Incubators+&+Science+Parks

Science and technology parks (in some countries called Research Parks or Technoparks) promote economic development and competitiveness of regions and cities by providing specialized facilities and support services. The majority of science parks worldwide contain new business incubators to help grow very early-stage companies, which after they developed will move out to allow other companies to enter. Many science parks are associated with universities and provided a platform for growing university spin-off companies.

Unfortunately, some countries have launched science park development projects without sufficient knowledge of how the parks will function in the longer term and become self-sustaining. Typically too much emphasis has been placed on developing an attractive building rather than on the quality and growth potential of the tenant companies. Science and technology parks and incubators, even in developed countries, often have a modest start. Sustainability is always an issue. What are the important factors in enabling science parks and incubators to be sustainable?

Questions about Science and Technology Parks
**What are sources of income for Science and Technology parks ?**

Sources of income may include:
 * 1) Fees from rental of space (in many cases the land, infrastructure, and building have been paid for by the state or private sector).
 * 2) Fees from additional business development services which are not included in the basic rent charged to companies.
 * 3) Cashing out of equity holdings in tenant companies. Most technoparks do not take equity, but I think taking a small equity-for-services in selected businesses is a good idea. This income is long-term and difficult to predict.
 * 4) Sponsorship or investment by large domestic or foreign companies. This may be in the form of a grant, investment, or payment by the large company for R&D contracts. In this case it is important for the technopark to be associated with universities and/or research institutes. Most of the successful technoparks around the world have a university affiliation (e.g parks at Stanford, Arizona, Oxford, Cambridge etc).
 * 5) “Opportunistic” revenues. Fees from consulting or other services required by the region in which the technopark is located for some project which may not be predictable (e.g. a foreign company wants to locate in the region but need help in making its decision).
 * 6) Fees from consulting services for client companies. For example, using the “brand name” of the technopark to negotiate with domestic or foreign partners, find market access, access investment etc.

An example of a profitable Science Park  is the Manchester Science Park (MSP) in the UK []. There are two important items to note:

MSP was founded as a response to the decline of traditional manufacturing industries in the region during the 1980s, and to capitalize on the strengths of Manchester’s universities. In 1993 MSP had 16 companies. Now it has 100. Lesson to be learned: it can take time to develop a successful Science Park.

Science Park <span style="font-family: Arial,Helvetica,sans-serif;">s can attract investment and make a direct profit. This profit was made in spite of MSP paying off development loans. By “direct profit” we mean profit from technopark operations. Of course the purpose of technoparks is not to make large profits from operations but develop the economy in its region.

<span style="font-family: Arial,Helvetica,sans-serif;">The **MSP 2009 Annual Report** [] states:

<span style="font-family: Arial,Helvetica,sans-serif;">"The 21st Century Science Park is a gateway, not a destination. Third generation science parks, like MSP, now function not just as a place for businesses to locate but as the entry point to a readily available network that actively works with them to grow their business and make connections that will ultimately work to stimulate the regional economy and business."

<span style="font-family: Arial,Helvetica,sans-serif;">Research parks in the United States and Canada directly employ more than 350,000 people and contribute more than $31 billion annually to the economies of the United States and Canada, according to new data compiled by the Association of University Research Parks (AURP). Estimated U.S. total employment enabled by research parks is over 712,000 jobs.

<span style="font-family: Arial,Helvetica,sans-serif;">It should be remembered that a typical Science Park takes around 10 years to reach maturity and, in doing so, passes through a series of phases.
 * 1) <span style="font-family: Arial,Helvetica,sans-serif;">Initial planning and agreement from the park’s stakeholders, and the acquisition of funds to begin operations. At this stage, everything is new and exciting, but the CEO soon realizes that a big effort will be needed to fill up the buildings and for the park to reach financial self-sustainability.
 * 2) <span style="font-family: Arial,Helvetica,sans-serif;">Steady growth. This phase can be of varying length, depending on factors such as the location, quality of management and the overall economic climate. During this phase, the management and operational activities of the park develop progressively and become more efficient. Some parks remain in this phase, with steady growth and stable management.
 * 3) <span style="font-family: Arial,Helvetica,sans-serif;">Mature stage, when the management recognizes that the park is capable of playing some wider and desirable role in the economic or technological development of the region. This stimulates a change towards a more individual style of park, which differentiates it from others. The change may be to become increasingly involved in providing management services to assist tenant company growth; or to link closer to its associated university. Or it may be quite another special set of characteristics.

