www.kent.ac.uk

David ButlerDirector, Canterbury Enterprise HubUniversity of Kent

Internationalising Incubator Clients- a new approach

Facts 1: In Western Europe, traditional

manufacturing industries such as textiles, automotive, and steel have declined over the past twenty years.

Large manufacturing companies have been replaced by growth in service industries, typically involving SMEs.

In Eastern Europe, manufacturing industries are thriving due to competitive economies and lower wages costs.

Facts 2: The south-east region of the UK is one of the

most economically prosperous regions in Europe ……… But:

In Kent – the closest part of the UK to Europe – 99% of businesses have less than 5 employees, and most of these are lifestyle businesses that are unlikely to achieve rapid growth.

Less than 6% of Kent companies are engaged in any international trade

The problem – to encourage small firms to grow

Corporate approach to exporting:

Extensive market research Examine options Formulation of a business case Strategic level decision Resources allocated in business plan Formation of sales strategies / marketing

alliances The big launch Publicity & promotion campaigns

Exporting – the Small Business approach:• “In the real world owner-managers appear to

approach exporting on an almost random basis …. reflected by actions such as responding to an unsolicited overseas enquiry without further market research, or selecting a market on the basis of it being somewhere the individual would like to visit”

“A small firm’s first entry into an overseas market may be because a friend or relative living elsewhere in the world, has asked them if they can supply a product that they need” – Chaston & Mangles (2002)

The response to the problem: In 2001 the South-East England Development Agency

(SEEDA) set up a network of 21 Enterprise Hubs: To provide high-levels of business support and advice,

with access to investment funding Target market: High-tech and knowledge-based start-

ups and early stage companies with high-growth potential – the 2–3% of companies that will generate 95% of capital growth

Business ideas should be scaleable – capable of national market penetration in 1-2 years, and international expansion in 3-4 years of achieving revenue

Canterbury Enterprise Hub One of the 21 Hubs in the SEEDA Enterprise Hub Network CEH exists to support new and small firms with high-growth

potential – currently 33 Portfolio clients (high-level support) & 105 Network clients (more general support)

Clients from biosciences, medical devices, ICT, biometrics & security, nanotechnology, sustainable fuels & diamond processing sectors

Aids commercialisation of research / links business with academia Access to intellectual property advice & finance for growth Operates Business Incubator 700 sq.m – 15 tenants + waiting list New Innovation Centre addition 3500sq.m for early 2009 Support for Student Enterprise Society / Kent Inventors Club Support and advice for student start-up companies Start-up training for academics & high-growth companies Encourage spin outs from University: 9 so far, 3 last year Works closely with two other Kent-based Enterprise Hubs

The challenge for the Enterprise Hubs: Business support resources, access to

investment funding, intellectual property advice etc are well-provided by the Enterprise Hub Network

UK Trade & Investment (government sponsored export advisory service) works well, especially for established medium and large businesses

But – there is a gap in provision for small and early-stage companies

Enterprise Hubs have a responsibility to “internationalise” their client companies

Soft Landings – not a new concept : NBIA Soft Landings designations have been around for

several years – currently 10 across 7 countries (April 2007) NBIA designation - initial approval 2 years renewable, seen

as a Seal of Approval of good practice in activities including: - Effective incubator management- Language training & translation services- Domestic market research & entry assistance- Support to access capital and funding sources- IP and Patent protection advice- Advice on immigration, govt regulations, business licenses, import & export laws- Housing assistance / cultural training

European Business Incubator Network (EBN) offers office and market research facilities for Incubator clients in a range of locations around Europe – pilot EU project, working well.

Soft Landings - traditional approach Provision of business support services for

companies wishing to trade in other countries Support services include market-access

advice, legal and banking services, translation facilities

Typically real-estate based support designed to support relocation to another country, finding and acquiring suitable premises.

Not necessarily appropriate to small or early-stage companies that seek collaboration, sales agents, or marketing partnerships.

