This page covers government and business incubator schemes
and other assistance measures.
It covers -
Business incubators nurture start-up enterprises during
the initial period when they are most vulnerable.
Typically incubators provide management advice and access
to services such as accounting and intellectual property
protection. Many provide some support finance and exposure
to other funding sources, often with advice about building
relationships with those sources. Some incubators are
industry-specific (eg concentrate on information technology
or biotechnology). Others embrace a range of sectors.
Most incubators provide infrastructure to start-ups on
a nominal cost basis, for example -
to business equipment
to broadband connectivity
with an expectation that the enterprises will move to
other accommodation as they mature. The emphasis in Australia
and other countries on commercialisation of academic research
has led to a vogue for situating incubators in technology
parks on/adjacent to the campuses of major academic institutions.
In Australia most incubators have had an essentially non-commercial
basis, ie draw on government support and are not run as
profit-making bodies (whether directly through service
charges or through participation venture capital style
in ultimate listing/sale of the incubated entities).
Some overseas incubators have, however, been run as unabashed
businesses, leading on occasion to criticisms that the
incubator exploited the start-ups. Such criticisms have
been echoed in Australia, with the 2003
evaluation of the BITS Incubator Program & Intelligent
Island Incubator and subsequent responses for example
that some incubators have been disguised property ploys
from some start-ups that funding was dependent on "lopsided
contracts under which promises of cash injections evaporate
under compulsory fee-for-service arrangements with the
that the small size of the local market meant that incubatees
were unable to encourage best practice, because "rocking
the boat would mean they would never raise funds"
abuses that include overcharging for services such as
phone connections or rent and conflicts of interest
(eg directors of incubators being shareholders and directors
lack of effective monitoring, with little scope for
incubatees to audit their incubator or report on quality
inflated figures for levels of investment in reporting
by incubators to government.
US National Business Incubator Association claims that
60% of US incubators are "either self sufficient
or could be self sufficient if subsidies ceased",
up from 13% in 1997.
How effective are incubators and what are the best incubator
models, given varying innovation and investment cultures
in different countries and the varying nature of different
A 2003 European Commission report
attempted to offer benchmarks for the assessment of performance.
Those benchmarks include -
and strategic aims
and legal form
market and promotion
and exit rules
space and services
and survival rates
2003 Australian government report (PDF)
on incubator funding noted that the majority of enterprises
assisted by incubators remain in the area where they commenced
business and that the most significant economic benefits
are also localised.
The gap between the level of funding provided by incubators
and minimum venture capital investments has created problems.
In Australia that has meant that some BITS incubatees
and graduates have sought to focus on "organic growth",
reflected in a slower growth path and lower returns.
AusIndustry, a Commonwealth government agency, points
to a number of government initiatives on its VC
The Commonwealth government's Business Entry Point (BEP)
has information for small business on matters such as
government industry initiatives, taxation, recordkeeping
and industrial relations.
It includes pointers to "800 programs and services
offered by government", industry associations and
Chambers of Commerce, and the Business Licence Information
Service (BLIS) - information on licences and permits required
in the running of a business.
Aust government incubators
Most Australian states and the ACT have government-supported
incubators, generally in association with academic institutions
and primarily driven by Commonwealth funding under the
BITS program. As of June 2003 some 3,553 applicants had
been screened by BITS incubators, with 267 entities accepted
for incubation and 116 graduated.
The latest incubator is the Information Technology &
Communications Incubator for the Northern Territory (ITCINT).
In Sydney the Australian Technology Park (ATP),
the model for government incubators, spans the range from
telecommunications to the biological sciences.
Information City Melbourne (ICM)
is a state government initiative with substantial Commonwealth
funding, bringing together various Melbourne incubators
and support services. Its ambit includes dot coms, software
development, e-commerce applications and photonics. The
initiative includes venture capital funding.
Centre' as part of the Information City initiative
provides advanced ICT facilities, office accommodation
and services from Melbourne University-related bodies
such as the Melbourne Business School.
Cubed - the Interactive Information Institute at Melbourne's
RMIT - is concerned with interactive media product and
service development. Photonics incubator RedCentre
is another Information City affiliate.
The Australian Distributed Incubator (ADInc)
- promoted as the 'National Virtual Incubator' - delivers
6 month structured business programs to startups. The
programs involve mentoring, consulting and online support
offers financing, technical and legal advice, coaching
and support services. Members of the consortium include
Imago Multimedia Centre, Zernike (Australia), the Australian
Telecommunications Cooperative Research Centre and Software
Engineering Australia (WA).
is a NSW-based IT incubator offering short-term (2 year)
support, including management support, facilities and
communications infrastructure. Its members are Iplus Developments,
Lateral Concepts International and Software Engineering
and the Capital Region Technology Business Centre in Canberra
offers "a structured business growth program",
including early stage finance, management and specialist
services, coaching and mentoring. Members include the
Canberra Business Centre, Anutech, CSIRO and University
other Aust incubators
Group (NSW) is a commercial incubator that offers hardware,
network integration, legal services, accounting, recruitment,
marketing and public relations, access to entrepreneurial
and managerial talent, access to initial funding and subsequent
was established by Deloitte Touche Tohmatsu and venture
capital firm Allen & Buckeridge. Its focus is on e-business:
B2B, infrastructure, middleware and mcommerce.
in Queensland, to be located in the technology precinct
at Varsity Lakes on the central Gold Coast, will take
equity in return for providing startup services and facilities.
Partners include Amwin Investment Fund, Boeing Australia,
Bond University, CM Capital, Delfin, Gartner, Grant Samuel
Technology Fund, Griffith University, Nanyang Management,
QUT, Sun Microsystems and Schiavello Commercial Interiors.
The US idealab!
has spawned numeous startups such as eToys and Eve.com,
several of which melted down. It has attracted attention
for its problematical New.Net alternate domain name scheme.
Among the more colourful US incubators eHatchery
appears to base its support on "eCeleration"
software. First Base Ventures (FBV) eschews
the software and instead offers a baseball metaphor to
"get them ready for the big game". Ground Floor
Ventures (GFV) is a commercial
incubator exclusively for female-owned or operated web
Divine Interventures (DI) offers a "nurturing
environment" that includes web development, sales
and marketing, legal assistance and other services. eCompanies
claims a 'Henry Ford approach', startups being "fitted"
with experts in strategy, finance or technology. Austin
Ventures (AV) offers 'semi-custom
manufacturing' of startups, aiming to move them to the
next round of financing within three months instead of
the traditional 12-18 months.
(partly owned by Microsoft, Pacific Century CyberWorks,
Compaq, Intel and Sumitomo) and Japan's Softbank
(a major shareholder in Yahoo!, ZDNet and E*Trade) are
large-scale incubator cum investment funds.
At the more boutique end of the market Internet Capital
Group (ICG) offers operational
assistance, capital and networking to B2B startups. IdeaEdge Ventures
focuses on wireless Internet technology, infrastructure
and "post-PC" technologies. B2B incubator Camp
Six provides marketing, business development, legal,
engineering and other services.
A perspective is provided by Elena Scaramuzzi's 2002 Incubators
in Developing Countries: Status & Development Perspectives
and the US government's 2003 A National Benchmarking
Analysis of Technology Business Incubator Performance
& Practices (PDF)
and Business Incubation: Emerging Trends for Profitablity
and Economic Development in the US, Central Asia &
the Middle East (PDF).
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