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Business Incubation Timeline (2013)

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We have started with a noble goal which was to create a timeline and present a holistic view on the industry’s development. However, it turned out that the selection and identification of the most …

We have started with a noble goal which was to create a timeline and present a holistic view on the industry’s development. However, it turned out that the selection and identification of the most significant events is extremely subjective. Which events we should consider and which not? Why this was important and not that? How you can identify and trace influence of a particular event that happened decades ago? So, this was really challengeable task.

That is why we decided to publish first draft and then update it according to the feedback from experts community. Thus, our team will appreciate any help from industry expert on what could be changed or added to it.

It’s also very hard to trace precursors of the phenomenon. As I’ve mentioned in the previous post (The History of Business Incubation – Part 2) according to Mr. Chinsomboon any controlled environment that helped businesses to grow could be considered as business incubation environment. We can found a lot of different examples before Batavia Industrial Center of systematic help for new businesses. However, the date of formalization where main components of basic business incubator model were linked together is 1959. Therefore, we agreed to have Batavia Industrial Center Launch as our starting point.

So, please enjoy the results of our work and we will appreciate any help and feedback from experts and community!
March 2013

Published in: Business

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  • 1. Business Incubation Timeline Business Incubation Blog http://worldbusinessincubation.wordpress.com/, Author Ryzhonkov Vasily Business incubation programs diffused Batavia Industrial Center was established in slowly across the USA the USA 1959 1960s University City Science Centre Business Incubation programs diffused slowly across the A local real estate developer Mancusos acquired an 850,000 ft building country, they were mainly government-sponsored being a left vacant after a large corporation exited the area. Massey-Ferguson (UCSC) in Philadelphia was opened response to the need for economic restructuring. Notably, in Concept of business incubation plant was closed as a result of mergers and consolidations in the farm the 1960s interest in incubators-incubation was piqued by the expanded in the US when a 28- equipment industry putting almost 2 000 local residents out of work. development of University City Science Center (UCSC), a member consortium of colleges, Unable to find a tenant capable of leasing the entire facility, the collaborative effort at rational-izing the process of universities and academic health developer opted to sublet subdivided partitions of the building to a commercializing basic research outputs. centres opened the University City variety of tenants, some of whom requested business advice and/or Science Centre in Philadelphia, assistance with raising capital. Thus, the first business incubator was born. Pennsylvania. As part of its efforts, the National Science Foundation These efforts launched a number of new local ventures, and formalised University City Science Centre the concept of business incubation as an economic development tool. catalyzed best practices of business 1964 initiated a programme to support the establishment and growth of early- incubation and the concept 1970 stage companies in the research parks In the 1970s interest in the facility, thus establishing one of the incubator-incubation concept was s Business incubation reached England first US urban research parks and further catalyzed through the incubators. operation of the National Science Foundation’s Innovation Centers Next wave of BI because of plants Loren Schultz started Pro-gram, an effort to stimulate closures in steel industry Technology Enterprise Center and institutionalize best practices Next wave of incubator in the processes of evaluating and development in the United in Philadelphia commercializing selected Kingdom was in response to plant technological inventions. closings, British Steel Corporation 1972 established a wholly owned subsidiary. Following British Steels Leaders started consider it as a viable approach for example, a number of other stimulating, diversifying or even stabilizing local private corporations,5 as well as economies. Evidence exists that business incubators were local, national, and regional 1975 beginning to take hold in England from as early as 1972 the governments, universities, and subdivision of older vacant buildings by architects into 12 Business Incubators were community organizations have "working communities" of design-related firms with shared operating in the United States sponsored business incubators in accommodations, services, and management (the first was in the United Kingdom and Western 1972 in London designed by David Rock at 5 Dryden Street, All of them in the industrial Northeast, which Europe Covent Garden Loren Schultz has started first had been hard-hit by plant closures in the previous decade 1976 Technology Enterprise Center in 1976 in a suburb of Philadelphia. Main aim was to house companies involved with 1980 technology-related businesses and new technology-based products. Later over a dozen center programs were launched. 