Gaps in current Soft-Landing provision: Essentially uni-directional and highly competitive –

the focus is on attracting incoming companies for regional economic growth

Real-estate based - assumes companies want to relocate to trade – not always true

Good levels of business support available but less emphasis on cultural and family support

Young companies often need more that incubator premises and business support – technology-based companies may need R&D resources or university collaboration

Young companies expect advice from Incubator managers about suitable target markets or locations

Obligations on incubators to internationalise clients

Challenges of international relocationInternational relocation is not just about setting

up a new business or subsidiary company in a new country. In order to really succeed it requires:

Introductions into new markets Providing introductions to established networks On-going high-level business support including

sector-specialist advice. Fully integrating with the local business culture Ensuring suitable domestic support, with

access to housing, schools, mortgages, social and community life

Reciprocal Soft-Landings NetworkThe Reciprocal Soft-Landings Network (RSLN) is a

new concept that aims to build on existing good practice to proactively encourage start-up and early stage companies to engage in international trade at levels that are appropriate to their own stage of development, including:

Research or product development collaboration Finding sales agents, distributors or strategic

marketing partners Licensing of intellectual property Setting up overseas subsidiaries

What is different about the RSLN?RSLN aims to take the good practice demonstrated by the

existing NBIA designation process a stage further: To establish accredited standards of best-practice in Soft

Landings provision on an international basis To enable incoming companies to access broad ranges of

established business sector, marketing, research and support networks in the new host countries beyond those offered by individual incubators

To broaden the range of social and family support available – recognising that family comfort and stability is an important contributor to business success in a new country

To raise the level of company movements between countries

The proposed RSLN model: Network members will be made up of a consortium of

incubators, science parks, universities, economic development agencies, and business support specialists. One of those will act as the lead partner.

Network Member consortia will be assessed against specified quality standards and accredited by one or more of the international bodies. Draft criteria for those standards are in preparation, and will incorporate NBIA / EBN good practice

In the early stages there will be one consortium in each country that will act as a gate-keeper for client companies trading with other parts of the Network.

As the Network grows then larger countries may develop regional consortia.

RSLN – developing the networkPilot stage initial members: New River Valley Economic Development Alliance,

Virginia Tech & Radford Universities, Virginia USA Canterbury Enterprise Hub, University of Kent,

SEEDA Enterprise Hub Network, UKPhase 1 members: 8 – 10 consortium members accredited by mid

2009, from UK, USA, Poland, Canada, Australia, Northern Ireland, India, Spain & France

By late 2010 – 20 consortia members from around the world

Project to be self-financing from 2011

RSLN progress to date Pilot exchanges between UK / USA – 6 small UK

companies to make a trade visit to Virginia in April 2008, with a similar number of US companies visiting UK in October 2008.

EBN (300 incubator members in 30 countries) have confirmed support for the project and will back applications for project funding to World Trade organisation. EBN have also offered use of their accreditation resources.

NBIA – (900 incubator members in 47 countries) RSLN project to be presented at NBIA conference, May 2008, to seek similar support.

Website (including initial consortia members) planned for October 2008.

Criteria for consortia involvement Ability to provide high levels of business support:

- Access to finance - R&D grants, Proof of Concept & V-C funding, loans- Access to marketing and distribution support- IP guidance & support- Incubator facilities or commercial workspace - Legal, regulatory, taxation, financial & employment guidance- Business culture advice & translation facilities- Access to technical expertise / academic research

Ability to offer high levels of family & social support:- Finding & setting up homes, schooling, local facilities- Understanding national cultures- Finding bank accounts, insurance, local laws, transport

Today’s Challenge:

The Krakow Technology Park and the three associated Universities in Krakow are

regarded as ideal potential partners to represent Poland in the Reciprocal Soft-

Landings Network

We would welcome you to join us in discussing the future of this project