Best Practice för inkubatorer Best practice for incubators in Region Västra Götaland Chalmers...

Best Practice för inkubatorer

Best practice for incubators in Region Västra Götaland

Chalmers Innovation, Gothenburg

Gothia Science Park, Skövde

Developing Industrial Strategies Through Innovative Clusters and Technologies

Best Practice for Incubators


Preface to the Study of Best Practice for Incubators The idea for this study evolved from discussions in Thematic Working Group (TWG) Start-ups within the ERIK + network (European Regions Knowledge Based Innovation Network, part funded by DG Regional Policy) in which Region Västra Götaland is a member. These initial discussions were then followed by in-depth working group sessions involving the regions of Hamburg, Lower Austria and Västra Götaland. These working group sessions were paid for with funds provided by the regional budget of ERIK +. However, it was not possible to use ERIK + funding to pay for the study itself due to the project’s limited budget. It was therefore decided that the study would be funded by the regional budget within the DISTRICT programme within Interreg IIIC (part funded by DG Regional Policy) in which Västra Götaland is a partner, along with the regions of Tuscany, West Midlands and Sachsen. Under this programme, the region of Västra Götaland is responsible for the thematic area start-ups, spin-offs and financial engineering. This study was therefore of interest for augmenting our knowledge of the working methods of different incubators, since these play a major role in assisting with new start-ups. This knowledge can be passed on to other European regions. This study can also be of interest to the region of Västra Götaland, which expends considerable resources for part funding of almost all incubators in the region. This is to increase the number of technology-based and knowledge-intensive companies with potential in the global market. It should be pointed out that the incubator system is relatively new in the region of Västra Götaland. The first publicly-funded incubator was opened as recently as 1998 (Sahlgrenska Science Park – however, this has operated solely as an incubator only in the last couple of years). Most of the incubators in the region were established in 2002 or at a later date. The public investment in a more systematic means of developing advanced innovations is thus quite recent. The forerunners of the incubators were The House of Innovations at Chalmers University of Technology and the Business Innovation Centre (BIC) an EU concept, which began in Uddevalla in 1995. It is this latter concept that worked with advanced business development for starts-ups in the industrial sphere, but without any incubator activity.



To be able to carry out this study, it was essential that the chosen incubators had worked enough years for their working methods to have been verified and that the incubator companies interviewed had gone through the entire process.The regional dimension was also of particular interest – the different techniques and working methods of the incubators in various research and development environments, such as a metropolitan city area and smaller university college town. It was also important that the management/key persons were still with the company, since the study also adopted a company perspective, i.e. the company’s experience of the incubator’s service and support.Chalmers Innovation in Gothenburg (began operating in 1999) and Gothia Science Park in Skövde (2000) were considered as the most successful in their respective regional segments. These are also two of the oldest incubators in Region Västra Götaland. For that reason, these two were chosen for this study.The nine incubators operating in the Region are mentioned in the study. It ought to be added that a tenth incubator is being established (CIEL in Lidköping). This means that five incubators are operating in the Gothenburg city area and five in towns with university colleges or university departments. In addition to these ten incubators, which are part funded by the Region Västra Götaland, there is also a private incubator in Gothenburg that is run by Scandinavian Financial Management (SFM). This receives no public funding. Yet another private incubator, which has a more virtual organisation, is located in Gothenburg. Incubator Expertise is a regional network that promotes the exploitation of synergies and the skills development of publicly funded incubators. This is financially funded by Region Västra Götaland.Consequently, the incubators play a vital role in helping innovative start-up companies in the process of gaining a foothold in the market. It is also essential that these companies develop corporate concepts that are of such quality and show such potential that they can obtain private funding at later stages. However, funding has to come from public sources in the early stages because access to private seed capital is limited. Similarly, the incubators depend on a great influx of innovative concepts, driven by dynamic entrepreneurs, so that they can select the concepts that show most potential and good marketing prospects.If the regional public innovation system is going to be successful, it also has to contain these elements.



