Kreo tn2 Karlsruhe, Rhône Alpes, Emilia-Romagna and Oxfordshire Thematic Network for the Support of Innovative Companies

4Business incubators: definitions

There is not one single set of characteristics defining a business incubator. The term “business incubator” is applied to very different structures, all providing support to enterprises, such as for instance technology parks, business and innovation centres (BIC) or even “virtual incubators”, i.e. initiatives that provide new entrepreneurs with “soft support” excluding physical space and often including only distance assistance.

An extensive definition may be that of the Centre for Strategy & Evaluation Services: “A business incubator is an organisation that accelerates and systematises the process of creating successful enterprises by providing them with a comprehensive and integrated range of support, including: incubator space, business support services, and clustering and networking opportunities.

By providing their clients with services on a 'one-stop-shop’ basis and enabling overheads to be reduced by sharing costs, business incubators significantly improve the survival and growth prospects of new start-ups.

A successful business incubator will generate a steady flow of new businesses with above average job and wealth creation potential.”¹

5Incubators: features

There are many differences among those structures that may be considered a “business incubator” accordingly to the definition provided above. We consider that differences mainly reside in 4 aspects having an influence on the incubators’ approach, operation method and, consequently, type of service provided, i.e. (1) main origin of funding, (2) target enterprises, (3) links with research institutions and (4) enterprise development phase.

5.1Main origin of funding: private vs public

The nature of financing organisations represents an important indication on the business incubator’s main purpose.

Those business incubators promoted by public organisation generally are no profit oriented and they represent of course support structures for enterprises but also a territorial planning tool for the strengthening of local economy through the promotion of entrepreneurship, innovation, employment and wealth. For this reason, most incubators are operated either by public institutions at national or local level or by development agencies.

In case of those incubating systems promoted by private organisations, they also represent structures supporting new enterprises in the starting or development phases but with a for-profit orientation. Good examples of private incubating systems are for instance those linked to consultancy companies such as Accenture, Ernst & Young or Bain that were developed in the late 90s or early 2000s specifically for dot com start ups and encountered serious difficulties when this specific sector collapsed.

5.2Target enterprises: Specific sectoral focus vs general focus

Business incubators may focus on early stage companies with no distinction on their economic activity or may concentrate on new enterprises in specific sectors. As for those incubating structures with a sectoral focus, they represent an essential tool for the development of a specific cluster, interactions with existing companies in this sector being often encouraged.

5.3Links with research institutions: tight vs weak links

Science and technology represent an important source for strengthening or even renewing local national economic systems, the establishment of links with research organisations being a priority for policy makers to access knowledge and technology resources for the development of a technology and knowledge based economy. As observed by the National Business Incubation Association², links with research institutions ensure access to “highly specialised technical assistance providers, qualified workforce (including relatively low-cost graduate students), specialized laboratories and equipment. In addition, these affiliations provide the entrepreneurial firms credibility and reputation benefits”.

Links between incubating structures and the research base may be extremely tight. This is the case in university business incubators and research business incubators, where higher education and research institutions create their own business incubator for favouring the commercial exploitation of research outputs and competencies present in their organisations. In this case, most of the times, the research institution is involved in all aspects e.g. beneficiaries are linked to the specific institution, the selection is ensured by the research institution, they provide space, services to beneficiaries may be ensured by personnel of the research organisation, etc.

The research base could also be involved in a business incubator only in some aspects (e.g. participation in the selection committee, provision of some services, access to research facilities) or may not be involved at all.

5.4Project development: pre-creation vs post-creation

The enterprise project development stage is also another factor that differentiates one business incubator to another. In many cases, beneficiaries are only those enterprises that already have been registered at the Chamber of Commerce whereas in other cases, beneficiaries are business projects in the idea definition phase that have to prove viability. Of course, this specific feature has a major influence on the type of service that are provided to beneficiaries.

It is also to be mentioned two other factors that characterise incubating structures’ operation methods: the admission and exit criteria the structure applies. Those two features are considered as part of the incubator identifying aspects and will be analysed in the general presentation of specific structures selected in each KREO region.

6Main incubators present in the KREO regions

The following programmes and structures present in the TechnologieRegion Karlsruhe and Pforzheim, Rhône-Alpes, Emilia-Romagna and Oxfordshire have been selected according to the previous mentioned criteria:

Region	Structure	Main origin of funds	Target enterprises	Links with research	Project development phase
Karlsruhe	KEIM	Public	No Sectoral focus	Tight	Idea definition phase
Rhone-Alpes	CREALYS	Public	No Sectoral focus	Tight	Idea definition phase
	GRAIN	Public	No Sectoral focus	Tight	Idea definition phase
	NOVACITE	Public	No Sectoral focus	Medium	Establishment and 3 first years
Emilia-Romagna	AlmaCube	Mixed	No Sectoral focus	Tight	Establishment and 3 first years
	I TECH-OFF	Public	Sectoral focus	Tight	Idea definition Establishment First year
	SIPRO	Public	No Sectoral focus	Medium	Start-up and development
	SPINNER	Public	No Sectoral focus	Tight	Idea definition phase
Oxfordshire	Oxford Innovation’s Innovation Centres	Mixed	No Sectoral focus	Medium	Start-up and development
	Diagnox laboratory	Public	Sectoral focus	Medium	Idea definition All phases

The concept of business incubator defined in paragraph 4 has been enlarged to the French concept of “incubateur” i.e. “a facility in charge of assisting and supporting people to create or develop a start-up company.” “The incubators are usually located close to a scientific pole and maintain close links with research laboratories. The under and post-graduate education facilities and state funded research centres from which initiators most often come (researchers, teaching staff, young PhDs) are founding members of these incubators.” ³ Another specificity of these structures is that they support business project holders before the company has been established (they are indeed called “ante-creation” incubators) and therefore, the direct provision of office space is not foreseen, while this is commonly considered as the determining definition criteria for a business incubating structure.