Incubators: typology, models and examples ESCP-EAP Option Entrepreneuriat Session 1 Paris, September 26th 2007

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Summary Incubators : what for ? Models of Incubators Incubators in Paris ESCP-EAP Academic Incubator

Incubators : what for ?

Models of Incubators

Incubators in Paris

ESCP-EAP Academic Incubator

Summary Incubators : what for ? Models of Incubators Incubators in Paris ESCP-EAP Academic Incubator

Incubators : what for ?

Models of Incubators

Incubators in Paris

ESCP-EAP Academic Incubator

A definition : « Incubator : one that incubates, as (a) an apparatus by which eggs are hatched artificially (b) an apparatus with a chamber used to provide controlled environmental conditions especially for the cultivation of microorganisms or the care and protection of premature or sick babies » Webster dictionary Premature or early stage ? Incubators after the New Economy

A definition :

« Incubator : one that incubates, as

(a) an apparatus by which eggs are hatched artificially

(b) an apparatus with a chamber used to provide controlled environmental conditions especially for the cultivation of microorganisms or the care and protection of premature or sick babies »

Webster dictionary

Premature or early stage ?

Types of Incubators in the New Economy Venture Incubator : the incubator as we know it Campsix, Cambridge Incubator, IdeaLab !, eCompanies Venture Accelerator : consulting services IntendChange, Reactivity, Mc Kinsey, Yankee Tek Venture Portal : online self service NVST.com, TheElevator.com, Garage.com Venture Network : portfolio of investments + synergies Internet Capital Group, Net Value Holdings, CMGI Source : Oonut Mac Chinsonboom, MIT, 2000

Venture Incubator : the incubator as we know it

Campsix, Cambridge Incubator, IdeaLab !, eCompanies

Venture Accelerator : consulting services

IntendChange, Reactivity, Mc Kinsey, Yankee Tek

Venture Portal : online self service

NVST.com, TheElevator.com, Garage.com

Venture Network : portfolio of investments + synergies

Internet Capital Group, Net Value Holdings, CMGI

Source : Oonut Mac Chinsonboom, MIT, 2000

Incubators : why do we need them ? Capture potentially successful deals missed by VCs Facilitate idea creation Enhance product and service Accelerate speed of implementation Provide supplemental management Offer more « hand holding » than a typical VC Give access to expertise in marketing, operations, HR, technical, management, strategy, business development, financial, and others Facilitate business development and partnerships Help in finding clients Facilitate sources of fundings, now and later stage Portfolioize seed-stage ventures Provide additional deal-flow and vetting of deals for later-stage investors

Capture potentially successful deals missed by VCs

Facilitate idea creation

Enhance product and service

Accelerate speed of implementation

Provide supplemental management

Offer more « hand holding » than a typical VC

Give access to expertise in marketing, operations, HR, technical, management, strategy, business development, financial, and others

Facilitate business development and partnerships

Help in finding clients

Facilitate sources of fundings, now and later stage

Portfolioize seed-stage ventures

Provide additional deal-flow and vetting of deals for later-stage investors

Incubators : why should an entrepreneur go to them ? Assistance in brainstorming a concept or application for a new technology Provide additional validation Assist in creating the business model and plan Facilitate seed funding Offer more « hands » to the new entrepreneur Provide an option for ventures that were too early or were missed by VC Provide unique access to services in a resource-deficient region (e.g. shortage of office space in Silicon Valley) Financial advantage in that cost savings in a contracted time frame are more than the cost of equity that must be given to the incubator Offer access to uniquely positioned/qualified domain experts or advisors

Assistance in brainstorming a concept or application for a new technology

Provide additional validation

Assist in creating the business model and plan

Facilitate seed funding

Offer more « hands » to the new entrepreneur

Provide an option for ventures that were too early or were missed by VC

Provide unique access to services in a resource-deficient region (e.g. shortage of office space in Silicon Valley)

Financial advantage in that cost savings in a contracted time frame are more than the cost of equity that must be given to the incubator

