Virtual Business Incubator Framework for Enriching Innovation Ecosystem 2013
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Virtual Business Incubator Framework for Enriching Innovation Ecosystem 2013
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The main purpose of this work is to find possible solutions for overcoming challenges of existing business incubation models. The end goal is to provide practitioners with the model of economic development tool which will help them to build new generation of business incubators, e.g. to guide management teams, policy makers, entrepreneurs and educators in establishing a successful business incubation program (BIP). Eventually the model intends to expand the limits of existing business incubation models.
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Virtual Business Incubator Framework for Enriching Innovation Ecosystem 2013
- 1. A FRAMEWORK FOR VIRTUAL BUSINESS INCUBATION PROGRAM ENRICHING INNOVATION ECOSYSTEM © Vasily Ryzhonkov, 2013 1
- 2. OVERVIEW 1. INTRODUCTION 2. BACKGROUND (WORLD RISKS, GOALS, ENTREPRENEURSHIP, BUSINESS INCUBATION) 3. STATEMENT OF THE PROBLEM, OBJECTIVES & RESEARCH QUESTIONS 4. METHODOLOGY 5. RELATED RESEARCH 6. ANALYSIS OF 20 BUSINESS INCUBATION MODELS 7. SYNTHESIS OF GENERIC BUSINESS INCUBATION MODEL 8. KEY TECHNOLOGICAL TRENDS 9. SYNTHESIS OF VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK 10. RESULTS, DISCUSSION, CONCLUSION & FURTHER RESEARCH 2
- 3. INTRODUCTION Short overview of the work, facts and statistics, motivation of the research 3
- 4. FACTS ABOUT THE RESEARCH INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 4 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • The work: • My entrepreneurial experience showed that entrepreneurs face tremendous amount of problems at early stages of a venture cycle. These needs could be addressed in a new way and require new models of supportive environment. • The work lasted more than a year and started on May, 2012. • Theoretical research was accompanied by practical work (a venture CrowdSynergy was created in order to build real-life model of virtual business incubator) • The research group included at maximum 10 members working on some aspects of the work. • The whole list of sources which was analyzed in this work is composed of 226 scientific papers and 71 industry reports, more than 20 knowledgeable authors and academics were read in strict examination.
- 5. FACTS ABOUT THE RESEARCH INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 5 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Results have been published online at http://worldbusinessincubation.wordpress.com • Content is reviewed by experts from industry: • Readers are from 97 countries, 50 active countries (as for May, 2013) • 623 readers per month (as for May 2013) • The comments and feedback about the content were made by more than 15 professionals coming from industry. • Contribution and presented models: • 20 business incubation models were analyzed since 1985 till 2012. • 2 new business incubation frameworks synthesized as a result of the research • The model is receiving more attention from the industry experts (UKBI, NBIA)
- 6. BACKGROUND Overview of World risks & problems, entrepreneurship as a possible solution to problems, innovation ecosystem and business incubation 6
- 7. 7 billion people in the World And we have problems … 7
- 8. WORLD RISKS & PROBLEMS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 8 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Economic risks • By 2030 costs on asset renewal of the world’s infrastructure will grow up to $70 trln. • Transnational corporations form a giant bow-tie structure, and 737 MNCs control 80% of total world’s wealth. • Environmental risks • By 2030 costs of ecological and climate problems, discharge of shortage of energy and drinking water will be around $95 trln. • Geopolitical risks (Mismanagement of population ageing; Rising debt) • Societal risks • Income inequality in OECD countries is at its highest level for the past half century (2012). • 1 in 5 of the world’s people - 1.2 billion - live on less than one dollar a day • Technological risks • Diffusion of weapons of mass destruction, cyber-attacks, etc. The data in the following slides is taken from World Economic Forum Report, 2012; Lalkaka R. , 2007; OECD, 2011; United Nations University, 2011.
- 9. economy is on the verge of recession. The problems with employment can lead to protests in 45 from 118 countries. 9@ COPYRIGHT 2012 CROWD SYNERGY (WWW.CROWDSYNERGY.COM) VASILY RYZHONKOV
- 10. Political methods are not working! We need innovations! 10 @ COPYRIGHT 2012 CROWD SYNERGY (WWW.CROWDSYNERGY.COM) VASILY RYZHONKOV
- 11. MEADOWS’S “LIMITS TO GROWTH” INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 11 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Key ethical hope of D. Meadows: “We believe, that the evolution of a society that favors innovation and technological development, a society based on equality and justice, is far more likely to evolve in a state of global equilibrium than it is in the state of growth we are experiencing today.” If human beings will continue to consume more than nature is capable of providing, global economic collapse and precipitous population decline could occur by 2030.