1980s City Venture Corporation (CVC) developed business incubators in several large and small cities Business Incubation spread in the The rate of incubator diffusion Control Data Corporation, under the UK and Europe through various direction of company founder William increased significantly Norris, became one of the earliest related forms supporters of the business incubation industry. With a belief that large First National Study of companies should work with government and other sectors to address major societal Business Incubators needs, Norris formed City Venture first national study of business incubators in Corporation (CVC), a Control Data division 1984, Business Incubator Profiles*—which that developed business incubators in reported that over half were less than a Incubation spread to the UK and Europe through various The rate of incubator diffusion increased significantly when several large and small cities. Several related forms (e.g. innovation centres, pépinières year old—the number of incubators in successful incubators that were initially "(a) the passage of the Bayh-Dole Act in the U.S. Congress in d’entreprises, technopoles/science parks). operation has increased by one-third to developed with assistance from CVC – 1980 decreased the uncertainty associated with one-half each year including the Entrepreneurial Center in commercializing the fruits of federally funded basic research, 1982 (b) the U.S. legal system increas-ingly recognized the Birmingham, Ala., and the Pueblo Business & Technology Center in Pueblo, Colo. – importance of innovation and intellectual property rights still exist today. Walter Plosila’s design for the state’s protection, and (c) profit opportunities derived from the commercia-lization Ben Franklin Partnership Program of biomedical research expanded." In this environment several 1984 incubator development guides as well as non-academic reports and articles with a geographic and normative focus on current or potential business incubation efforts were generated. Walter Plosila’s design for the state’s European Business & Innovation Centre Ben Franklin Partnership Program,Network (EBN) officially established by the one of the country’s first The U.S. Small Business comprehensive technology and manufacturing agendas. Program Administration (SBA) strongly EC included incubators as a key component, promoted incubator became an early model for other states’ support of business incubation. development Series of regional conferences to disseminate First Academic Studies of Business 1984 - information about incubation. The SBA also published a newsletter and several incubator Incubators 1987 handbooks during the period resulted in 20 incubator openings annually in 1984 to more than 70 in 1987. mid-1980s1st EC-Business Innovation Centre (B.I.C.) opened in Liège,Belgium National Business IncubationEuropean Business & Innovation Centre Network (EBN) officially Since the establishment of the first business incubator, Association (NBIA) established in the USestablished by the EC and industry leaders such as British Steel most incubators have been established as publicly(industry), Cockerill-Sambre, Natwest, IRI Group, Générale de funded vehicles for job creation, urban economic 1985Belgique, Fiat, Control Data Corp., EVCA, Philips, Barclays etc.The first chairman of EBN was Viscount Etienne Davignon, while revitalization, and the commercialization of university innovations, or as privately funded organizations for theRomano Prodi, Lord Carr and Alain Minc were other influential incubation of high-potential new ventures . Main topics The Torch Program wasBoard members. considered definitions, taxonomies, policy implemented by the Ministry prescriptions. Main questions were "What is an incubator?" , "How do we develop an incubator?", of Science and Technology Business incubation leaders formed the National Business "What life cycle model can be extracted from analysis Incubation Association (NBIA). This surge in report- of business incubators?" First Chineese business generating activity in the early 1980s and the formation of the NBIA in 1985 underscore the growth in popular interest incubator was set up in Wuhan 1987 in business incubation in the 1980s. It was established aiming to provide training and tools for assisting start-up The Torchs Program mission was to First Chineese business incubator was set up in and fledgling firms and to serve as a clearinghouse for accelerate national technology Wuhan information on incubator management and development development, commercialization and Academia: Incubator configuration issues 40 members in its first year to approximately 1600 in internationalization. 2006. The main objective of the Torch Program studies and Incubatee development 1988 was to create a favorable environment for studies high-technology industries in terms of Academia enhanced research of business incubator topic. policies, financing, information networks, Main topics at this point of time are conceptual frameworks and strategic development the growth of and incubatee selection. Phase 1 of Chinas BIs development was carried business incubators in China occurred on Main questions: a national scale, fueled primarily by out financial support from the Torch Center 1) What are the critical success factors fro incubation? 2) How does the incubator-incubation concept work in practice? 3) How do incubators select incubatees? 1987 - 1990 Researchers investigated 4) What is the process of new venture development in an incubator context? business incubation impact 5) What is the role of planning and the business incubator Researches were concerned about following manager? topics: 1) Levels and units of analysis The government of China instituted special policies in support of business 2) Outcomes and measures of success incubator development and took responsibility for the provision of basic Main questions: physical infrastructure and services. 