Business Incubation in the United States Past, Present and Future

1. Business Incubation in the United StatesPast, Present and Future 2009 Presenter: Tracy Kitts, VP COO National Business Incubation Association

2. A business incubation program is… • a program designed to accelerate the successful development of entrepreneurial companies • through an array of business support resources and services, • developed or orchestrated by incubator management, • and offered both in the incubator and through its network of contacts

3. History in Progress 1959 First U.S. incubator founded in Batavia, N.Y. 1985 National Business Incubation Association founded 40 members 2009 7,000 incubators worldwide 1,915 NBIA members

4. Goals of Business Incubation • Diversify economies. • Provide employment. • Create wealth in communities. • Transfer technology from universities and major corporations. • Create new market access opportunities

5. Thriving Incubators • Integrate into the larger community • Part of overall community economic development plan • Community/sponsor support for mission and operations • Have an effective team • Professional management with adequate pay • Network of business advisors, mentors and consultants • Exude professionalism • Emphasizes client assistance • Models good business practices • Strives for financial sustainability • Measures effectiveness and impact regularly

6. 2006 NBIA SOI Highlights • There are over 1,100 business incubators operating in North America, up from 950 in 2002. • In 2005 alone North American incubators: • Assisted more than 27,000 start-up companies. • Provided employment for more than 100,000 workers. • Generated annual revenue of $17 billion.

7. Incubator Size • Average Incubator Size: 37,086 square feet (3,445 square meters) • Average Net Leasable Space: 26,528 square feet (2,464 square meters) • Rarely do incubators downsize once in business.

8. Incubator Income

9. Incubator Expenses

10. Sponsoring Entities • Economic Development Organizations – 31% • Government – 21% • Academic Institutions – 20% • No Sponsoring Entity – 8% • Hybrid – 8% • For-Profit Entity – 4% • Other – 8%

11. Average Number of Client Companies per Incubator

12. Incubation Program Type

13. Graduation Policies • Graduation policies have become more sophisticated over the years. • In 1991, 58% of SOI respondents set time limits as their only graduation policy. • In 2006, most SOI respondents have set graduation policies based on business-related benchmarks.

14. Incubation Industry Growth • The industry continues to grow • NBIA identified 390 North American incubators in 1989 compared to 1,100 in 2006. • The number of client companies per incubator has increased from an average of 12 in 1991 to 25 in 2006.

15. Incubation Industry Trends • Programs that focus on industry clusters. • Biotechnology • Clean Energy/Renewable Fuels • Agri-business • Construction Trade • Medical Devices • International partnerships. • Incubators as part of research and commercial parks

16. Business Incubation Works • Return on investment • $1 public investment in incubator = $30 in local tax revenue • Business retention • 84% of graduates stay in community • Increased likelihood of business success • 87% of incubator graduates stay in business

17. The End Presenter: Tracy Kitts, VP COO E-mail: tkitts@nbia.org National Business Incubation Association http://www.nbia.org