- 12. SOLUTION TO THE WORLD CHALLENGES INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 12 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Entrepreneurship could be considered as the main driver of world economy’s sustainable growth and a solution to the world’s problems as far as it existed in all economies throughout the world and centuries as the main transformational force. Entrepreneurship could be characterized by: • Complex system transformation issues • Informational, institutional, social and cultural changes • Creative destruction and technologies • Synergetic effect from new and existing technologies • Possibility to increase wealth and reallocate resources, consume less - produce more
- 13. INNOVATION ECOSYSTEM INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 13 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH
- 14. INNOVATION ECOSYSTEM CHARACTERISTICS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 14 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Funnel (or pipeline) organization of a system (99% of those who seek FINANCING get REJECTED) • High mortality rate and risks connected to entrepreneurship (“9 out 10 survive”) • Venture Capital (focus on investor`s profit and reduction of their risks, short-term orientation). • Innovation ecosystem is a system of systems • Innovation ecosystem works if there is a demand for innovations • Number of entrepreneurs worldwide is growing (400 mln entrepreneurs in 2012, 1bln entrepreneurs is expected by 2020) • Focus on a limited number of elements out of the whole scope (such as infrastructure, educational organizations, venture funds) • Innovations are considered as a social elevator by young people. • Main models of the venture support in the innovation ecosystem are venture fund, business incubator (accelerator), industrial & science park
- 15. BUSINESS INCUBATION CHARACTERISTICS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 15 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Comprehensive array of targeted services, resources and people in one integrated package • Careful selection of entrepreneurial firms and exit policy • Focused counseling and consulting • Training and networking on management • Marketing and business assistance • Information and affordable workspace • Access to outside service providers and finance • Interaction with all the actors in the ecosystem • Provision of a valuable feedback loop to other stakeholders of the system
- 16. STATEMENT OF THE PROBLEM, RESEARCH OBJECTIVES AND QUESTIONS Perspectives on the innovation ecosystem and business incubation industry challenges and constraints 16
- 17. BUSINESS INCUBATION & INNOVATION ECOSYSTEM PROBLEMS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 17 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Short term orientation • Scarcity of the resources and complicated access to these resources for early-stage entrepreneurs • Limited capital for early stage entrepreneurs: $31,27B reached entrepreneurs (10% of available capital by Angels and VCs), whereas demand was around $2565-2790B in 2012 • Limited number of brilliant ideas and talented people: current number of business incubators can satisfy the needs only of 900 000 while a demand is around 25 mln projects in 2012. Accepts limited number of projects, usually 30- 50 projects per incubator, at maximum < 100 ventures a year • Skills-intensive as it requires experienced management teams • Funnel-based configuration of the system • 99% of Entrepreneurs who seek FINANCING get REJECTED • Incubation process oriented on tough selection, mediation and exit policies • Old logistics of projects selection and development
- 18. PURPOSE OF THE WORK INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 18 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • To introduce a completely new framework of virtual business incubation program (VBIP) that could overcome existing BI problems, and assess its potential applicability as an enabling system for early-stage entrepreneurs in comparison with existing models
- 19. RESEARCH QUESTIONS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 19 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • What could be a framework of virtual business incubation program? (Main question) • What are the innovation industry and business incubation industry state and challenges? • What could be a generic business incubation model? • How can new trends (IT) in society shape the business incubation and their models? • How can virtual business incubation change the face of innovation ecosystem? • What could be an impact of virtual business incubation program on entrepreneur’s process?
- 20. METHODOLOGY Description of the research method: literature review, analysis and synthesis methods, venture creation and online blogging as an instrument of feedback, logic of research 20
- 21. RESEARCH TOPICS OVERVIEW INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 21 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH World problems & risks and possible solutions Entrepreneurship and innovations Innovation ecosystem Business incubation (history, definition, characteristics, problems) Business incubation models Generic business incubation model Key technological and mega trends Virtual business incubation (definition, history, characteristics) Virtual business incubation models Virtual business incubation program
- 22. GENERAL RESEARCH METHOD (ANALYSIS) INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 22 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH 4. Empirical evidence Publication of a model at online blog Conducting experts interviews Obtaining a feedback from professional communities 3. Analysis of the topic/problem Systematization of data & knowledge Interpretation of the data & information Search for and creation a model Hypothesis or problem statement 2. Establishing a viewpoint on the topic/problem Identifying relevant issues, stakeholders and their objectives Identification key elements and behaviour of a system 1. Information, data & knowledge collection and classification Literature review Experts interviews Relevant discussions in the COP Field notes & practical lessons learned
- 23. GENERAL RESEARCH METHOD (SYNTHESIS) INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 23 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH 3. Creation Reviewing existing technologies and trends Brainstorming of ideas and possible solutions Search for a model that could fit existing requirements 2. Establishing an entrepreneur's viewpoint and needs Identifying relevant needs Existing models from the entrepreneur's perspective Requirements for a new model 1. Critical review of existing theory or models Key concepts and value Main problems and chalenges Further research questions
- 24. RELATED RESEARCH Short overview of what has been done in the academia on business incubation, business incubation models and virtual business incubation 24
- 25. OVERVIEW OF BUSINESS INCUBATION RESEARCH INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 25 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH All Topics Business Incubation Business Incubation Models Virtual Business Incubation Virtual Business Incubation Models 200 scientific papers and 70 industry reports. 135 scientific papers and 5 industry reports. 25 scientific papers and 3 publications in industry. 10 scientific papers and 1 publications in industry. 5 scientific papers and 1 publications in industry. ‘80s ‘85 ‘00 ‘00
- 26. ANALYSIS OF 20 BUSINESS INCUBATION MODELS Results of the analysis of existing business incubation models 26
- 27. 20 BUSINESS INCUBATION MODELS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 27 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Black-box White-box Structure Typeofmodel Process Abstraction technique 2000, Lalkaka 1988, Nijcamp & Smilor 1987, Smilor 2000, Carter, Jones-Evans 2000, Nowak and Grantham 2000, Booz · Allen & Hamilton 2002, Lazarowich & Wojciechowski2003, Gibson, Wiggins 2004, Sahay 2004, Hacket & Dilts, Peters et al., Soetanto 2004, Hackett & Dilts 2008, Bergek, Norrman 2010, Jones 2010, EBN 2011, Chandra and C.-A. Chao 2004, Hackett & Dilts business incubation logic model 2009, InfoDev 2013, Ryzhonkov Generic Incubation model 2002, Costa- David, Malan, Lalkaka, NBIA 1985, Campbell, Kendrick, Samuelson 2012, Metibtikar
- 28. KEY OUTCOMES OF THE ANALYSIS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 28 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Business incubation program is a support (or enabling) system for the entrepreneur. • Business incubation program is a risk management system. • Business incubation program requires a variety of players, playing as a team. • Business incubator should concentrate on key value-adding activities for the stakeholders (mainly for entrepreneur). • Incubation process is of key importance. • Business incubator should influence and proactively participate in formation of local entrepreneurial culture. • Business incubator should provide a mechanism of transformation the demand coming from industry and government for particular solutions/technology to the supply coming from the entrepreneurial community. • Business incubator itself should be profit-driven and innovative organization able to learn, to be sustainable and focus on providing value to key stakeholders.
