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A virtuous circle?

I have always thought that the business incubation industry, while contributing to the development of private interests, also holds a public interest mission as it contributes to job and wealth generation. This, I believe, is the main reason that has led to a situation where 77 percent of European incubator ownership is held by public sector representatives, and where over 67 percent of their income is dependent on public sector funding (EBN: 2013 EC-BIC Observatory). In the United States the situation is not dissimilar, according to the recently published NBIA 2012 State of the Business Incubation Industry.

But, does this situation encourage efficient choices, or should incubator managers look at different models?

I can see various inefficiencies occuring within today's prominent business and ownership models. However the riskier ones relate to management and those must be addressed first.

Firstly, there are the ever-present political influences, where top management posts in business incubators can be held as a result of political negotiations rather than sound and necessary technical assessment. The risk here is that civil servants take over a function which, in principle, should be assigned to those with a more privately-orientated mind-set. I believe people with solid private sector experience - those who have “been there and done that” (even with mixed success) are more qualified to provide support to start-ups.

Furthermore, the public sector is slower in its decision-making process. This is counter-productive to the fast-paced lives of entrepreneurs, where speedy decision making is often the difference between the life and death of a start-up. One of the criteria to get the EC-BIC label, requires full autonomy when it comes to management (including a separate profit and loss account for the incubator) and I believe this to be a wise criterion.

The higher the public sector stakes, the more time that will be taken from management to deal with public sector requests, rather than urgent private sector needs. The risk here is getting lost in the bureaucracy. For example, the accountability required for public income requires more time and more effort than that required by private income. In a world of limited resources this may not be for the best, as attention is diverted away from the core mission. My point? Let the incubator managers, coaches and trainers concentrate on their job. If the public sector wants to be involved it should make sure that it happens by providing adequate funding with few strings attached.

Of course, the public sector must not and cannot entirely disappear. Incubators still hold a mission of public interest. But the industry should move towards a different model, perhaps trying to invert the present public/private ratio, to one where the private sector is better represented. This might spur some interesting dynamics. For example, being able to concentrate more on the core mission will undoubtedly increase the overall performances of the industry, thus increasing its attractiveness, producing higher levels of private sector investment, with a further improved allocation of internal resources, which in turn would lead to better overall performance.

A virtuous circle? Surely worth a try!


Giordano Dichter is Head of Quality and Technical Assistance at the European BIC Network. He is passionate about incubation and innovation and always seeks ways to introduce the latter into the former.
Published on 24-05-2013 20:55 by David Tee. 1196 page views

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