In recent years, Region Västra Götaland has systematically invested in these key areas too. In order to promote academic entrepreneurship, each university and university college now has an entrepreneur school. This initiative was inspired by the Chalmers School of Entrepreneurship, which began in 1997 in Gothenburg. The school was later expanded with a pre-incubator. The Chalmers School of Entrepreneurship also now has a branch in Lidköping. To foster entrepreneurship and business development at universities and university colleges, Chalmers University of Technology and Gothenburg University developed the Hothouse concept at about the same time as Chalmers School of Entrepreneurship. This concept has since spread to other university colleges in the region. The University in Skövde has its own variety called Startblocket (Starting Block), which was launched in 2005. As well as encouraging entrepreneurship and trying to change attitudes to self-employment, many Hothouses also provide assistance and advice to simpler start-ups.Connect Väst also focuses on developing entrepreneurs and start-ups with what it calls its springboard programme. Connect began in Gothenburg in 1999 using Connect San Diego in California as its role model and now also works with new, promising companies through various networks, such as business angel networks. Connect is run by a private-public partnership with limited public funding. In recent years, Connect Väst has also established branches in all university towns across the region. One important organisation that promotes new concepts and business ideas by arranging annual business plan contests is Venture Cup. As can be seen from this report, numerous concepts have started in Gothenburg, particularly at Chalmers University of Technology, and have then spread to the three university towns in the region. In the area of public funding in early business stages, Region Västra Götaland has been a forerunner with seed capital for start-ups. These initiatives began in 2001 and in recent years have been developed and augmented with other initiatives in partnership with private and public players, such as Innovationsbron Väst and ALMI Väst. These two players also have their own funding solutions, such as option loans and start-up loans (Innovationsbron Väst) and innovation loans (ALMI). The regional holding companies also play a key role. The public efforts have been focused on the early stages (pre-seed and seed capital) as it is difficult to obtain private venture capital for these early stages. The companies may receive some public funding during their expansion phase through holding companies and initiatives with private/public partnerships.



The appended illustrations show, in a somewhat simplified manner, the most important components of this innovation system. If all of these key components – entrepreneurship initiatives, incubators and public venture capital in early stages – are weighed together, Region Västra Götaland probably has the bestpublic-funded innovation system for technology-based and knowledge-intensive start-ups of any region in Sweden. However, the system needs to be developed in order to exploit all the potential that exists. It is therefore necessary to devise and test new concepts while at the same time continually improving existing initiatives. This study has been conducted by Scandinavian Financial Management (SFM) at the request of Region Västra Götaland. The authors are responsible for the conclusions and recommendations that have been made.

Christer EnerskogRegional Coordinator for DISTRICTin Region Västra Götaland andmember of ERIK +

www.vgregion.se/districtwww.district-rfo.euwww.eriknetwork.net


http://www.vgregion.se/district

http://www.district-rfo.eu/

http://www.eriknetwork.net/


Best Practice, Chalmers Innovation and Gothia Science Park

Martin Skoglund (SFM AB) and Petter Skoglund (Blåbergsholmen)GothenburgDecember 2006Revised March 2007



List of contents

1. Background• Basic concept and purpose • Listing of interviews and literature• Regional conditions • Summary of regional disparities and conclusions

2. Description of processes and structures

3. Interviews with incubators and conclusions drawn from these

4. Conclusions and recommendations to achieve best practice

5. Discussion

6. Appendix



Basic concept

To identify best practice for incubators working under different

conditions. A focus on Chalmers Innovation in Gothenburg and Gothia Science

Park in Skövde



Chalmers Innovation

The Chalmers Innovation Foundation was created in 1997 through a donation to Chalmers from the Sten A Olsson Foundation for Research and Culture. This donation provided the basis for creating the Chalmers Innovation Foundation and enabled the development of a centre for innovative activities at Chalmers.

Facts:• Chalmers Innovation was launched in May 1999 • At present, there are 18 companies in the incubator and 4 in the pre-incubator • Number of new companies each year: 10-12 • Number of graduate companies: 43 companies in business today and 14 no longer

operating • External capital attracted to the companies: EURO 88.6 million invested capital

(accumulated since inception) + EURO 10.9 million in public funding (accumulated since inception)

• Number of business developers: 7



Gothia Science Park

Gothia Science Park provides a complete environment for expanding, knowledge-intensive companies at the campus of the University of Skövde. The University of Skövde offers programmes with an emphasis on business where the main focus is on computing, natural science, technology, economics and humanities.

