As Nicolas Rouhana rightly pointed out in his article, Unnatural Selection in the launch issue of this magazine, it is absolutely essential for the nurturing of successful businesses that incubators design and stick to a very robust screening and selection process that is aligned with their core mission, goals and raison d’être.
However, it takes some courage, particularly if you run a relatively young incubator, or are located in an area filled with fellow and competing incubators, to resist the urge to play from time to time, what Nicolas calls, the numbers game. Typically, one can be rather unsure whether or not that all one's stakeholders (in particular the less-involved local public funders) prioritize the missions of the incubator; hence filling the tenancy gaps can be seen as a prime measure of success, even though, as part of this industry we may, and will, disagree on this bricks-and-mortar-first approach.
The logical answer to the dilemma is rather simple on paper: focus a significant part of your activities on customer acquisition. At the end of the day, the more inquiries you get, the more free you find yourself to pick up the projects / companies that will be a perfect fit for your incubation process and objectives – and that are likely to grow into mature, successful businesses.
Structural differences aside, most of us can, in that regard, only cast an envious glance at what accelerators do. Even though we are different species hunting in the same valley, one might be tempted to advocate the fact that a rate of enrolment in the region of 1% is something we, as incubators, should aim for as well. That said, this is not even an argument for The Valley vs. the rest of the world, since this kind of figure is also representative of what TechStars reach in Boulder, Colorado; a region most of us would think of as being on par or even less entrepreneurial than our own backyards.
So, it would appear that better quantitative and qualitative sourcing of projects is becoming increasingly key to the legitimacy of our incubators. The question remains however, on how to operationally proceed in this area. This is an area, that we at BIC Provence have put a lot of thought, energy and design into recently. The earlier trend was to believe that financial crises precipitated change and enhanced the entrepreneurial spirit. But in fact we have seen the numbers of inquiries decreasing significantly over the past five years, and we would like to share some solutions and answers that have evolved from our research and experience.
The territorial supremacy bias
Notwithstanding the indisputable success of business incubation as an industry, towards its funders and the entrepreneurial public, there is a payoff. Because the incubation model has proven relevant, in large part owing to the efforts of its national and international advocacy networks, it has often been considered over recent years as a particularly successful tool for economic development and successful venture nurturing. Eventually, the model at stake would be the one-stop-shop for entrepreneurial adventures in a given territory (particularly considering the overwhelmingly local nature of incubators’ funding in most cases).
The consequence of this positioning would be that most sourcing efforts for the incubator would be primarily targeted towards the alleged or actual pool of local (wannabee) entrepreneurs. This is fine for some of us - be it the ones with a high recognition and legitimacy factor built over the years, or the ones located in an already largely entrepreneurial or innovating area. However, this direct kind of strategy does not fit all environments. This is a growing issue we have, for instance, encountered at BIC Provence over the past two years, considering that Provence is not a particularly entrepreneurial area, particularly if you focus on innovation for which resources are scarce. For example, we used to focus primarily on a sector (‘environment’) which has since proven to be, at best, a bubble carried out by a strong policy mystique, non-perennial fiscal incentives and wishful thinking on the ability to overcome technological barriers.
As a result, our annual enquiries have dropped significantly and worryingly since 2009. Diversification has been an answer to that, but completely redesigning our customer acquisition process, mainly based on waiting for the thousands of entrepreneurs rising out of the aforementioned bubble, quickly became our obsession.
Think global, act global
This is not to say that part of the path has not already been paved. Incubators have a longstanding tradition of triggering entrepreneurship in their broad local area. The point here is that we have to probably reinvent the way we do this, considering the current shift in and growing awareness of entrepreneurial culture. Let's put it this way - putting up the usual outreach lecture workshops in business and engineering schools, and universities might not be sufficient drivers of this aspect of the incubation business anymore. As far as BIC Provence is concerned, we have found out that entrepreneur empowering events and features, such as Start Up Weekends ™, hackathons, co-working spaces or others that we have (re)invented, have, so far, proven to be more successful in bringing in more robust projects to the pipeline.