- 29. KEY CONSTRAINTS OF TRADITIONAL MODEL INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 29 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Structure of the operational system – Funnel • 99% of Entrepreneurs who seek support get REJECTED • Limited resources • Limited dealflow per BI per year - 30-50 projects on average, rarely – 100 => BI industry can satisfy the needs only of 900K while a demand is around 25M • Number of ideas per incubator a year – 1000 on average, most of them is lost • Scalability – no or limited (TechStars example) • Skills-intensive as it requires experienced management teams 7-9 managers on average • Business model • Profits – 95% non-profit • Incubation process - Concentration on selection, development, exit
- 30. SYNTHESIS OF GENERIC BUSINESS INCUBATION MODEL Short overview of the model and main conclusions 30
- 31. MAIN PREMISES OF A NEW GENERIC BI MODEL INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 31 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Few models consider entrepreneur as a key stakeholder of the process. • Almost all models describe “picking the winners” policy as the optimal (successful) approach. • There is no model that have linked entrepreneur’s life cycle, incubation process and processes in the innovation ecosystem (external environment). • Incubation process and services: • No model describes the importance of influencing the inputs in order to increase the performance of the business incubation system. • Few models described the incubation process in detail, only generalizations. • Few incubator’s models explain which services to apply in the particular conditions, cases, and stage of venture development. • Business incubation programs are becoming more and more short-term oriented. Only few propose pre-incubation services where risks and needs are on their peak.
- 32. MAIN PARTS OF THE GENERIC BI MODEL INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 32 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Funnel model of incubation Risk and Incubation stages Generic model of business incubation process Matching entrepreneur’s needs and aims with stages of incubation process External environment of Business Incubation Program Process model of innovation ecosystem
- 33. FUNNEL MODEL OF INCUBATION INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 33 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Success of incubation process in general depends on internal and external factors • If an incubator doesn’t provide sufficient efforts influencing the innovation ecosystem, and the appearance of brilliant talent and ideas, there are less chances to get sufficient deal flow as an input to the incubation process, and incubate more successful startups. • Relevant for emerging innovation ecosystems of efficiency-driven countries.
- 34. RISK AND INCUBATION STAGES MODEL INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 34 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • The chances for success of a startup depend on many factors, and are extremely low at early stages. • Incubators are considered by sponsors and investors as risk reduction tools, which manage both investment risks, as well as entrepreneurial risks. • Model shows that the more uncertainty is eliminated the more chances of startup to raise financing.
- 35. GENERIC MODEL OF BUSINESS INCUBATION PROCESS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 35 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH
- 36. EXTERNAL ENVIRONMENT OF BI PROGRAM INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 36 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Business Incubation Program Investors Government Entrepreneur s, Ventures, SMEs Universities & R&D centers, Inventors Service ProvidersNon profit Organization s & Associations Corporations and Business Business Incubation Programs Community / Private Sector Market (Customers ) • There are many stakeholders of the incubation process in the innovation ecosystem. These goals and interests are conflicting with each other. • Business incubator is one of the mediators in the innovation ecosystem. It links money on the one hand, and people and technologies on the other hand. • This leads to the conclusion that incubators should be more private and profit-driven than it is now, eventually this will lead to more projects and deals.
- 37. PROCESS MODEL OF INNOVATION ECOSYSTEM INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 37 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH PeopleTechnological Entrepreneurs Professionals Gov.programs, incubators, angels, family Venture Funds Universities Corporate R&D labs Independent R&D centres Patent Brokers Services & Goods Producers Companies Defence Health Transport Housing Communication Internet Finances Information Education Food & Drinks Leisure Goods Energy Ecology Policy 2-4% of population are entrepreneurs 20-40% of population are professionals ExaminationIdeas Money Money Money Money Technologies Technologies Money Goods & Services Projects Projects Startups Startups Startups Money Money Patents Technologies Licenses Patents Government Market Money Entrepreneurial Teams Money Community Technologies
- 38. CONTRIBUTION OF GENERIC BI MODEL INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 38 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Few business incubators provide pre-incubation services when risks are higher, and consequently entrepreneurs needs more support. • Multiple stakeholders and objectives of incubator create conflicts of interest. Thus, it makes efficiency and effectiveness of the incubator lower from entrepreneurial perspective. • Due to big risks and limited resources incubator can process only limited amount of tenants per period. This restricts scalability of the incubator and there are less chances to get sufficient deal flow as an input to the incubation process, and incubate more successful startups. • It is very hard to build sustainable and profitable business incubator with viable business model. That’s why most of them are dependent on a government support.