Facts:• Gothia Science Park opened for business in 2000• At present, there are 8 companies + 3 projects in the incubator• Number of new companies each year: 3-5 on average • Number of graduate companies: 25• External capital attracted to the companies: EURO 1,7 million invested capital

(accumulated since inception) + EURO 540 000 in public funding (accumulated since inception)

• Number of business developers: 2.5



Purpose of the study

Using good examples from two cities with different conditions, this study seeks to:

• Illustrate disparities in conditions of best practice in two different local environments• Show how best practice is implemented practically• Provide guidance for how other incubators can manage and improve their operations• Suggest areas of improvement to the incubators in the study to help them enhance

their business offering• Provide guidance on requirements for start-up of incubators• Provide guidance on management of new incubators



10 incubator companies

Name Company Business

Ulf Schönning, Uvox Industrial Microwave Technology

Tobias Forsell Forsway Broadband boxes

David Rosén Lockpick Computer games

Jan Eric Fasth Noticia Level measuring

Thordur Erlingsson Asitis Debt collection software

Lars Karlsson System OK Backup systems

Joel Haamar MicVac Microwave technology

Anders Kalryd Aitellu Business Intelligence software

Leif Jägerbrandt Admeta Business Intelligence software

Thomas Gustafsson MicroPos Positioning in medical treatment



Incubators in Region Västra Götaland

Source:Best Practice for Incubators

Nine incubators

Innovation system in Västra Götaland- strengths and challenges


Public Funding

Source:Best Practice for Incubators

Innovation system in Västra Götaland- strengths and challenges

FUNDING GUIDE

What kind of capital is needed for the idea or company to grow?

pre-study funding

pre-seedseed capital

growth capital

verification

idea

packaging

development

pre company formation post company formation

Option loan Conditional loanProfit share loan

Innovation loan

Holding company

Growth loanHolding company


Innovation systems for technology-based and knowledge-intensive companies

• Available throughout the region • Can provide funding and assistance with projects, from initial ideas through to early

growth stages• Does not provide services for later stages (growth)• Focuses on projects with high technology content



Gothenburg and Skövde based on regional conditions according to NUTEK's division into Local Work Regions

Region Family 1Metropolitan cities

Region Family 2University towns and

cities

Region Family 3Regional centres

Region Family 4Secondary centres

Region Family 5Small regions -

private

Region Family 6Small regions - public

Source: NUTEK

[Regional categorisation of Sweden]

Gothenburg

SkövdeBest Practice for Incubators

Stockholm region Uppsala region Borås region Falkenberg/Varberg Malung Mora/Orsa/ÄlvdalenGothenburg region Helsingborg region Fyrstad region Köping/Arboga/Kungsör Örnsköldsvik VästervikMalmö region Linköping region Skövde/Skara region Nässjö region Markaryd/Ljungby Hudiksvall/Nordanstig

Örebro region Karlstad/Kristinehamn Gotland Åre Säffle/ÅmålVästerås region Sundsvall/Härnösand Lidköping/Götene/Vara Ludvika region Sollefteå/KramforsUmeå region Falun/Borlänge region Simrishamn/Tomelilla Fagersta region Lycksele/MalåJönköping region Växjö region Värnamo/Gnosjö/Gislaved Hultsfred/Vimmerby Arvidsjaur

Halmstad/Laholm/Hylte Olofström/Karlshamn Härjedalen SorseleKristianstad/Hässleholm StrömstadTanum Årjäng Bollnäs/OvanåkerKalmarreg/Öland Nyköping/Oxelösund Kiruna Arvika/EdaGävle/Sandviken region Tranås/Ydre/Aneby Jokkmokk ÖverkalixLuleå/Fyrkanten region Arjeplog Söderhamn Sunne/TorsbyNorrköping region Skellefteå/Norsjö Vansbro KalixEskilstuna Karlskoga region Hagfors StorumanKarlskrona/Ronneby Älmhult/Osby Bengtsfors/Dals-Ed LjusdalÖstersund region Avesta/Hedemora Filipstad/Hällefors Gällivare