<span style="font-family: Arial,Helvetica,sans-serif;">[The above notes are adapted from several research papers]

<span style="font-family: Arial,Helvetica,sans-serif;">Accelerators
<span style="font-family: Arial,Helvetica,sans-serif;">Accelerators are a new type of incubator created over the last 3-5 years. There are about 100 of them around the globe. An accelerator provides intensive but short term mentoring and small scale funding. They are frequently industry specific (e.g. typically web application ideas). Leaders include YCombinator [|http://ycombinator.com] and TechStars [|http://techstars.org]. Many accelerators are industry-specific niche accelerators such as FinTech Innovation Lab [] for financial services startups, and Women 2.0 [|http://www.women2.org] for women-founded startups.

<span style="font-family: Arial,Helvetica,sans-serif;">Nurturing Innovation, Venture Acceleration Networks: A Review of Existing Models
@http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/VentureAccelerationNetworks1.pdf


 * **Typical Incubator characteristics** || **Typical Accelerator characteristics** ||
 * Space for rent. || Basic working space, typically rent free. ||
 * Grow in the incubator for 1 year or more, with typically annual rent increases to encourage departure (“Incubation”). || Startup given 8 to 12 weeks to gain some serious traction and make sufficient progress leave in 3-6 months (a “fail early, often, and inexpensively” mentality if there is no business traction). ||
 * Access to general business services and additional professional services if required. || Intense mentoring from teams of mentors with appropriate technical and business experience, investors, lawyers, accountants, media, and other entrepreneurs who have successfully grown businesses. ||
 * Introduction to sources of finance such as angel investors and seed capital funds. Equity in the incubatee business is not typically taken by the incubator. || Most accelerators offer a stipend ($15-25K is typical for 3-6 months) as seed capital although a few offer more substantial seed capital up to $1min exchange for equity in the startup (3-6% is common) - although some have proposed taking substantially more<span style="font-family: 'Calibri','sans-serif'; font-size: 14.6667px;">. ||
 * Entrepreneurs are usually from the region in which the incubator is located. || Entrepreneurs may move to the accelerator’s location. ||
 * Incubator companies may make pitches to angel investors or seed funds. || Entrepreneurs have a “demo day” at the end of their stay to show progress and seek outside investment that will keep their company alive for the next period of growth. ||
 * Incubator companies may make pitches to angel investors or seed funds. || Entrepreneurs have a “demo day” at the end of their stay to show progress and seek outside investment that will keep their company alive for the next period of growth. ||

Most accelerators have focused on web-based multimedia startups. It is not yet clear how the methodology works with other technologies such as biotech or engineered products which require a longer development phase. The accelerator model will probably break down when pieces are missing, including: a lack of successful and experienced entrepreneurs and weak supportive infrastructure. Difficulties in applying the current accelerator model in a developing country have not been assessed.

<span style="font-family: Arial,Helvetica,sans-serif;">**Modules**
 * 1) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">Science and technology parks/technoparks as support structures for growing technology-based companies, roles of universities and research institutes.
 * 2) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">Integrating science and technology parks into a country's economic development policy.
 * 3) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">New business incubators, <span style="color: #000000; font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">accelerators and proof-of-concept centers <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">.
 * 4) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">Financing science and technology parks and incubators, developing a budget, strategies for realizing a return-on-investment, sustainability of science and technology parks and incubators.
 * 5) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">Pre-conditions for the success of science and technology parks and incubators.
 * 6) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">Best practices, success factors, metrics for science and technology parks and incubators, measuring outputs and outcomes
 * 7) <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">Annotated sample contracts with the tenant companies.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">These Modules are a guide only to the //planned content// of this Handbook Section. Please add new content to this page, or use the discussion Tab. As the wiki grows we will move things around.

<span style="font-family: Arial,Helvetica,sans-serif;">**Incubator Toolkit, InfoDev Incubator Support Center** (The World Bank) <span style="font-family: Arial,Helvetica,sans-serif;"> [|http://www.idisc.net/en/Toolkit.html#]

<span style="font-family: Arial,Helvetica,sans-serif;">Sections include: Start an incubator, Select clients, Graduate clients, Provide services ( Business Advice, Coaching and Mentoring, Financing, ICT services, Infrastructure & Facilities, Pre-incubation), Manage an incubator (Administration, Financial Management, Human resources, Operations), Finance an incubator, Raise awareness, Market an incubator, Monitor & Evaluate an Incubator, Affect policies & regulations, Engage Partners.