- 40. KEY TECHNOLOGIES INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 40 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Internet penetration • Mobile platforms & Cloud computing • Social Networking Technologies • Online Payment Systems • Crowdsourcing • Microfinance and crowdfunding • Gamification
- 41. SYNTHESIS OF VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK Overview of the framework, main characteristics and results 41
- 42. Virtual Business Incubation Process- oriented operational model Bundled package of services Early-stage entrepreneurs support Unique combination of processes, services, infrastructure and human resources Development of raw ideas into viable businesses Independence from physical infrastructure and geographical location VIRTUAL BUSINESS INCUBATION INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 42 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Physical Business Incubation
- 43. VIRTUAL BUSINESS INCUBATION HISTORY INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 43 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Internet Incubators: a rise to some 400 for-profit, Internet incubators that were added in the U.S and elsewhere in the 1999 – 2000 period • Networked incubator: a concept introduced by Hansen & Chesbrough in 2000 Chapter 1 of VBI History (late 1990s-2000) • Incubator without walls: low-cost infrastructure provided by ICT means, easily accessible markets, scalability, expands geographical coverage, allows for exchange between entrepreneurs from different backgrounds and regions • Critics: Credibility and trust are hard to establish, Flow of knowledge and partnerships couldn’t be imitated via virtual channels, Virtual incubators are more likely to be service providers (Hackett & Dilts, 2004). Chapter 2 of VBI History (2000-2005) • Business accelerators: For-profit, short-term oriented business incubators such as Y Combinator, TechStars, DreamIt Ventures Chapter 3 in VBI History (2005 - present)
- 44. VIRTUAL BUSINESS INCUBATION PREMISES INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 44 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Early stage entrepreneur’s and venture’s needs and problems are the corner stones of the virtual business incubator. • Virtual business incubator should provide deals sourcing mechanism for innovation industry. • VBIP should provide flexible support to different types of early stage entrepreneurs. • VBIP is viewed as the entrepreneurial institute for early stage entrepreneurs (MBA for entrepreneurs) • Entrepreneurs should be self-motivated • Virtual business incubation program should apply the principles of generic business incubation model
- 45. 10 VIRTUAL BUSINESS INCUBATOR CHARACTERISTICS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 45 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH 1. Target group – early stage entrepreneurs 2. Location independent 3. Long-term determinism 4. Profit-driven 5. Built-in mechanisms of risk reduction and experimentation 6. Growing talents and ideas by educating 7. Early stage entrepreneurs’ needs and performance is a focus 8. Incubation process (systemic approach to the virtual incubation process) 9. Spaghetti + Funnel based configuration of the system 10. Scalability
- 46. SUPPORT STAGE OF VIRTUAL BUSINESS INCUBATOR INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 46 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH
- 47. VIRTUAL BUSINESS INCUBATOR CONFIGURATION INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 47 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH
- 48. VIRTUAL BUSINESS INCUBATOR FINANCING FOCUS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 48 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH
- 49. INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 49 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Service Category Subcategories Secretary services o Remote assistants services Business services o Ideation and business model creation assistance o Crowd and experts’ validation of ideas, business models o Systematic assistance with business basics Financing and access to finance o Access to crowdfunding and crowdinvesting platforms or VBIP crowdinvesting tool o Access to venture capitalists, business angels o Help with raising bank finance, grants, seed and venture capital People connectivity and networking o Team building services o Reputation building services for project, team and person. o Networking activities within VBIP social network o Entrepreneurs, teams, experts and investors database Education / access to knowledge o E-courses on entrepreneurship, business and management o Comprehensive business training Brand building o Internal business model, business plan or business idea competitions for receiving internal or external grants o Project tracking system (transparent for other participants) Motivational services o Automated feedback mechanism for entrepreneurs on venture progress and self-learning o Constant feedback from dedicated mentors or experts o Personal mentoring VIRTUAL BUSINESS INCUBATOR SERVICES
- 50. VIRTUAL BUSINESS INCUBATOR PROCESS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 50 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Business Incubation Stage Substage Venture Life Cycle Stage Result PRE- INCUBATION Deal sourcing (ideas, entrepreneurs, team members) DISCOVERY Founding team is formed Many customer interviews are conducted Value proposition is found Minimally viable products are created First mentors and advisors come on board. Ideation Training Assesment Concept / Business Model INCUBATION Screening process and competitions Early Stage (search for the scalable business model of a venture) VALIDATION Refinement of core features Initial user growth Metrics and analytics First key hires, Pivots (if necessary), First paying customers, Product market fit
- 51. VIRTUAL BUSINESS INCUBATOR PROCESS INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 51 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH
- 52. VIRTUAL BUSINESS INCUBATOR FINANCE MODEL INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 52 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH Costs • Staffing costs • Development of the platform • Maintenance and tech supplies • Public relations and marketing • Mentoring and experts reward • Rent of physical facilities • Administrative expenses Subscription / membership fees Roaylties on sales Lead generation and applications sales Equity deals Mentoring Consulting services for government s, companies / National innovation clusters Revenue Sources
- 53. VIRTUAL BUSINESS INCUBATION PLATFORM INTRODUCTION BACKGROUND PROBLEM, OBJECTI VES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 53 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUS ION & FURTHER RESEARCH
- 54. RESULTS, CONCLUSION AND FURTHER RESEARCH Key benefits, impact of virtual business incubation and contribution 54
- 55. IMPACT OF THE VIRTUAL BUSINESS INCUBATION PROGRAM INTRODUCTION BACKGROUND PROBLEM, OBJECTI VES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 55 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUS ION & FURTHER RESEARCH Parameter Classical Business Incubator Virtual Business Incubator Model of Business Incubation Classical Physical Business Incubators & Accelerators(BI) Model for Virtual Business Incubation (Advanced Networked Incubator) Structure of the operational system Funnel Spaghetti Resources and Capacity Dealflow per BI per year 30-50 projects, rarely – 100* 1000 – 10000 % of rejected entrepreneurs 99% 0% Capital attracted No numbers $50K per project ( crowdsourcing format) Human Resources 7-10 managers on average The same
- 56. INTRODUCTION BACKGROUND PROBLEM, OBJECTI VES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 56 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUS ION & FURTHER RESEARCH Parameter Classical Business Incubator Virtual Business Incubator Number of ideas per incubator a year 1000 (on average), and most of them are lost Unlimited, ideas remain in the system and can be refined Costs of establishing and operations $3-5M (average cost) per incubator $4-6M – development of the system, $100K – price for scaling per region/city/country Profits 95% not-for-profit Different revenue models Incubation process Concentration on selection, development, exit Concentration on growing a critical mass Scalability No , limited (TechStars example) Yes Networking Partly, depends on personnel Crucial asset, not dependent on humans Trans nationality Local (90%) Transnational IMPACT OF THE VIRTUAL BUSINESS INCUBATION PROGRAM
- 57. CONCLUSION AND FURTHER RESEARCH INTRODUCTION BACKGROUND PROBLEM, OBJECTI VES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 57 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUS ION & FURTHER RESEARCH • My findings confirm that: • There is scarcity of resources available for early stage entrepreneurs and disproportional concentration of them (resources) around the globe. • Existing models of supporting organizations and business incubation (as the main type) in particular are constrained and limited, and even more the innovation ecosystem can’t satisfy the growing demand from booming entrepreneurial population. • Virtual business incubation has a potential to overcome mentioned constraints
- 58. CONCLUSION AND FURTHER RESEARCH INTRODUCTION BACKGROUND PROBLEM, OBJECTIVES & RESEARCH QUESTIONS METHODOLOGY RELATED RESEARCH 58 ANALYSIS OF 20 BUSINESS INCUBATION MODELS GENERIC BUSINESS INCUBATION MODEL KEY TECHNOLOGICAL TRENDS VIRTUAL BUSINESS INCUBATION PROGRAM FRAMEWORK RESULTS, CONCLUSION & FURTHER RESEARCH • Further research: • Comparison of entrepreneur’s supportive systems. • Business incubation • Dependency on government support - in policy, infrastructure, initial funding. • Paradox of market emulation • Expensiveness • Profitable business model • Virtual incubation • Virtual business incubation models
Editor's Notes
- Being honest my research is three times bugger than any research presented in this room. Thus, it would be fair if I could have at least 45 minutes in order to present the results of my work.Otherwise it will be superficial.