Offer access to uniquely positioned/qualified domain experts or advisors

Incubators : different natures for a common objective Before or after the company creation : US : before and after the creation of a company, an ‘innovation center’ France : only before (followed by the ‘pepinière’) Walled or unwalled Public or Private Technological or generalist

Before or after the company creation :

US : before and after the creation of a company, an ‘innovation center’

France : only before (followed by the ‘pepinière’)

Walled or unwalled

Public or Private

Technological or generalist

Criterias to analyze incubators Promoters Public : region, state, universities / schools, chambers of commerce, … Private : large companies, individuals, foundations / trusts, associations, research centers, … Mission and objectives Job creation, business activity, transfer of technologies, profit, revitalization of regions, promotion of specific sectors, … Type of projects Generalist, or specialized on one sector (crafts, technology, services, …) To specific populations : students, people in reconversion, … Before, during or after the company creation Type of services offered Real estate, administrative services, consulting and support, training and coaching, networking Financial / business model Rent or services billed to incubated companies, external services, subventions or donations, sponsoring, royalties / dividends / equity Environment Geographical area (rural, industrial, large city …) and network of partners (companies, research centers, business angels / VCs, …)

Promoters

Public : region, state, universities / schools, chambers of commerce, …

Private : large companies, individuals, foundations / trusts, associations, research centers, …

Mission and objectives

Job creation, business activity, transfer of technologies, profit, revitalization of regions, promotion of specific sectors, …

Type of projects

Generalist, or specialized on one sector (crafts, technology, services, …)

To specific populations : students, people in reconversion, …

Before, during or after the company creation

Type of services offered

Real estate, administrative services, consulting and support, training and coaching, networking

Financial / business model

Rent or services billed to incubated companies, external services, subventions or donations, sponsoring, royalties / dividends / equity

Environment

Geographical area (rural, industrial, large city …) and network of partners (companies, research centers, business angels / VCs, …)

Where are we on the learning curve ? Source : Philippe Albert, CERAM Sophia Antipolis for the French Ministry of Industry, 2002

Incubators in Europe vs US Source : Philippe Albert, CERAM Sophia Antipolis for the French Ministry of Industry, 2002

The US : an innovative leader Development of incubators is old (first one in 1959) Environment is favorable to the creation of companies (culture, legal, etc…) Entrepreneurial spirit is strong The National Business Incubators Association (NBIA) plays a leading role The public and private sectors are strong VCs and BAs are key partners, especially in technological areas (Silicon Valey, …) Universities are very often involved (research, transfer of technologies, teaching on entrepreneurship, …) Companies plays a minor role

Development of incubators is old (first one in 1959)

Environment is favorable to the creation of companies (culture, legal, etc…)

Entrepreneurial spirit is strong

The National Business Incubators Association (NBIA) plays a leading role

The public and private sectors are strong

VCs and BAs are key partners, especially in technological areas (Silicon Valey, …)

Universities are very often involved (research, transfer of technologies, teaching on entrepreneurship, …)

Companies plays a minor role

The UK : a recent come-back of the government along private cies Some icon successes, but global result is poor Incubators are mainly « company hotels » Many initiatives from the Department of Trade and Industry starting 1999 to improve regulations and incentives Entrepreneurial spirit low Development of local public / private networks and Regional Development Agencies Many consultants selling services to incubators Dynamic BAs network and Stock Exchange The UKBI association plays a leading role

Some icon successes, but global result is poor

Incubators are mainly « company hotels »

Many initiatives from the Department of Trade and Industry starting 1999 to improve regulations and incentives

Entrepreneurial spirit low

Development of local public / private networks and Regional Development Agencies

Many consultants selling services to incubators

Dynamic BAs network and Stock Exchange

The UKBI association plays a leading role

Germany : a powerful engine with low return fueled by public money The largest number of incubators in Europe Generally a local partnership between collectivities, chamber of commerce, banks and Länder Entrepreneurial spirit is low Teaching of entrepreneurship is encouraged but universities are slow to adapt Help for SMC are numerous Bavaria and Baden-Würtemberg are leading in High Tech sectors Internationalisation of large German companies is « exporting » incubators where their research centers are Private incubators are in a very difficult situation The crash of the Neuer Markt is dissuading a lot of potential investors