Oskarshamn region ÖvertorneåKatrineholm/Flen region Vilhelmina/Dorotea/Åsele

StrömsundPajalaHaparanda


Academic research per region family and average per individual Local Work Region, R&D annual work units

R&

D a

nn

ua

l w

ork

un

its

(Un

ive

rsit

ies

an

d c

oll

eg

es

)

Source: SCB "Research and development in the university and university college sector"

[Analysis of regional sources for research and development]

There is virtually no academic research in region families 4-6

Gothenburg


10323

5894

2046

19 50 0

3441

842

128 1 6 00

2000

4000

6000

8000

10000

12000

Region family 1 Region family 2 Region family 3 Region family 4 Region family 5 Region family 6

Total no. R&D annual work units/region family Average no. R&D annual work units/region

There is virtually no academic research in region families 4-6


Summary of an average Local Work Region in each family regarding R&D sources

Region Family 1Metropolitan Cities

Region Family 2University towns

and cities

Region Family 3Regional centres

Region Family 4Secondary centres


private


public

0004523496Research institute (no. employees)

207

(1.4%)

319

(2.1%)

776

(2.2%)

2,674

(2.7%)

4,656

(3.0%)

37,800

(4.5%)

People with engineering degrees (%)

1531593841,0561,5668 783SME companies (10-199 employees)

3492641294Large companies (>200 employees)

0611308403,400Academic research (R&D annual work units)

R&D sources

Colours indicate relative access to R&D in different regions:= Excellent access = Good access = Some access

Source: WARP/SFM analysis


= No access

Gothenburg



Level of education per region family (II/II), general post-secondary education

Equivalent to the number of highly-qualified people in

just the Helsingborg region

Equivalent to the number of highly-qualified people in

just the Örebro region

As

a p

erc

en

tag

e

Nu

mb

er

of

pe

op

le (

16

-74

ye

ars

old

)

Source: The State of the Regions in 2002, ITPS and NUTEK


Gothenburg


790951

287396

364804

114872

38532 50694

263 650

41 05722 800 6 382 2 408 2414

31%

27%

23%

18%

16% 16%

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

Region family 1 Region family 2 Region family 3 Region family 4 Region family 5 Region family 6

0%

5%

10%

15%

20%

25%

30%

35%

No. people with post-secondary education per region family

No. people with post-secondary education on average in each region

% with post-secondary education per region family

Equivalent to the number of highly-qualified people in the Örebro region

Equivalent to the number of highly-qualified people in the Helsingborg

region


Summary of disparities in conditions for Chalmers and Gothia

• Academic research is carried out to a far greater extent in Gothenburg

• There are more engineers per capita and in actual numbers in Gothenburg

• There are more students in Gothenburg

• More R&D is conducted at the large companies in Gothenburg

• There is more private venture capital in Gothenburg



List of contents

1. Background


• Chalmers Innovation, Deal Flow, selection and growth rate • Gothia Science Park, Deal Flow, selection and growth rate• Chalmers Innovation, process• Gothia Science Park, process • Business growth process• Summary of differences in working methods and structures at Chalmers and Gothia



5. Discussion

6. Appendix



Chalmers Innovation, Deal Flow, selection and growth rate

Many objects High and rapid growth by means of venture capital

3 years

Tough selection(approx. 10%)



Gothia Science Park Deal Flow, selection and growth rate

Few objects Slow growth with little external funding and substantial own funding

7 years

Considerate selection(50%?)



Business growth

• Characterised by two different roles for the business developers in the incubator

– Consultant - has an active, operational role in the company. For example, acts as the CEO or CFO for a period of time

– Coach - has a more passive role, is responsible for follow-up of the companies and provides support to the management team throughout an entire incubation phase

• External consultants are employed in various roles

– In the management team for the companies– In sales and marketing– In technology development

• Chalmers has an extensive alumni network from the E-school

– Can start up companies– Can step in as a leader in later stages– As sales representatives, etc.



