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The Israeli Technological Incubator Program

TECHNION – ISRAEL INSTITUTE OF TECHNOLOGY THE SAMUEL NEAMAN INSTITUTE FOR ADVANCED STUDIES IN SCIENCE AND TECHNOLOGY PROJECT IFISE. An Evaluation of the Israeli Technological Incubator Program and Its Projects Final Report Prof. Daniel Shefer Dr. Amnon Frenkel February 2002.

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The Israeli Technological Incubator Program

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  1. TECHNION – ISRAEL INSTITUTE OF TECHNOLOGYTHE SAMUEL NEAMAN INSTITUTE FOR ADVANCED STUDIES IN SCIENCE AND TECHNOLOGYPROJECT IFISE An Evaluation of the Israeli Technological Incubator Program and Its Projects Final ReportProf. Daniel Shefer Dr. Amnon FrenkelFebruary 2002

  2. The technological incubator is a complementary program • The incubator gives a chance to projects that are unable to attract commercial investors in the initial stages of development. • Its functions are: • Assistance in determining the technological and marketing applicability of the idea and drawing up an R&D plan; • Assistance in obtaining the financial resources needed to carry out the project; • Assistance in forming and organizing an R&D team; • Professional and administrative counseling, guidance, and supervision; • Secretarial and administrative services, maintenance, procurements, accounting, and legal advice; • Assistance in raising capital and preparing for marketing. The Israeli Technological Incubator Program

  3. The Project contribute: • Nationally - as a tool for filtering and developing valuable and original ideas and providing seed-capital. • Locally - as a means of local economic development through inducing the development of new firms in a specific location.

  4. The Office of the Chief Scientist of the Ministry of Industry and Trade gives: To each incubator $175,000 per annum Each project granted up to $150,000 per year, for a maximum of two years (Level of the given grant is up to 85% of the approved budget of the project). The principal criteria for project selection are: (1) product-oriented (2) primarily export-oriented (3) based on R&D (4) feasible with the available resources. Governmental Funding and Selection Criteria

  5. Objectives of the Study 1. To describe the High-Tech incubator as a filter of new technological ideas that subsequently become new technology-based companies. 2. To Identify the type of investors who are willing to participate in funding a project during and after the incubation period. 3. To analyze the geographical distribution of the incubators and to examine their contribution to local economic development. 4. To examine the viability of the Israeli Technological Incubator program as a vehicle for the development of the high-tech industry and as a paradigm for European countries, particularly Italy.

  6. Data Source • The data were collected by means of two well-constructed questionnaires. • Managers of 21 of the 24 existing incubators were personally interviewed and samples of 109 projects were examined between May and September 2001. • The incubators and the projects within them, were divided into sub-groups: by geographic location (Metropolitan, Intermediate, and Peripheral), type of incubator (general and specialized), and type of sponsorship. • The projects were also classified by major field of activity.

  7. Project-Selection Process in 21 Incubators, by Location(previous 3 years)

  8. Project-Selection Process in 21 Incubators, by Incubator Type(previous 3 years)

  9. Project-Selection Process in 21 Incubators(previous 3 years)

  10. Distribution of all Projects in the 21 Incubators, by Field and Location (percentage of total number of projects in the field)