The largest number of incubators in Europe

Generally a local partnership between collectivities, chamber of commerce, banks and Länder

Entrepreneurial spirit is low

Teaching of entrepreneurship is encouraged but universities are slow to adapt

Help for SMC are numerous

Bavaria and Baden-Würtemberg are leading in High Tech sectors

Internationalisation of large German companies is « exporting » incubators where their research centers are

Private incubators are in a very difficult situation

The crash of the Neuer Markt is dissuading a lot of potential investors

France : small initiatives with high return The French territory is covered with many “pépinières” Quality process (ISO) has improved professionalism Government plays a leading role (1999 Allegre law on research, 2002 law Dutreil on economic initiative) Sensibilisation to entrepreneurial spirit is only starting, but universities and schools are slow to pick up Private incubators are searching for a business model VC is limited and concentrated on key industrial sectors (telecom, software, bio-tech) and spin-offs vs pure creations Banks are reluctant BAs are few and very often active outside of France where environment is better

The French territory is covered with many “pépinières”

Quality process (ISO) has improved professionalism

Government plays a leading role (1999 Allegre law on research, 2002 law Dutreil on economic initiative)

Sensibilisation to entrepreneurial spirit is only starting, but universities and schools are slow to pick up

Private incubators are searching for a business model

VC is limited and concentrated on key industrial sectors (telecom, software, bio-tech) and spin-offs vs pure creations

Banks are reluctant

BAs are few and very often active outside of France where environment is better

Summary Incubators : what for ? Models of Incubators Incubators in Paris ESCP-EAP Academic Incubator

Incubators : what for ?

Models of Incubators

Incubators in Paris

ESCP-EAP Academic Incubator

Definition and typology of incubators An incubator is an entity designed to nurture business ideas or new technologies to the point that they become autonomous. An incubator typically provides physical space and some or all of the services - legal, managerial, technical - needed for a business idea to be developed Sources : faberNovel, Altassets Private Incubators Public Incubators Types of Incubators Incubators of Ideas and Projects Private Investors Incubators Corporate Incubator Local Economic Development Incubators Academic and Scientific Incubators Actors Corporations Venture Funds Corporations Local Government Different types of public actors Objectives Business development Return on investment by quick exit External growth Quick return on investment Local economic development Support to particular target groups or industries Development of SMEs and clusters Valorizing research Technology transfer Targets Internal and external projects, generally related to the activity of the company. Technological start-ups generally ICT related Startups (external or “excubated”), generally related to the activity of the company. Small commercial craft or service companies. In some cases, high-tech companies. Projects internal to institutions prior to company creation External projects

An incubator is an entity designed to nurture business ideas or new technologies to the point that they become autonomous. An incubator typically provides physical space and some or all of the services - legal, managerial, technical - needed for a business idea to be developed

Corporations

Venture Funds

Corporations

Local Government

Different types of public actors

Business development

Return on investment by quick exit

External growth

Quick return on investment

Local economic development

Support to particular target groups or industries

Development of SMEs and clusters

Valorizing research

Technology transfer

Internal and external projects, generally related to the activity of the company.

Technological start-ups generally ICT related

Startups (external or “excubated”), generally related to the activity of the company.

Small commercial craft or service companies.

In some cases, high-tech companies.