1) Do incubators achieve what their stakeholders This approach was essentially a landlord model of incubation where the assert they do? Idealab! was founded by government provided physical resources, such as land and buildings, along 2) How can business incubation program 1987 - 1997 with access to governmental sources of risk capital with little or no Bill Gross emphasis on value-added services, such as business consulting or outcomes be evaluated? Idealab was founded by Bill Gross with a 3) Have business incubators impacted new handful of employees to test many ideas at networking venture survival rates, job creation once and turn the best of them into Incubators during this early phase were almost fully sponsored and rates, industrial innovation rates? companies, while also attracting the human supported by government funds and run on a non-profit model in 4) What are the economic and fiscal impacts of and financial capital necessary to bring accordance with the Torch Center’s first goal of commercialization of an incubator? them to market. technology. 1990 – 1999 1996 Dot-com bubble shifted attitude and media considered incubators as producers of Pronounced shift "Death Stars". towards for-profit incubators late 1990s During the .com mania there was a pronounced shift towards for-profit incubators it is estimated that in the USA, a for- August 1999 and profit internet incubator was being created every other day. Aberdeen August 2000 Group analyst Dave Wright estimates that the number of for-profit incubators rose from just 37 in January In the late 1990s, fueled by irrationally exuberant stock valuations of 1998 to more than 400 by July 2000 3200 business several for-profit incubators and/or their incubatees, the media popularized a fantasy of business incubators as innovation hatcheries incubators in the capable of incubating and taking public ‘‘infinitely scaleable, dot-com World 3200 business incubators in the e-business start-ups’’ less than a year after entering the incubator. This fantasy and the incubator-incubation concept were largely World: abandoned and left for dead by the popular press after the collapse of Major Business Accelerators - one-third is located in North 2000 the United States’ stock market bubble. America; 900 incubation programs in were estabished However, rumors of the demise of the incubator-incubation concept - 30% in Western Europe and are ‘‘greatly exaggerated’’. The media reached its negative Western Europe - the rest is dispersed over the Far conclusions regarding incubators-incubation while fixated on for- East (20%), South America (7%), profit incubators, a relatively small segment of Eastern Europe (5%) and Africa, the total incubator population. the Middle East and other regions The vast majority of incubators are non-profit entities that continue to (5%) (EuropeanCommission, 2002). incubate below the ‘‘radar screens’’ of most journalists. 2002 Major Business Accelerators were 2005 - 2011 A study funded by the European Commission in 2002 established such as Y Combinator by Paul identified around 900 incubation environments in Western Graham, TechStars by David Cohen, Brad Y Combinator was started by Paul Europe Feld, David Brown, and Jared Polis, 500startups by Dave McClure, DreamIt TechStars was launched Graham Ventures, etc.. TechStars was launched as a mentorship-driven startup accelerator. It was founded by David 2005 Cohen, Brad Feld, David Brown, and Jared Polis. Business accelerator developed as a 13 week MENAinc and AIN were programs for startups in Boulder, New York City, Boston, Seattle, and San Antonio. Out of the 114 launched in Africa MENAinc is a regional network of business Phase 2 of Chinas BIs development companies that have completed the TechStars incubators and technology parks as well as their program, 92% are active and profitable. was launched supporting organizations and stakeholders for Development of more specialized, industry-specific 2006 Middle East and North Africa (MENA). incubators that targeted specific sectors in high In March 2005, one of the top seed accelerators in MENAinc is part of the global network of technology, such as new materials, software, the US (Y combinator) started its activity. Y infoDev. environmental technologies, combinator provided small amount of seed African Incubation Network (AIN) included Pre- and post-incubation services were also pro-vided by investment and hosted startups in its 3 months- groups that planned and opened incubators some of the more progressive incubators. Local, regional program. Main services are networking, advice on with infoDev support. and national incubator networks were developed in this business from experienced entrepreneurs. period with the intent of sharing resources and knowledge In 2013, the average valuation of Y Combinator- and continue to grow to this day backed companies, according to co-founder Paul diversified funding sources, i.e. mix of government, Graham, is $45.2 million. As of 2013, Y Combinator private and university/research institutes, indigenized has funded over 500 companies in over 30 different incubators markets. Profit-oriented models of incubation were created in China, particularly in the South such as Shenzhen and 2007 5000 business incubators in the Guangzhou where the environment is more market- 1997 - present World oriented. 5000 business incubators existed in the World in 2007 : North America - 1000 9000 business incubators in the World Western Europe - 900 9000 business South America - 400+ incubators exists in the Asia - 1000, China - 540 World in 2007 : Business Incubation industry maturity Mid East, Africa, Australia – no information North America - 1400 USA - 1250 The industry has matured the types of businesses Western Europe – 1000 incubated has significantly broadened. Germany – 200+ Incubation is a highly adaptable business intervention form, and today’s incubators target UK – 300 2013 diverse industries such as biotechnology, clean Eastern Europe - 300 South America - 400+ energy, ceramics technologies, the internet, Asia – 1000 software and telecommunications, high Africa – 50+ technology, and the arts. The industry services Mid East – 50+ high-growth, venture-backed businesses as well Australia & Pacific Area as micro enterprises; women and minority – no info owned businesses; and rural, suburban and urban environments Business Incubation Timeline Business Incubation Blog http://worldbusinessincubation.wordpress.com/, Author Ryzhonkov Vasily