<span style="font-family: Arial,Helvetica,sans-serif;">**InfoDev (Information for Development Program) Home** <span style="font-family: Arial,Helvetica,sans-serif;">[]

<span style="font-family: Arial,Helvetica,sans-serif;">//info//Dev is a global development financing program among international development agencies, coordinated and served by an expert Secretariat housed in the Global ICT Department of the World Bank, one of its key donors and founders. It acts as a neutral convener of dialogue, and as a coordinator of joint action among bilateral and multilateral donors—supporting global sharing of information on ICT for development (ICT4D), and helping to reduce duplication of efforts and investments. //info//Dev also forms partnerships with public and private-sector organizations who are innovators in the field of ICT4D.

<span style="font-family: Arial,Helvetica,sans-serif;">**What makes science parks successful?** <span style="font-family: Arial,Helvetica,sans-serif;">[]

<span style="font-family: Arial,Helvetica,sans-serif;">These findings imply that the selection of firms into science parks may have an important impact on the success of the park in fostering firms' performance and innovation. Moreover, maintaining the right balance of companies in a park over time is difficult due to the continuous changes caused by growth, failure and the moving in and out of companies.

<span style="font-family: Arial,Helvetica,sans-serif;">**Proof of concept centers: Accelerating the Commercialization of University Innovation** <span style="font-family: Arial,Helvetica,sans-serif;"> [|http://sites.kauffman.org/pdf/POC_Centers_01242008.pdf]

<span style="font-family: Arial,Helvetica,sans-serif;">This report from the Ewing Marion Kauffman Foundation compares two Proof of Concept Centers. "In an increasingly dynamic and global economy, the institutional infrastructure is inefficient at moving university innovations to the marketplace. University researchers often face convoluted procedures with insufficient guidance to commercialize their innovations. As angel investors and venture capitalists increasingly invest in later-stage enterprises, researchers face difficulty finding early stage funding to develop and test prototypes and conduct market research. In order to fill this funding gap and accelerate the commercialization of university innovations, a new type of organization has emerged—the proof of concept center."

<span style="font-family: Arial,Helvetica,sans-serif; text-align: left;">An Alternative Model for Startup Incubation
<span style="font-family: Arial,Helvetica,sans-serif;">[]

<span style="font-family: Arial,Helvetica,sans-serif;">"The incubator recruits talented people who may have the potential of becoming founders, but aren’t required to do so. The incubator takes 80% and the employees/entrepreneurs/founders-to-be take 20%. The incubator isn’t funding startups, it’s funding projects. The projects may eventually become startups – if they get enough traction (which needs to be defined by the incubator) – and will need founders to run them. The people working on the projects may become the founders or CEOs/CTOs/etc. But not necessarily".

[|www.alexandria.unisg.ch/export/DL/47926.pdf]
 * Corporate Incubators: Industrial R&D and What Universities Can Learn from Them**

"While corporate incubators are for-proﬁt organizations with which to enhance a corporation’s technology development, university incubators try to leverage technological insights from the university in a similar manner. In accordance with their respective missions, organizational structures, incubator processes and resource ﬂows, it is possible to transfer lessons learned from two corporate incubator archetypes—the fast-proﬁt incubator and leveraging incubator—to the world of university incubator. Our empirical ﬁndings are based on in-depth case studies of 25 companies through 52 semi-structured interviews ....."

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">**Wikipedia article on Science Parks** <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;"> []

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;">**International Association of Science Parks** <span style="font-family: Arial,Helvetica,sans-serif; font-size: 13.3333px;"> []

<span style="font-family: Arial,Helvetica,sans-serif;">**Understanding Research, Science and Technology Parks: Global Best Practice: Report of a Symposium** <span style="font-family: Arial,Helvetica,sans-serif;">Download free pdf file for personal use only at [|http://www.nap.edu/catalog.php?record_id=12546#description]

<span style="font-family: Arial,Helvetica,sans-serif;">Includes discussion of the diverse roles that research parks in both universities and laboratories play in national innovation systems. The presentations identify common challenges and demonstrate substantial differences in research park programs around the world.