Chalmers Innovation, process

Potential Selection Supply value Exit

Little sourcingeffort

"Tough selection" "Major consulting effort"

"Rapid growth"

Capital from the incubator

Little start-up capital

Private venture capital

3 years

External External



Skövde Gothia Science Park, process

Potential Selection Supply value Exit

Major sourcingeffort

"Considerate selection"

"Major consulting effort"

"Slow growth"

7 years + 7 years

Capital from the incubator

Little start-up capital

Private venture capital

External External



Business growth process in the incubator

Coach

Consultant

years1 2 3 4 5 6

Gothia, own staff

Chalmers, own staff

E-school studentsChalmers Alumni

-1

Board business



Summary of differences and similarities in working methods and structures at Chalmers and at Gothia Science ParkChalmers

• Large deal flow with high levels of technological sophistication - lots of projects with research backgrounds

• Tough selection process similar to that at venture capital companies

• Business growth based on many business developers with a deep commitment to the companies

• The business developers have varying roles (coach/consultant)

• E-school alumni provide a recruiting base for project managers/consultants

• Relatively good access to private capital via business angels and venture capital companies

• Short development period through influx of venture capital

• The portfolio companies have fast routes to public funding since this focuses on technological sophistication

Gothia Science Park

• Small deal flow with varying levels of technological sophistication - few projects with research backgrounds

• Considerate selection process in which much time is spent helping the companies along

• Business growth based on many business developers with a deep commitment to the companies

• The business developers have varying roles (coach/consultant)

• Poor access to private capital via business angels and venture capital companies

• Long development period because of a slow influx of venture capital

• The portfolio companies have longer routes to public funding since this focuses on technological sophistication



List of contents

1. Background


3. Interviews with the incubator companies and conclusions drawn from these

• Bottlenecks in the process and the benefit provided by Gothia to the companies according to best practice.

• Bottlenecks in the process and the benefit provided by Chalmers to the companies according to best practice.

• Summary from interviews


2. Discussion

3. Appendix



Bottlenecks in the process and the benefit provided by Gothia to the companies according to best practice.

Bottlenecks for Gothia1 indicates no bottleneck

Benefit provided by Gothia5 indicates that the benefit provided is highly valuable

According to best practice, Gothia provides the companies with the help they requireand counters the formation of bottlenecks.

Phase 1: idea to start-up phasePhase 2: start-up phase in the first yearPhase 3: after the first year


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Phase 1 Phase 2 Phase 3

Capital

Coach

Consultant

Other

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5


Capital

Coach

Consultant

Other


Bottlenecks in the process and the benefit provided by Chalmers to the companies according to best practice.

Bottlenecks for Chalmers1 indicates no bottleneck

Benefit provided by Chalmers5 indicates that the benefit provided is highly valuable

According to best practice, Chalmers provides the companies with the help they require

and counters the formation of bottlenecks.

Phase 1: idea to start-up phasePhase 2: start-up phase in the first yearPhase 3: after the first year


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5


Capital

Coach

Consultant

Other

3D stack 5

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5


Capital

Coach

Consultant

Other


Summary based on interviews with the companies in this study• Many of the companies at Gothia Science Park have industrial backgrounds, focus on one specific

customer group and have varying levels of technological sophistication

• Many of the companies at Chalmers Innovation have research backgrounds, are focused on finding a suitable market and application and are often highly technologically sophisticated

• The incubators have a clear picture of their prospects

• The incubators have a clear picture of their process and how it has developed over time

• The incubators and the incubator companies give a homogeneous picture of the actual situation

• All companies interviewed stated that they would not be in existence today without the support of the incubator

• The incubators provide help that counters the bottlenecks of the seedling companies

• Skövde has major problems with funding in phases 1 and 2

• In Skövde, the seedling companies raise much of the funding through their own work

• Swifter progress could be made in Skövde if it had a larger private funding network and access to industrial development skills



List of contents

1. Background



4. Conclusions and recommendations for best practice

• Staffing• Deal Flow and selection• Funding• Networks• Summary

5. Discussion

6. Appendix



Best Practice – Staffing

• The incubator should have a critical mass of 4 or 5 employees with a very broad skills base