Projects internal to institutions prior to company creation

External projects

Typology of incubators Private Incubators Public Incubators Incubators Incubators of Ideas and Projects Private Investors Incubators Corporate Incubator Local Economic Development Incubators Academic and Scientific Incubators Offering Giving access to a working site, meeting rooms, communication, office services and secretariat, library, etc, in an environment that is favorable to innovation Support for project management (business case redaction, public financing requests, IP, …) Management and strategy advice Supply of one or several types of financing and search of complementary financing. Personal networks Eventually : Hosting and administrative assistance Legal services, public relations, recruiting, etc… Financial resources Prototype and market testing Access to commercial markets Eventually : Long-term strategic partnership Access to multiple competencies Hosting and shared services Administrative assistance -consulting Eventually : Coaching - training- networking, access to financing Financial resources Prototype and market testing Access to commercial markets Eventually : Long-term strategic partnership Access to multiple competencies Main Actors Big technological and pharmaceutical firms Private investors (venture capitalists) Big technological and pharmaceutical groups (via their investment fund) Board of trades, local body Laboratories of public research Trends High levels of consolidation and restructuring of the sector Still looking for a successful model Testing of the concept in numerous companies Likely to develop Regular development Increasing territorial coverage Rapid development under the aegis of public programs.

Giving access to a working site, meeting rooms, communication, office services and secretariat, library, etc, in an environment that is favorable to innovation

Support for project management (business case redaction, public financing requests, IP, …)

Management and strategy advice

Supply of one or several types of financing and search of complementary financing.

Personal networks

Eventually :

Hosting and administrative assistance

Legal services, public relations, recruiting, etc…

Financial resources

Prototype and market testing

Access to commercial markets

Eventually :

Long-term strategic partnership

Access to multiple competencies

Hosting and shared services

Administrative assistance -consulting

Eventually :

Coaching - training- networking, access to financing

Financial resources

Prototype and market testing

Access to commercial markets

Eventually :

Long-term strategic partnership

Access to multiple competencies

Big technological and pharmaceutical firms

Private investors (venture capitalists)

Big technological and pharmaceutical groups (via their investment fund)

Board of trades, local body

Laboratories of public research

High levels of consolidation and restructuring of the sector

Still looking for a successful model

Testing of the concept in numerous companies

Likely to develop

Regular development

Increasing territorial coverage

Rapid development under the aegis of public programs.

Corporate Incubators (CI) Corporate incubators objectives are to develop knowledge and skills on new technologies, business models and markets, and to develop entrepreneurial spirit among research divisions (strategic experimentation) Common success factors in new corporate incubators initiatives: clear, approved and communicated expectations Sources : faberNovel, Oseo Corporate Innovators key success factors * CI Culture and Rewards CI Processes CI Resources Top Management Sponsorship “ Failure is Success” Directly linked incentives Efficient end-to-end process Institutionalized internal and external idea/deal flow Clear cut milestones and tollgates Transparent pursue-or-exit path Intelligent, staged funding CI team CI facilities CI services CI funds

Corporate incubators objectives are to develop knowledge and skills on new technologies, business models and markets, and to develop entrepreneurial spirit among research divisions (strategic experimentation)

Common success factors in new corporate incubators initiatives:

clear, approved and communicated expectations

Top Management Sponsorship

“ Failure is Success”

Directly linked incentives

Efficient end-to-end process

Institutionalized internal and external idea/deal flow

Clear cut milestones and tollgates

Transparent pursue-or-exit path

Intelligent, staged funding

CI team

CI facilities

CI services

CI funds

Examples of successful corporate incubators Early-stage accelerator Technology Incubator

Summary Incubators : what for ? Models of Incubators Incubators in Paris ESCP-EAP Academic Incubator

Incubators : what for ?

Models of Incubators

Incubators in Paris

ESCP-EAP Academic Incubator

Incubateur Académique ESCP-EAP C/o Paris Soleillet

Paris’ incubators in 2007 Incubateur Académique ESCP-EAP

Agoranov www.agoranov.com Paris Innovation www.agoranov.com Telecom Paris http://www.enst.fr/creation-entreprise/incubateur/ Paris Biotech http://www.parisbiotech.org/ Advancia http://www.advancia.fr/template.asp?chapitre=60 Paris Pionnières http://www.parispionnieres.org/ ESCP-EAP http://www.lenouveaucourrier.ccip.fr/Article.asp?tgt=5&id=487

Summary Incubators : what for ? Models of Incubators Incubators in Paris ESCP-EAP Academic Incubator

Incubators : what for ?

