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Business Incubation

An Introduction to Business Incubation

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Definition

Business incubators provide intensive, hands-on support and services to nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable.

The services includeshared office services

access to equipment

flexible leases and expandable space

help with business planning

raising finance

professional services (accounting, IP etc.)

marketing support

mentoring

access to networks

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Diffusion of Incubators

USA1980 = 12

2000 = 800

UK1996 = 25

2001 = 150

SA1998 = 0 (Ignoring some “low tech” initiatives)

2002 = 12

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Typical incubator… (UK study)

91% of incubators provided physical space to their client companies

31% of respondent incubators are located on science parks; 24% are based on industry parks; and 24% are close to/on a university campus

The average size of an incubator in the UK is 3900sqm (ranging from 65sqm to 13000sqm

Most (64%) incubators would describe themselves as being "sector specific". Of the named sectors, "Technology", "Biotech", "Knowledge-based", "IT" "Software" and "E-business" were the most frequently cited sectors

Management team average six full time equivalents

Most are “not-for-profit”. At the height of the dot.com boom there were an number of commercial incubators – most now closed/refocused.

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Aims of Sponsors

Create jobsRevitalize neighborhoodsCommercialize critical new technologiesStrengthen local and national economiesAddress other development issues (e.g. BEE)Make money from portfolio companies (??)Godisa specific – to address:

Outdated technology used by many SMMEsPoor (or non existent) technology support to SMMEsVery low entry rates of SMMEs into the productive “value added” sectorsHigh failure rates amongst start up SMMEsPoor access to facilities for the testing and promotion of innovative ideas

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SA Incubators

Technovent (CSIR) Mixed (1999)

Bandwidth Barn (Cape Town) IT (2000)

Innovation Hub (CSIR) IT/Mixed (2001)

Softstart (CSIR) IT (2001)

EgoliBio (CSIR) (Biotech, Life Sciences) (2001)

Zenzele Tech. Demo. Centre (Randburg) Mining (2001)

Acorn Technologies (Cape Town) Medical Devices (2002)

Chemin (Port Elizabeth) Fine Chemicals (2002)

Bodibeng Technology Incubator (Midrand) ICT and Electronics (2002)

Timbali Technology Incubator (Nelspruit) Floriculture (2002)

Upstarts (part of HBD)

Blue Catalyst

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Incubator Value Add

Office space to rent on flexible terms

Office productivity infrastructure

Meeting, training and conference facilities

Access to professional services

Business coaching and mentoring

Access to valuable networks

Low

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Bricks and Mortar Incub-ators

VirtualEmphasis

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Choosing an Incubator

What Sector are you in?

Where is it located?

What are you looking for – office space, advice, tools, the atmosphere???

What are the terms? Office space will probably be “sold” on flexibility rather than price etc.

Speak to other tenants and “graduates”

Who is the management – what are their credentials?

Are they linked to financial institutions (VCs)

What are the programmes, how do you graduate?

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Some Contacts

www.godisa.net - Charles Wyeth

www.upstarts.co.za – Philip Marais

www.bluecatalyst.co.za - ?

www.theinnovationhub.com - Jill Sawers