incubator in
their area. Most of the SBTDC's involvement includes: educating
individuals, organizations, and communities on the concept of
business incubation; facilitating strategic planning workshops with
project steering committees; and conducting feasibility studies.

What is a business incubator?

A business incubator is an environment that grows and nurtures small

businesses through their early years of existence by providing an
array of business assistance services, shared resources, and
networking opportunities. There are 31 business incubators in North
Carolina.

In most instances, an incubator is an actual building housing several

small business tenants. Business incubators fall into one of four
categories:

1. Industry Specific (focusing assistance on industries such as

technology, manufacturing, service);
2. Empowerment (concentrating on assisting women- or
minority-owned firms);
 3. Targeted (serving businesses with particular market niche
products or markets in common like arts, food processing,
multi-media); or
4. Mixed-Use (serving a variety of businesses types).

Incubator facilities are run by managers and staff who provide

business advice and referral services to tenants in addition to
managing the operations of the building. Office or laboratory space is
often leased at an affordable rate with flexible terms. In most
instances, incubator businesses mature and grow out of the incubator
within 3 to 5 years, creating opportunities for new firms to move in.
Nearly 90% of graduates then continue their business success within
the surrounding area.

Research has found that incubators produce a very good return on

investment compared to many traditional economic development
tools. Incubators and their graduating businesses create jobs,
commercialize technology, revitalize neighborhoods, and encourage
entrepreneurial development.

Incubator Research Services

The SBTDC has conducted feasibility studies for over a dozen local
governments and community non-profit organizations throughout
North Carolina since 1995. Our studies include:

• a history and overview of the business incubator industry

nationally and in North Carolina
• an economic analysis of the incubator's projected market
• trends in regional entrepreneurship
• needs of local businesses
• project cash flow projections
• market feasibility of the project
• financial feasibility of the project
• recommendations for proceeding
• potential funding options
 • risks and success factors

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Start-up Resources

• Angel Investors
• Venture Capital
• Incubators
• SEO (Search Engine Optimization)
• Start-up Guides (Starting a company in India)
• Government Initiatives

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Business Incubators and Facilitators in India

A Business Incubator is a facility designed to assist businesses to become

established and sustainable during their start up phase. Typically, they do this by
providing- shared premises, business advice, business services, access to investor,
market and international networks, mentoring and a full-time, hands-on management
team.

Business incubators are programs designed to accelerate the successful

development of entrepreneurial companies through an array of business support
resources and services, developed and orchestrated by incubator management and
offered both in the incubator and through its network of contacts. Incubators vary in
the way they deliver their services, in their organizational structure, and in the types
of clients they serve. Successful completion of a business incubation program
increases the likelihood that a start-up company will stay in business for the long
term.

The main goal of most business incubation programmes is to produce companies

that create jobs and wealth in their communities. Business incubators nurture the
development of entrepreneurial companies, helping them survive and grow during
the start-up period, when they are most vulnerable.

Business incubators provide their resident companies with business support services
and resources such as guidance, assistance with business planning and help
obtaining financing. Incubators usually also offer companies rental space with
flexible leases, shared basic office services and access to equipment all under one
roof.

What makes a business incubator successful?

Incubator developers must first invest time and money in a feasibility study to lay the
groundwork for a successful incubation programme. An effective feasibility study will
help determine whether the proposed project has all the factors crucial to an
incubator's success - a solid market, a sound financial base and strong community
support.

Once established, model business incubation programmes commit to industry best

practices such as structuring for financial sustainability, recruiting and appropriately
compensating management with company-growing skills, building an effective board
of directors, and prioritising management's time to place the greatest emphasis on
resident assistance.

How do incubators help start-ups get funding?

Incubators help resident companies secure capital in a number of ways, including:

• Connecting companies with angel investors (high-net-worth individual

investors).
• Working with companies to perfect venture capital presentations and
connecting them to venture capitalists.
• Assisting companies in applying for loans.
• Assisting companies in accessing government agency (e.g. NZTE,
Technology NZ) business assistance grant programmes.
List of Business Incubators in India can be down loaded

Who are Angel Investors?

Angel investors are individuals who invest in businesses looking for a higher return
than they would see from more traditional investments. Many are successful
entrepreneurs who want to help other entrepreneurs get their business off the
ground. Usually they are the bridge from the self-funded stage of the business to the
point that the business needs the level of funding that a venture capitalist would
offer. Funding estimates vary, but usually range from $150,000 to $1.5 million.

The most effective Angels help entrepreneurs shape business models, create
business plans and connect to resources - but without stepping into a controlling or
operating role. Often Angels are entrepreneurs who have successfully built
companies, or have spent a part of their career coaching young companies.

Today "angels" typically offer expertise, experience and contacts in addition to

money. Less is known about angel investing than venture capital because of the
individuality and privacy of the investments, but the Small Business Administration
estimates that there are at least 250,000 angels active in the country, funding about
30,000 small companies a year. The total investment from angels has been
estimated at anywhere from $20 billion to $50 billion as compared to the $3 to $5
billion per year that the formal venture capital community invests. In fact, the
potential pool of angel investors is substantially larger. There are about two million
people in the United States with the discretionary net worth to make angel
investments.

Angels Investing Network in India can be downloaded

Venture capital
is the term for money invested in young, fast growing companies. Many of today's
leading companies were backed by venture capital: Biocon, Google, Oracle, Apple.
Clearly, there are benefits to venture funding, but it's not a good fit for everyone. It's
critical for an entrepreneur to understand the venture dynamics, as Balaji Srinivas at
Aureos Capital warned, "It is very important for the entrepreneur to know why the
VCs are doing what they are doing."

The National Venture Capital Association defines venture capital as: "Money
provided by professionals who invest alongside management in young, rapidly
growing companies that have the potential to develop into significant economic
contributors."

INDIAN FUNDS: LIST OF VCs IN INDIA can be down loaded

NEN LIST OF INCUBATION PROGRAMMES & SCIENCE AND TECHNOLOGY

ENTREPRENEUR PARKS (STEPs)