- Вы можете спросить, так о чем собственно работа и почему была выбрана эта тема Enriching Innovation Ecosystem.Я – русский. А мы русские любим решать сложные и серьезные задачи. Мы запускали человека на луну, мы запустили первый искусственный спутник земли, строили транссибирскую магистраль, мы победили во второй мировой войне.Меня мучают вопросы того, что дети голодают. Меня мучают вопросы, касающиеся глобальных проблем человечества, состояние, ценности и цели человечества в целом. Куда идем? Мы уже столько раз наступали на грабли, это ведь может кончиться очень плачевно!
- Итак, наcболее 7 миллиардов и у наспроблемы...Сфокусируемсянаглавных и натом, вочто, в какиеденьгичеловечествуобойдетсярешение!!! Цифрыдаютсяразнымиконсалтинговымиагенствами, спекулятивны и имеютрасхождение, но в порядкахсовпадают...
- Economic risksBy 2030 costs on asset renewal of the world’s infrastructure will grow up to $70 trln. The distribution of total liquid net worth in the world per person in 2012 shows that 0.1% (8,891 mln people) owns more than 80% of total liquid net worth (Henry, 2012) (see Figure 1).Transnational corporations form a giant bow-tie structure, and 737 MNCs control 80% of total world’s wealth.Environmental risksBy 2030 costs of ecological and climate problems, discharge of shortage of energy and drinking water will be around $95 trln.Geopolitical risksWorld economy is on the verge of recession. The problems with employment can lead to protests in 45 from 118 countries.Mismanagement of population ageing.Rising debtSocietal risks1 in 5 of the world’s people - 1.2 billion - live on less than one dollar a day, 1 in 3 have no access to electricity, and 1 in 2 lack basic sanitation. 50 countries have lower per capita incomes now than a decade ago (Lalkaka R. , 2007) Income inequality in OECD countries is at its highest level for the past half century. The average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago (OECD, 2011) (see Figure 2).The richest 1% of adults alone owned 40% of global assets in the year 2000 (United Nations University, 2011). The three richest people possess more financial assets than the lowest 48 nations combined. The combined wealth of the "10 million dollar millionaires" grew to nearly $41 trillion in 2008.Technological risksDiffusion of weapons of mass destruction, cyber-attacks, etc.
- Все эти триллионы трудно представить... Надо с чем-то сравнить... К примеру Стоимость Сбербанка – чуть выше 50 млрд. долларов, а 1 трл. – это около 20 Сбербанков. Так вот проблема в том, что к 2030 году нам надо где-то найти и заплатить сумму денег более 8000 стоимостей сбербанка. Где эти деньги брать? Можно как обычо – увеличить налоги и напечатать. Но есть проблемы....
- Политические и монетарные методы не работаютНужны инновации и возникает вопрос – а насколько современная инновационная система способна удобвлетворить такой спрос?
- Global governance failure. Knowledge to attack most of the problems (e.g. poverty and disease) exists. But political commitment and resources have yet to be mobilized.Growth advocates change the justification for their paradigm rather than changing the paradigm itself. Politics and the market are inherently unsuited to adopt constructive policies that can lead to sustainable development.Racial, religious and gender violence, and cultural differences make us all less secure.Governments are still concerned about their local economies and local goals. E.g. official development assistance to poor countries is about $125.6 billion a year (OECD data, 2012). Whereas, subsidies to agriculture in rich nations are $350 billion, and world militarystands at over $1.7 trillion in annual expenditure (Stockholm International Peace Research Institute (SIPRI), 2012), and has been rising in recent years.World faced financial crisis in 2008 that forced governments to think about their own countries and economies instead of global problems.Unwillingness of MNCs to shift the paradigm of short-term profits towards long-term development. Unsustainable population growth.Corruption and greed (World Economic Forum Report, 2012).Model showed that population and industrial growth are inherently exponential; and that exponential growth will take global society to any existing limit quickly, wherever that limit is. The global ecosystem is now far above its carrying capacity.The real question is “Collapse or stabilized world”, this is how we should place a question. Predictions that we can make today are:The reality will become evident in the nearest future (within 30 years)!We are following the collapse scenario. Economics & industrial capacity will crash and human populations decline rapidly.
- The innovation ecosystem (IE) is a very complex system which consists of multiple stakeholders with their own goals. Thousands of articles, books, blueprints and guidelines were written about revealing the secret sauce of an innovation ecosystem. Innovation ecosystem is a unique combination of elements: foundational institutions (such as universities, venture creators, supply chains, labor markets, and job-training programs), supporting organizations (business incubators, science parks, technology centers), culture, ideas, capital, talent, and most notably demand (see Figure Main elements of an Innovation Ecosystem).These elements are less effective if they operate in isolation. They should be networked—with smooth pathways that allow intellectual, financial, and human capital flow between entities. Innovation ecosystem is system of systems. Thus, it inherited main characteristics of complex systems:complexity;high and unpredictable connectivity;constant dynamics;resilience;Building a successful innovation ecosystem have become a kind of holy grail for governments around the world—in both emerging and developed countries.There is no universal formula for building an innovation-based economy and successful innovation ecosystem (even though tons of guidelines have been written); there are only practical cases (successful and not), and imperfect roadmaps. I would like to point out what they shouldn’t do, instead of providing recommendations or principles that leaders should follow.
