Virtual business incubation provides incubation services remotely using online tools and virtual communication methods. This allows incubators to expand their geographical reach and increase cost-effectiveness. However, virtual incubation requires different skills than traditional incubation and costs may be similar or higher due to maintenance requirements. There are three main types of virtual incubators: hand-holders that focus on business development services, network boosters that facilitate networking, and seed capital providers that focus on financing. Successful virtual incubation depends on clearly defining services, understanding client needs, selecting appropriate virtual tools, developing new staff skills, and building an incubator brand online.

1. LESSONS LEARNED FROM
VIRTUAL BUSINESS INCUBATION
Summary of the report

2. Structure of the presentation
 Defining virtual incubation
 Reviewing virtual incubation tools
 Virtual service delivery
 On-site, E-learning throughwebsites, 1-on-1 ICT based
exchange, ‘online recruitment’, virtual
communities, crowdsourcing.
 VBI typologies
 Hand holders, network boosters and seed-capital
providers
 Key lessons learned

3. “What is virtual business incubation?”
 Physical incubation clients served in a physical building
(only)
 Virtual incubation is “the full range of business
incubation tools and services that are not (necessarily)
provided to clients residing inside the facilities of a
business incubator”
 As shorthand, “virtual” = location-independent.
Definition:
(V)BI Service concept = package of incubation services
(V)BI Tools = way to deliver a service

4. Conventional & virtual
‘Conventional’ business ‘Virtual’ business
incubation incubation
- Intense contact with - Outreach potential
clients - New revenue
- Capital intensive generation models
- Limited outreach - Impact on business
growth?

5. VBI: How and under what conditions?
Prevailing Virtual Incubation Tools
conditions On-site;
incubatees are invited to come to a physical location.
- Business E-learning and websites;
The incubator provides online training materials and online
environment information.
1-on-1 ICT exchange;
- Mission of the The incubator provides its services (also) through E-
mail, SMS, phone, Skype, MSN and online collaboration tools.
incubator
“Online recruitment”;
- Target group of the An incubation service provider is a ‘broker’, who mobilises and
matches incubatees, mentors, interns and investors through
incubator the web; Services are provided virtually and/or physically
(location, skills, ICT access, …) “Virtual communities”;
Online and physical networking and exchange or the
entrepreneurs amongst each other; incubator is mere
facilitator
The online crowd;
Services are provided by an online crowd, each member of the
crowd provides a small part of the needed service. The
incubator may facilitate this crowdsourcing or crowd funding

6. On-site services
Delivering BDS to non-resident clients can:
 expand geographical coverage
 (can) increase its cost effectiveness (if facilities are readily available),
 exposes entrepreneur to a new business environment, and
 allows for exchange between entrepreneurs from different backgrounds and
regions.
Lessons
 If in a remote location, local partner to mobilise local knowledge, networks and
reputation.
 In the start-up phase, entrepreneurs highly value interacting with peers.
Incubators need to actively facilitate this interaction.
 If incubatees and incubator staff need to travel, this can be costly and time
consuming;
 Interacting with the entrepreneur without experiencing their workplace can be
less effective

7. Websites and e-learning
Websites and E-learning:
 Websites can provide information or online training materials.
 Expand outreach and geographical coverage of an incubator,
 incubatee can learn / look for information at own pace, whenever and wherever
convenient.
Lessons
 Depends on the skills and access to tools and the motivation of the incubatee,
 Training topic; If related to changing the habits, motivation or mind-set of the
trainee, face-to-face training is far more effective
 Costly to develop quality e-Learning training modules and materials. Cooperation
with existing e-learning portals is recommended.
 Information made available through the Internet (website) needs to be kept up-
to-date.
 Social media tools can be added to a site at little or no cost, and are a good tool
for enhancing the brand identity of the incubator, again requires maintenance.

8. 1-on-1 ICT based exchange
1-on-1 interaction with ICT
 Mentoring of monitoring the incubatees through ICT (phone, email, skype) can save time
and (travel) costs, and is a fast way of communication, which can be important in some
situations.
Lessons:
 Depends on complexity of the issue to be addressed. Complex issues need to be addressed
in face-to-face contact. Simple tasks can be performed through ICT.
 Success of ICT based communication also depends on a relationship of trust between the
incubatee and the service provider. These relationships do not develop overnight, and often
require face to face contact, and/or a business incubator with a strong reputation.
 For specific advice that does not involve disclosing too much about the background of the
entrepreneur and the business, ICT based advice is considered fast and efficient.
 Video skype in another location (outside the incubatee office) can help to ensure that the
incubatee makes him or herself fully available for the conversation.
 Online collaboration tools can make exchange through phone and skype more effective.
 Remote supporting of incubatees through a diverse means of ICT poses management
challenges to the incubator, if it is not systemised.

