Supporting technology transfer: The role of business incubators

1. Supporting technology transfer: The role of business incubators John Gabriel Goddard Knowledge Economy Forum VII Ancona, Italy

2. Issue #1: Speed of adoption of “new technologies” Penetration of recent technologies Global Economic Prospects (2008)

3. Issue #2: Level of absorptive capacity Technology absorptive capacity Global Economic Prospects (2008)

4. Issue #3: Science-Industry links Firms collaborating in innovation with higher education institutions OECD Scoreboard (2007)

5. Issue #4: Entrepreneurial culture Total Entrepreneurial Activity (TEA Global Entrepreneurship Monitor (2002)

6. Rapid growth of European Business Incubation (BI) facilities • 50% of incubators began to operate in the last 5 years • Upwards of 5,500 people work in EU incubators • Around 24,000 firms receive services • Survey of European Business Incubators (2006)

7. Survey of European Business Incubators (2006) • 936 BI managers contacted in the EU-25 • BI definition = on-site rental space and business support • Focus of the survey was BI characteristics, start-up risks and financing gaps • 170 responses received, a response rate of 18%, with 10%+ in all countries • Carried out at Paris Dauphine University with funding from an EC research grant

8. Non-profit BIs supported by public/ mixed funding are most common Figures highlight the: • Widespread use of incubators in entrepreneurial and innovation policy • Weak interest of the private sector in this service model due to risks and lags of business creation

9. Innovation and technology transfer are central to European BIs • The popularity of technology BIs points to the perceived usefulness of this model for fostering technology transfer; and availability of EU funds • BIs are active in software, digital media and biotech industries

10. Yet, major risks facing start-ups are commercial

11. Business incubation: a public solution to accelerate technology transfer • Business incubators are a leading instrument used by European governments to facilitate technology transfer from public research organizations • Commercial risks pose a greater problem than technical risks when taking R&D results to market, not least because spin-offs are often founded by scientists with technical capacities but without business skills

12. BI managers need strong business background • Effective screening at entry and mentoring require business experience, preferably in related products markets • Specialized technical/IPR advice can be provided by external experts

13. Even so, “rules of the game” will frame the BI manager/tenant incentives • Pressure to deliver quick results can distort the incentives of BI managers • Possible bias to select companies with high potential but no real need for BI services • Start-ups may delay exit to benefit from subsidized rents/services • Rules of the game need to be made compatible with overall BI strategy and reduce these incentive problems

14. Tailored financial services critical to manage start-up and scale-up costs • And also: • Syndicated capital from third party investors • Agreements with local banks to test new forms of financing

15. Concessional support/grants can be useful at the initial phase

16. BIs as part of a public (or PPP) platform for technology transfer • Can BIs be planned as stand-alone entities? • Need for proximity to deal-flow from research organizations and economic poles • Fostering linkages and cooperation with the National/ Regional Innovation System? • Merging the functions of BIs and other instruments (e.g. S&T parks, Technology Transfer Offices, VC funds)? • Capacities, networks and goals are different • Instruments needed at different stages

17. Thank you! John Gabriel Goddard Email: jgoddard@worldbank.org Tel: +1 202-631-8158