- World’s Innovation Industry cannot satisfy growing demand for innovations coming from the society and entrepreneurs in particular.
- As it was mentioned before there is no exact formula how to build perfectly efficient and effective innovation ecosystem or cluster. Neither there is no a universal formula of which tools and mechanisms to use for venture support. However, some indirect evidence could prove importance and pivotal role of business incubators in the innovation ecosystem landscape. Exact figures and facts will be proposed for reader’s consideration in the next chapter.The heart of innovation ecosystem lies in business incubation – a set of tools, processes and policies of nurturing ventures into viable businesses. Depending on goals, conditions, local policies and involved stakeholders business incubation could be implemented in different ways. Nevertheless there are common characteristicsinteractive and dynamic business support process of new businesses at an early stages with the purpose of stimulating people to start their own business and development of innovative products or services. Business incubation is provided through comprehensive array of targeted services, resources and people. Business incubation should also be viewed as unique and flexible combination of business development processes, infrastructure and people.
- Since 1980s when first publications about incubators appeared academics and practitioners investigated a plenty of questions. One of the most important questions was the question about limitations, constraints and challenges of business incubation. Our literature review showed that many researchers conducted research on this issue. I would like to name main works, that have touched the issue of business incubation problems and down-sides.ModelofbusinessincubationElitist – FunnelsystemofworkIncubation process Dependentongovernmentsupport - inpolicy, infrastructure, initialfundingScarcity of the resources and complicated access to these resources for early-stage entrepreneurs$31,27B reachedentrepreneurs (10% ofavailablecapitalbyAngelsandVCs), whereasdemandwasaround $2565-2790B in 2012Currentnumberofbusinessincubatorscansatisfytheneedsonlyof 900 000 projects (ifall 9000 businessincubatorsintheworldwillaccept 40 projectsperyear). While a demandis (ifweassumethatatleast a halfofearly-stageentrepreneurswouldliketogetsupportfrombusinessincubators) around 25 mlnprojects (around 50 mlnearly-stageentrepreneurswereintheworldin 2012) Funnel-based configuration of the system99% ofEntrepreneurswhoseek FINANCING get REJECTED Acceptslimitednumberofprojects, usually 30-50 projectsperincubator, atmaximum <100 ventures a yearOldlogisticsofprojectsselectionanddevelopmentScarcity of the resources and complicated access to these resources for early-stage entrepreneurs:50 mln early-stage entrepreneurs in 2011 (OECD, 2011) (GEM, 2011) (WEF, 2011) requested around $2,5trln, whileas supply was $31,3bln (NVCA, Yearbook, 2012) (Money Tree Report, 2012); by 2030 the demand for innovations will be $5-7trln and number of entrepreneurs around $1bln (CrowdSynergy estimation). Funnel-based configuration of the system:Current ventureindustry and as a consequence system of business incubation (as one of the most effective and efficient economic development tools) is built as pyramid where 99 early-stage entrepreneurs are rejected (NVCA, Yearbook, 2012)(CrowdSynergy Analysis, 2012).Estimation of CrowdSynergy based on current trends and reports from industry, 2012
- This thesis work has been conducted in seven different areas, as presented in Figure 2. To create a foundation of the work background study is carried out in order to formulate research questions, problems and formulate hypotheses. In order to form a solid theoretical background for this thesis work, a careful literature review was carried out with final analysis of more than 200 scientific papers and 70 industry reports. Publications and online sources including the terms ‘business incubation’, ‘business incubation model’, ‘innovation ecosystem’, ‘venture life cycle’ and a few more were collected and reviewed, including exploration of citations and references. All collected data about business incubation was systematized and used in order to conduct several supplementary researches (by deductive reasoning) such as‘Business incubation models’ research (see Appendix 1), ‘Business incubation history’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Business incubation definition’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Entrepreneurial process models’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Fundraising as the main problem of early stage entrepreneur’ research (provided online at http://www.slideshare.net/VRyzhonkov/fundraising-as-main-problem-for-entrepreneur-2012),Glossary of terms of entrepreneurship and business incubation (provided online at http://www.slideshare.net/VRyzhonkov/glossary-of-terms-on-entrepreneruship-and-business-incubation-ryzhonkov-vasily-2013),‘Business incubation objectives, mission and vision’ research (provided in the Chapter 4).
- This thesis work has been conducted in seven different areas, as presented in Figure 2. To create a foundation of the work background study is carried out in order to formulate research questions, problems and formulate hypotheses. In order to form a solid theoretical background for this thesis work, a careful literature review was carried out with final analysis of more than 200 scientific papers and 70 industry reports. Publications and online sources including the terms ‘business incubation’, ‘business incubation model’, ‘innovation ecosystem’, ‘venture life cycle’ and a few more were collected and reviewed, including exploration of citations and references. All collected data about business incubation was systematized and used in order to conduct several supplementary researches (by deductive reasoning) such as‘Business incubation models’ research (see Appendix 1), ‘Business incubation history’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Business incubation definition’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Entrepreneurial process models’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Fundraising as the main problem of early stage entrepreneur’ research (provided online at http://www.slideshare.net/VRyzhonkov/fundraising-as-main-problem-for-entrepreneur-2012),Glossary of terms of entrepreneurship and business incubation (provided online at http://www.slideshare.net/VRyzhonkov/glossary-of-terms-on-entrepreneruship-and-business-incubation-ryzhonkov-vasily-2013),‘Business incubation objectives, mission and vision’ research (provided in the Chapter 4).