Models of Incubators

Incubators in Paris

ESCP-EAP Academic Incubator

The ESCP-EAP Academic Incubator in one slide Owners : ESCP-EAP et AAESCP-EAP Mission : Research lab on the process to start a new company Objective : Development of projects and creation of innovative and/or growth companies Type of projects concerned : all kinds, including students , at the idea / BP stage Services offered : Coaching (Training, Coaching, Consulting), Hosting in some cases (real estate and shared services in the Pépinière Paris Soleillet) Budget : mixte : School budget (teachers + logistics) Sponsoring and subventions (hardware + office rent) Voluntary (coaching + expertise) Legal type : Internal to business school (part of ESCP-EAP Entrepreneurship Chair) A project « launched » in 2003, the structure, the place, the logistics, the first financing, experts and coaches are in place.

Owners : ESCP-EAP et AAESCP-EAP

Mission : Research lab on the process to start a new company

Objective : Development of projects and creation of innovative and/or growth companies

Type of projects concerned : all kinds, including students , at the idea / BP stage

Services offered :

Coaching (Training, Coaching, Consulting),

Hosting in some cases (real estate and shared services in the Pépinière Paris Soleillet)

Budget : mixte :

School budget (teachers + logistics)

Sponsoring and subventions (hardware + office rent)

Voluntary (coaching + expertise)

Legal type : Internal to business school (part of ESCP-EAP Entrepreneurship Chair)

Allow us now to introduce ourselves…

faberNovel’s activities are split into 3 units Galvanize innovative genes Carry out quickly Remain entrepreneur XP Venturi Strategy and organization for growth and innovation Experimentation and project management Interal project development and investment Assisting large groups on methodology, analysis and decision making Innovation consulting: Innovation Strategy Organization and innovation Change Management Knowledge Management R&D portfolio management Strategic experimentation Reduction of innovation risks Fast acquisition of key know-how and skills Conception and development of innovative products and services Functional specification Outsourced project management Conception and business validation Evaluation and identification of partners Piloting and feedback Venture capital, « excubation » Investment and development of internal projects Company creation assistance Capital shares offering additional action leverage Timuzo C4Mprod Consulting

Assisting large groups on methodology, analysis and decision making

Innovation consulting:

Innovation Strategy

Organization and innovation

Change Management

Knowledge Management

R&D portfolio management

Strategic experimentation

Reduction of innovation risks

Fast acquisition of key know-how and skills

Conception and development of innovative products and services

Functional specification

Outsourced project management

Conception and business validation

Evaluation and identification of partners

Piloting and feedback

Venture capital, « excubation »

Investment and development of internal projects

Company creation assistance

Capital shares offering additional action leverage

faberNovel oversees projects from their positioning to their realization

faberNovel Consulting heads all of faberNovel’s consulting activities Strategy Growth strategy Innovation platform Project portfolio management Innovation management faberNovel Consulting’s mission: galvanize firms’ innovative genes Organization Participative innovation (Idea Management System) Collaborative innovation (Customer Relationship Innovation ®) Intrapreneurship development Change management Sharing best practices Communities animation Knowledge design Technology transfer Prospective intelligence Technologies Markets Uses Implementation Competitive benchmark Functional specifications Partnerships / Monetization

Strategy

Growth strategy

Innovation platform

Project portfolio management

Innovation management

Organization

Participative innovation (Idea Management System)

Collaborative innovation (Customer Relationship Innovation ®)

Intrapreneurship development

Change management

Sharing best practices

Communities animation

Knowledge design

Technology transfer

Prospective intelligence

Technologies

Markets

Uses

Implementation

Competitive benchmark

Functional specifications

Partnerships / Monetization

If you want to know more on this subject, do not hesitate to contact us… 42, boulevard de Sébastopol I 75003 Paris I France Tel.: +33 1 42 72 2004 I Fax: + 33 1 42 72 2003 Web: www. fabernovel . com E-mail : amaury .de. [email_address] . com