9. Online recruitment
Online recruitment
 Through the internet, incubators can reach and mobilise interested mentors / volunteers /
incubatees and select the most suited candidates and improve the quality of the incubator
service. Recruiting highly qualified volunteers can save costs without jeopardising quality.
Online recruitment can also positively contribute to the brand of the incubator.
Lessons:
 Online recruitment is a suitable tool for recruiting incubatees and mentors; for access to
finance, other tools need to be used.
 The incubator needs a well thought through recruitment strategy, to ensure the high quality
of the applications.
 The incubator needs to invest in building a brand, and build partnerships with networks or
organisations that have relations with the targeted audience
(volunteers, mentors, incubatees).
 Social media are support recruitment campaigns as additional tools. (spread the word!)
 The incubator needs to verify the quality of applicants. Face-to-face interaction is usually
still needed.

10. Virtual communities & events
A vivid community mobilises members to actively contribute, by
providing resources. This may improve the quality of services of the
incubator, and may cut costs or even generate revenues because
members may be willing to pay a membership or admission fee.
Lessons:
 Successful virtual communities in our sample are based on regular
combined networking or training events, usually outside of office
hours. Members join the networks to learn, get inspired and build
their network.
 Hosting a community is an art, and requires skills and resources.
 Financing networks work best if they involve investors at
geographical and cultural proximity of the incubatees.

11. The online crowd
Crowd sourcing and crowd funding
Through the internet, incubators as well as incubatees can mobilises large
numbers of people to contribute their knowledge and/or finances online.
Lessons:
 Crowdsourcing may be suitable for incubators or incubatees with a clear
problem definition, such as feedback on a new product or service design
(as suggested by Mobile Monday in the start-up phase), or feedback on
specific business model related challenges.
 Crowd funding is may offer an access to finance opportunity, especially
when incubators can connect with existing crowd funding platforms.
 Attractive platform for crowds exist, VBIs can seek cooperation with
existing platforms;
 Emerging in advanced countries, with maybe limited knowledge for local
solutions in other countries;

12. Types of VBIs
3 types of VBIs:
 “Hand-holders”; focussed on offering mainly
business development services
 “Network boosters”; networking focussed
business incubators (two sub-types:
BPC+ and 2.0)
 “Seed capital providers”, Finance focussed
business incubators

13. Overview
Item
Hand-holders Network boosters Seed capital providers
Service Focus
BDS
Access to business networks Access to business finance
(training, mentoring)
Target group Wide range; High potential,
High potential,
Special target group to high Educated
or ‘Social enterprise’
potential Early stage or established
Outreach
100-300 businesses per
10-20 business per year 15-30 per season
network / competition
Service provision
Service provider Facilitator Facilitator
Funding
Donor / Gvt/ Univ / NGO Foundations, Commercial Commercial
Typical main revenue model Donations,
Sponsors,
Sponsors, Admission fees,
(consultancy) projects
membership fees return on equity
Client own contributions to
service fees

14. Revenue generation
Virtual service concepts offer new opportunities to
generate revenue; some general observations:
 For hand holders: challenging to raise additional revenues
through out-of-walls/satellite incubation, but more public
funding
 For network boosters: good opportunity to generate
revenue through membership fees and admission fees at
events (small amount, large group)
 For seed capital providers: financial sustainability is
possible, but for a narrow slice of the market (quick return,
later-stage incubatees)

15. Key lessons
Key benefits of Virtual Business incubation
 Service quality: New opportunities for tailored and
specialised services and network building for
incubatees
 Scale: Possible to increase outreach and customer
base significantly (with network boosting).
 Inventive: More possibilities to cater to innovative
entrepreneurs by fast, flexible and creative networks of
people
 Capital: access to new sources of (risk-) capital

16. Key lessons
Challenges of Virtual Business incubation
 Different set of skills and abilities in VBI are required;
not “easier” than in-the-walls incubation
 Cost is not necessarily lower; reviewed cases suggest
similar or higher overhead
 Lower capital outlay, but high maintenance and
shorter lifetime
 Brand building is essential to catch the eye of the
(online) crowd

17. Considerations for replication
To design a VBI service concept:
 Define the desired target group
 Assess and understand “needs” of incubatees
 Prioritise demand (=need x price) of incubatees for
services and design a lean service package
 Weigh cost and benefits of virtual tools
 Assess own staff’s skills and -gaps
 Consider investment cost/time
 Decide on strategy, check consistency of concept
 Act...

18. THANK YOU!
For more information,
contact Nienke Stam
n.stam@triodosfacet.nl
www.triodosfacet.nl
November 2011