Nevertheless, their primarily local dimension most likely precludes the incubator from being drowned by vast numbers of worthy applications. It may seem somewhat paradoxical that, whereas we are increasingly encouraging our startups to go as global as they can, and we design support strategy to enable this, our basic territorial nature prevents us from translating the same strategy into our own operations. After all, we can all claim to have built over the years a rather unique value proposition in our support process (all the more that we increasingly tend to bring expertise and resources to market niches), partly built on internal process and partly due to the specific resources of our (local) environment.
The rationale here lies in the capacity of the incubator to track projects emerging in geographically targeted markets and, in the case of knowledge-based incubators, the ability to spot promising innovation carried out by viable founders. That would normally imply business developers and business intelligence specialists at work, but considering the growing scarcity of resources of incubators, coming up with decentralized alternatives remains high on our agenda. Networks are key here. Fellow incubators, through mutual agreements and multipartite programmes can easily be part of the solution (the EBN’s Soft Landing Club is a rather good example of shared resources and mindsets in this regard). Targeted networks through sub-sectorial industrial niche institutions or inward investment organisations have also proven to be rather efficient.
The rise of the buccaneers
There is another playground which rather surprisingly has not been widely touched upon by incubation programmes as an industry, particularly in Europe, even though models have recently started to emerge there.
Relationships between incubators and large corporations have been at best ambiguous and historically based, either on a supplier by substitution / buyer model (think aerospace) or on a trading-entrepreneurship-for-layoffs scenario. Again, this is a general trend most likely describing non-US situations, and also non-digital companies. Yet, it turns out that these corporations are beyond doubt in very privileged locations where one could find, potentially very promising, innovation. To make a long story short, this is owed to outstanding HR, IP, infrastructural and other existing resources.
The issue here has long been a cultural one, determined by the tension between the market pressure and internal politics - more so in technology-based corporations, built on the separation of powers between engineers and marketers. However, a paradigm shift has recently started to operate here, based on the growing need for companies to get closer to the market, in order to be able to constantly regenerate themselves, in a fast-changing quick-paced environment.
Given their credentials in nurturing emerging ventures, incubators would be the perfect ally to trigger faster and more efficient business innovation, sourced in the corporation’s assets. From experience it can be, from the incubator's point of view, a long and sometimes painful process inferring a slight change in our functioning. The intrapreneurs – or, even better, the extrapreneurs - we have so far supported, due to their dual position neither completely in nor out of the company, are constantly facing unusual challenges in their relation with their mother organisation, being, to use a largely adopted metaphor, more innovation buccaneers than plain start-up pirates. Conversely, granted by exceptional internal resources due to their affiliation, they are also perfect candidates for success, and therefore excellent prospects for incubation. Also it is no surprise that overwhelmingly seductive models of integration between large corporations and incubation activities start to emerge in the market. A brilliant example of such integration is to be found at Stevenage BioScience Catalyst in the UK, which is backed by a pharmaceutical behemoth and run by one of the most famous incubation veterans.
Community empowerment, activity globalisation, extrapreneurial trends are some of the routes towards better sourcing options for incubators. Our experience at BIC Provence indicates that focusing on reinventing these preliminary process proves essential in targeting the (likely) winning business ideas on which our support proposition makes some sense. At the end of the day, this is what matters to legitimise ourselves as useful instruments for economic development. If, as we believe, our job is not about nurturing surviving companies, but on supporting the growth of promising ones at a rather early stage, then it is clear that we have to resist the temptation of not being selective anymore. In any case, this job is no longer about waiting for the opportunities to come knocking at our doors. As hunters, we have to constantly reinvent our weapons.
Olivier Tomat is an innovation and incubation expert, and the former Managing Director of BIC Provence, a small business incubator located in the south of France that primarily works with life sciences, clean-tech and digital startups. He has been involved with managing various incubation programs in France and the UK for over 12 years and has been recently accredited as an EC-BIC expert by EBN. He holds two post-graduate degrees in Policy Science (focused on innovation) from the University of Montpellier and the Insitute for Political Studies of Aix en Provence, France.
Published on 14-10-2012 13:48 by David Tee. 1448 page views
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