  11. Distribution of Projects in the 21 Incubators, by Incubator Type

  12. Distribution of all Projects in 21 Incubators, by Sponsorship (percentage of total number of projects in field)

  13. Distribution of all Projects in the 21 Incubators, by Field N=208

  14. Sources of Funding of Incubators

  15. Sources of Funding of Incubators

  16. Average Source of Funding of Incubators, by Location

  17. Average Source of Funding of Incubators

  18. Projects that Secured Significant Complementary Funding, by Field

  19. Major Sources of Complementary Funding

  20. Major Sources of Complementary Funding

  21. Projects that “Graduated” and Projects that “Dropped Out”,by Field (previous 3 years)

  22. Projects that “Graduated”, by Location (previous 3 years)

  23. Graduating Projects that Succeeded and Did Not Succeed in Securing Financial Support, by Field

  24. Graduating Projects that Succeeded and Did Not Succeed in Securing Financial Support, by Field

  25. Graduating Projects that Secured Financial Support, by Financial Source

  26. Graduating Projects that Secured Financial Support, by Financial Source

  27. Managers’ level of satisfaction

  28. Managers’ Level of Satisfaction, by Location

  29. Barriers and Obstacles to the Operation of an Incubator * Level of importance=% of incubators reporting the specific factor as being important or detrimental.

  30. Description Project Initiators Distribution of Project Initiators, by Sex N-176

  31. Description Project Initiators Project Initiators, by Level of Educational N-176

  32. Project Initiators, by Previous Place of Work

  33. Distribution of Initiators, by Project Field and Previous Place of Work

  34. Preferred Location of Project After Graduation

  35. Preferred Location of Project After Graduation, by Region

  36. Reasons for Choosing a Specific Incubator

  37. Project Initiators’ Reasons for Choosing an Incubator, by Location Spearman’s rho: Between metropolitan & intermediate region rs= 0.790, sig.=0.000 Between metropolitan & peripheral region rs= 0.615, sig.=0.011 Between peripheral & intermediate region rs= 0.713, sig.=0.00

  38. Project Initiators’ Reasons for Choosing an Incubator, by Type and Fields of Activity • The importance of proximity to place of residence emerge as the major reason for selecting the particular incubator, in general type as well as in specialized type of incubator, and in all fields of activity. • Fordrugs project, similar projects within the incubator are also important • Initiators ofmedical equipmentproject value highly acquaintance with the incubator’s mangers • Initiators ofenergy and ecology projectsput premium on fast admission to the incubator • High importance attached by the biotechnology, drugs and medical equipment projectsto the proximity to the university.

  39. Projects’ Source of Funding

  40. Projects’ Source of Funding The highest share of venture capital in a project’s average budget in metropolitan regions (11.2%), and the lowest is in peripheral regions (3.1%), can be associated with the degree of risk to the investment in each region

  41. Projects’ Source of Funding, by Location

  42. Projects’ Source of Funding, by Incubator Type

  43. Projects’ Source of Funding by Field of Activities • Projects inmechanical engineering, drugs, and biotechnologyreceived a high share (77.4%, 73.2%, and 73.2% ,respectively), of their budgets from the OCS. • Medical equipment and energy and ecology –both received a high share (30.3%)of their budgets from strategic partner

  44. Project Initiators’ Level of Satisfaction with Incubator Support System

  45. Project Initiators’ Levels of Satisfaction with Incubator Support, by Location Spearman’s rho: Between metropolitan & intermediate region rs= 0.636, sig.=0.005 Between metropolitan & peripheral region rs= 0.665, sig.=0.003 Between peripheral & intermediate region rs= 0.880, sig.=0.000

  46. The Main Factors Affecting the Initiation of a Project Lowest score were given to connection with suppliers, available suitable space and access to imputes.

  47. Comparison of Incubator Managers and Project Initiators Factors and Barriers to and Support of an Incubator’s Operation

  48. Level of Satisfaction from Elements of the Technological Incubator Program • The ranking of the score given by incubator mangers and project initiators to their level of satisfaction from each of the 18 factors yielded a very similar rank order. • The factors that received the highest scores were in descending order:available suitable space, legal counseling, IPR protection, management support, and strategic counseling. • In overall, incubator management expressed a slightly higher level of satisfaction than did project initiators, Nevertheless, the rank order of the factors given by each group is very similar. • In metropolitan and intermediate regions, incubator mangers gave a much higher score to international collaboration, than did project initiators.

  49. Project Initiators’ Level of Satisfaction from Services Provided Versus Level of Importance Attached to These Services

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