- This thesis work has been conducted in seven different areas, as presented in Figure 2. To create a foundation of the work background study is carried out in order to formulate research questions, problems and formulate hypotheses. In order to form a solid theoretical background for this thesis work, a careful literature review was carried out with final analysis of more than 200 scientific papers and 70 industry reports. Publications and online sources including the terms ‘business incubation’, ‘business incubation model’, ‘innovation ecosystem’, ‘venture life cycle’ and a few more were collected and reviewed, including exploration of citations and references. All collected data about business incubation was systematized and used in order to conduct several supplementary researches (by deductive reasoning) such as‘Business incubation models’ research (see Appendix 1), ‘Business incubation history’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Business incubation definition’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Entrepreneurial process models’ research (provided online in the blog http://worldbusinessincubation.wordpress.com), ‘Fundraising as the main problem of early stage entrepreneur’ research (provided online at http://www.slideshare.net/VRyzhonkov/fundraising-as-main-problem-for-entrepreneur-2012),Glossary of terms of entrepreneurship and business incubation (provided online at http://www.slideshare.net/VRyzhonkov/glossary-of-terms-on-entrepreneruship-and-business-incubation-ryzhonkov-vasily-2013),‘Business incubation objectives, mission and vision’ research (provided in the Chapter 4).
- Let’s me remind what we are seeking for in this work.Primarily, it’s about creation of new supportive environment that fits current market needs and combines modern technologies.Secondly, it’s about understanding the business incubation and business incubation models in general.Thirdly, it’s about virtual business incubation as a phenomenon, and virtual business incubation models.In my work I’ve created a so called business incubation timeline. This is analysis and development of a concept since it’s emergence in 1959 (this is when first business incubator appeared) and till recent times.Business incubationis interactive and dynamic business support process of new businesses at an early stages with the purpose of stimulating people to start their own business and development of innovative products or services. Business incubation is provided through comprehensive array of targeted services, resources and people. Business incubation should also be viewed as unique and flexible combination of business development processes, infrastructure and people. Business incubator is value adding service organization aimed to foster the care of a new venture at an early stage, increase its chances for surviving and enhance the growth potential via providing comprehensive and integrated range of business development services; and decreasing overheads by sharing costs, resources and services; thus, maximizing impact of new ventures on economic development.Definitions are synthesized based on analysis of 16 definitions of business incubation concept and historical development of the phenomenon.
- Business incubation is a concept which involves multiple stakeholders, dozens “building blocks”, various types of resources and several service categories (around 100 specific services in total). Consequently, it requires high level of conceptualization for better defining, analyzing, designing, calibration, performance evaluation and thinking about business incubation. We will use modeling and models to do so, trying to stay as simple as possible. It’s also important to highlight that researchers, consultants and practitioners were developing models of business incubators, incubation processes, etc. since 1985 and created around 20 different models. Main purpose of this section is to review existing business incubator’s models, and assess their historical applicability, performance and efficiency for business innovation purposes.The end goal is to provide practitioners with new synthesized Generic Model of Business Incubation Program which incorporates best practices from models developed before and can be applied in real life.
- Let’s begin by saying what we considered as a model:“Model is an abstraction of a system, aimed at understanding, communicating, explaining, or designing aspects of interest of that system.” (Dori, 2002) Dori, 2002 Thus, not all so called models were put into the classification.Then, the question was how to classify all existing models and put them on one chart in order to systematize the range of them.How to get value out of them? How to reveal problems and constraints of the models?
- Let’s begin by saying what we considered as a model:“Model is an abstraction of a system, aimed at understanding, communicating, explaining, or designing aspects of interest of that system.” (Dori, 2002) Dori, 2002 Thus, not all so called models were put into the classification.Then, the question was how to classify all existing models and put them on one chart in order to systematize the range of them.How to get value out of them? How to reveal problems and constraints of the models?
- Analysis of around 20 business incubation models (see Appendix) showed there are still many challenges in the industry and existing models must be improved to better fit entrepreneurs needs. Generic Business Incubation Model was created in order to better understand how the incubation process is organized, what is the structure of the business incubation program, how it interacts with other stakeholders in the innovation industry, how it helps entrepreneur to increase chances for success. That is why the model is a mixture between black and white box descriptions. On the one hand we describe how the program organized inside, what practices are used in order to support entrepreneur. On the other hand we analyzed interactions between players in the innovation industry. The model is also a mixture of the process and structure approaches: three main processes are matched together (venture life cycle, incubation process and funding process of a venture) and main inputs and outcomes of each stage are provided.
- Incubators rarely support entrepreneurs since the beginning of an endeavor, therefore very few provide pre-incubation support because it is costly and can’t be monetized by existing business models of incubators. Virtual business incubators as cost-effective instruments could shift the focus from incubation stage to pre-incubation, and increase chances for survival of early stage entrepreneurs.
- The model describes correlation between incubation stages, venture life cycle and funding stages of a venture.Various practices of incubation are required along the incubation process (from pre-incubation till post-incubation). The set of practices is heavily dependent on type of incubator, target group, sponsors and established objectives.Practices are applied with different intensity (see humps on a diagram) which depends on the degree of entrepreneur’s needs in knowledge, mentoring, resources, and team. Intensity of applied practices heavily depends on the industry, type of incubator, and entrepreneur’s capability.There are peaks in the incubation process which are related to the moving to the next phases, and attracting financing.Systemic approach to incubation with application of particular services / practices at any given stage allows entrepreneur to get more qualified support, and to spend resources more efficiently.However, due to big risk and limited resources incubator can process only limited amount of tenants per period. This restricts scalability of the incubator and makes it real only in linear way, not exponential one.
- There are many stakeholders of the incubation process in the innovation ecosystem. These goals and interests are conflicting with each other. This creates inefficiency in the incubation operations. If government is a sponsor, it establishes quite often a set of objectives which could be quite far of the entrepreneur’s goals. The same happens if incubator receives sponsorship from investors who seeks for profits and ROI.Business incubator is one of the mediators in the innovation ecosystem. It links money on the one hand, and people and technologies on the other hand.This leads to the conclusion that incubators should be more private and profit-driven than it is now, eventually this will lead to more projects and deals.