– Comments from seedling companies: It is excellent to be able to pick the brains of so many people. And if you don't get on with one person, you can always turn to someone else

• Business developers in the incubator ought to be pragmatic and deeply committed to each company

– Skills, experience and self-confidence to participate actively in the development of the companies– Avoid running incubators that are under-staffed and just have an "incubator manager"– Avoid building lots of small incubators where the staff become office administrators instead of

business developers

• Successful incubators start 1 or 2 companies per business developer per year

– Avoid setting unrealistic goals in relation to staff numbers and potential



Best Practice - Deal Flow and selection

The incubator must be adapted to the prevailing conditions of the region in which it operates

Smaller regions (population <200,000)

• The smaller the region, the broader the approach– The incubator should not be targeted at narrow market niches– Find out the best companies in all industries

• The smaller the region, the more limited the selection and flow– Look for potential companies from different sources - industry, academia, etc.

• The smaller the region, the more work is required to create and develop a Deal Flow

City regions (population >500,000)

• Deal flow potential is high from R&D and other sources

• Sufficient data for niched incubators



Best Practice – Funding

Smaller regions (population <200,000)

• The incubator companies need more customer-funded activities during the development phase, e.g. through consulting assignments

• Important to make use of funding sources for early phases, such as pre-incubator funds

• All regions have potential private financiers

• Creation of structured business angel networks can speed up access to venture capital

Metropolitan City regions (population >500,000)

• The incubator companies can be funded by venture capital

• Important to make use of funding sources for early phases, such as pre-incubator funds

• Creation of structured business angel networks can speed up access to venture capital



Best Practice – Networks

Incubator•> 4 employees•Broad skills base•Operational work•Deep commitment•Varying roles over time•Starts up 1 or 2 companies per person each year•Coaches up to 5 companies each year

Board pool•Active Board pool with extensive selection

"Grey eminence"•Experience of the business

Industrial development resources•Easy access

Universities/Colleges/R&D•Change according to the potentials

External consultant/e-school•Swift access

Public funding•In the backbone of the incubator's business developers

Capital/ Business angels•Structured and operational



List of contents

1. Background



4. Summary


6. Discussion

7. Appendix



Unexploited potential in Gothenburg - discussion

3 years

Tough selection technological sophistication

Technological sophistication

Where do they go? Room for Gothia-style incubator in Gothenburg?

Incubator companies

Successful companies

?



Unexploited potential in Gothenburg - discussion

• Chalmers captures just a fraction of the ideas in Gothenburg

• Gothia has shown good results with a very broad selection

• Several of the companies in Gothia would not have been accepted by Chalmers because their level of technological sophistication was too low

• Considering the success of Gothia's working model, there ought to be room in Gothenburg for another incubator with broader selection criteria and less focus on technological sophistication.A focus on business benefits.



List of contents

1. Background



4. Summary


6. Discussion

7. Appendix



AppendixQuestionnaire


Phase 1. Idea phase for start-up phase Phase 2. Start up phase in the first year Phase 3. After the first year

1. What were the bottlenecks during the various phases, rate on a scale of 1-5 where 5

is the greatest bottleneck in phases 1, 2 and 3?

a. Capital: Incubator’s own seedling fund, “I-Bron” b. Other: Service provider: cleaning, legal, premises, etc. c. Consultant: Business model, sales, external funding d. Coaching: mentorship, follow-up, business growthj -

Phase 1 Phase 2 Phase 3 Capital Coach Consultant Other Comments:

2. Rank on a scale of 1-5 which of the following incubator services you

benefited from the most during phases 1, 2 and 3? a. Capital: Incubator’s own seedling fund, “I-Bron” b. Other: Service provider: cleaning, legal, premises, etc. c. Consultant: Business model, sales, external funding d. Coaching: mentorship, follow-up, business growthj

Phase 1 Phase 2 Phase 3 Capital Coach Consultant Other

Best Practice för inkubatorer Best practice for incubators in Region Västra Götaland Chalmers...

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