- The innovation ecosystem ontology with the business incubator’s perspective is presented in the model.The model presents a holistic view of structure and process of innovation ecosystem and allows to understand the flow of technology, knowledge, money and information among people, enterprises and institutions.The key interaction process is exchange of value between players, where money plays essential role. Demand is the driver of an innovation process. By demand I mean basically the demand coming from government, corporations and lastly from community.Incubators could be considered no only as a venture transformation mechanism, but as a demand transformation mechanism – mediators of the demand in the ecosystem.The successfulness of incubator highly correlates with the possibility of incubator to meet the requirements and demand coming from government, corporations, investors, and community.
- Analysis of around 20 business incubation models (see Appendix) showed there are still many challenges in the industry and existing models must be improved to better fit entrepreneurs needs. Generic Business Incubation Model was created in order to better understand how the incubation process is organized, what is the structure of the business incubation program, how it interacts with other stakeholders in the innovation industry, how it helps entrepreneur to increase chances for success. That is why the model is a mixture between black and white box descriptions. On the one hand we describe how the program organized inside, what practices are used in order to support entrepreneur. On the other hand we analyzed interactions between players in the innovation industry. The model is also a mixture of the process and structure approaches: three main processes are matched together (venture life cycle, incubation process and funding process of a venture) and main inputs and outcomes of each stage are provided.
- Впрочем, есть и хорошиеновости - интернет, мобильность и облака, социальныетехнологии, глобальные платежныесистемдалитолчокдвумважнымтрендам – краудфандинг – какследующийэтап в микрофинансировании и краудсорсинг - какразвитиеколлективнойработы... Технологиисоздалинеограниченныевозможностидлялюдейобъединяться в сообщества и взаимодействовать.... Однако, сообщества, которыедоминируютсейчас – FB, TW, PI, IG и подобныелишьсвязалилюдей. Этокардинальноповлиялонанашмир, ноэтонерешилопроблемудефицитавозможностей.... Темнеменеесозданыпредпосылки появлениясообществновоготипа....Trends were of key importance since the beginning of humanity. New technologies were determining what will be the face of the future in the next decades or centuries. Nowadays the pace of technological progress is very fast. New technologies appear, get implemented and get into millions of lives in months. Since first notifications of virtual or online business incubation in 00s tremendous amounts of technologies were developed and introduced. These technologies allow the virtual business incubator not be just realistic but attainable with low cost. 5 years ago such a project would have been impossible, but nowadays it is feasible and economically viable. Key technologies that we use are available and tested. Let’s have a look at these technologies and explain how they can be used in the virtual business incubation program.To summarize, internet, mobility, cloud computing, social networking, global online payment systems make crowdsourcing and collective work possible. They reduce costs, make processes more efficient and scalable, increase communication pace. Next step will be achieved by crowdfunding models which will reduce barriers to capital. These technologies are already present and there are plenty of successful companies which implementing them. However, technological changes happen much faster than social, political and legal changes. We need to assume that it could take quite a long time to legitimize crowdinvesting (even the USA and UK are going ahead in this race, they still have some issues). Moreover, and what is important is to make a shift in the mindset of communities, entrepreneurs. It is needed to make them believe in the concept of value creation through online communities, promote a shift from talking communities (such as facebook) to value creation communities where people will join their efforts in order to produce new technologies, services, products and, eventually, lead a planet to a better and sustainable life.
- Virtual business incubators are those business incubators where most of the service package is virtual (i.e. location-independent) by design, and/or delivered (partially) with virtual tools. A virtual tool refers to a way of delivering a service to non-resident incubatees, where the service provider and service recipient need not be in the same physical location.
- Virtual business incubators are those business incubators where most of the service package is virtual (i.e. location-independent) by design, and/or delivered (partially) with virtual tools. A virtual tool refers to a way of delivering a service to non-resident incubatees, where the service provider and service recipient need not be in the same physical location.
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- Up to now we have analysed world’s problems and what could be done in order to reduce global risks. It was shown that entrepreneurship and its stimulation could reduce potential collapse of our civilization. Afterwards we showed the challenges of innovation ecosystems and business incubation in relation to entrepreneur’s needs and activities. Thereafter business incubation and existing business incubation models were analysed in depth with conclusion of main problems and unsolved issues. We also reviewed main technological and mega trends that could change the face of business incubation and the world in general. In this section we will provide a description of framework of virtual business incubation program (VBIP).
- The meaning and importance of the findingsThe results of the research mean to the world and innovation ecosystem that with the development and implementation of virtual business incubation program following results could be achieve:Proposed models of Generic Business Incubation and Virtual Business Incubation could provide practitioners and academics with knowledge about incubation process, its structure and main practices from entrepreneur’s perspective.Much more entrepreneurs (instead of 450K potentially 9M per year) will receive support in their endeavors around the world. The chances for survival will be increased for many entrepreneurs due to shift towards pre-incubation stages. More value will be generated in the world, much bigger amount of people will go into entrepreneurship.Consequently, this can shape the culture and social face of the world towards more sustainable future.Depends on many contingencies and figures are approximate.
- I showed that existing business incubation and innovation industry don’t solve entrepreneur’s needs in his (her) early phases of existence. However, more than 20 particular needs (see Generic Incubation Model) of entrepreneur should be addressed in the early discovery stage of the entrepreneurial life cycle.The system organized on a funnel-based principle which on the one hand positive (bringing only high capable entrepreneurs to the top), and on the other hand it is elitist (picking the winners policy). Two fundamental issues were revealed: scarcity of the resources and complicated access to these resources for early-stage entrepreneurs, funnel-based configuration of the system.We showed that innovation industry is not capable to manage and satisfy the growing demand for resources with existing structure and process coming from early stage entrepreneurs around the globe. However, I expect that the further research should be carried out in the several directions: