Conference

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Conference awardBest Practices in Science
Based IncubatorsThe role of Business Incubators
in post-2006 EU What are the priorities
Oxford, 10 December 2004

• Jorge Costa-David
• European Commission
• Enterprise Directorate General

2
The context (I)

• Lisbon objectives (EU Council 2000 invited the EC
  and M. States to focus their action on small and
  micro businesses)
• 24 million SMEs in Europe 25? 2/3 of total
  private employment? average size 6 persons
• European Charter for SMEs
• Open method of co-ordination
•  Think small first  and  SME Envoy 
• Entrepreneurship agenda
• Entrepreneurship Green Paper
• Entrepreneurship Action Plan

3
The context (II)

• Wider EU
• Kök report
• Blaming, Shaming, Faming
• Fewer priorities, more focus
• National (M. State specific) action plans
• Reactions to all the above
• EC DG Enterprise and its main functions
• New Commission (as of 22 November 2004)

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Enlargement Key Facts

• As from 1st May 2004
• Larger/est Integrated Market in the World
• EU 25 450 Mio Inhabitants 25 Mio
  Enterprises
• Implementation of the  Acquis Communautaire 
• Economic Prospects

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Challenges/Opportunities

• Strengthening Competitiveness in Candidate
  Countries
• Entering New Markets
• Investment Opportunities
• Clustering, Networking, Industrial Co-
  operation
• Sustainable Development

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CHALLENGES FOR ACCESSION AND CANDIDATE COUNTRIES

• Private business activity has grown very fast in
  CCs during transition to market-oriented systems
• SME sector less developed than in EU member
  states ? however, strong latent potential for
  entrepreneurship
• Very small businesses ? need for policies, access
  to finance and business support to encourage the
  transformation of self-employed and
  microenterprises to larger companies
• Limited knowledge of the demand for finance among
  SMEs in the CCs ? however, latent demand
  potentially important
• Supply of finance to SMEs in the CCs different
  than in EU countries ? commercial banks not aware
  enough of SME needs

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Role of the European Commission

Strategic goal of Lisbon (2000)

• to become the most competitive and dynamic
  knowledge-based economy in the world
• capable of sustainable economic growth with
  more and better jobs and greater social
  cohesion.

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The European Charter for Small Enterprises

• Charter for Small Businesses of June 2000 commits
  Member States and the Commission to create the
  best possible environment for small enterprises.
• Erkki Liikanen said Charter is central to
  achieving the Lisbon goal of making Europe into
  the worlds most competitive and dynamic
  knowledge-based economy by 2010

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Charter Action Lines (I)

• Education and training for entrepreneurship
• Cheaper and faster start-up
• Better legislation and regulation
• Availability of skills
• Improving online access
• More out of the Single Market

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Charter Action Lines (II)

• Taxation and financial matters
• Strengthen the technological capacity of small
  enterprises
• Successful e-business models and top-class small
  business support
• Develop stronger and more effective
  representation of small enterprises interests at
  Union and national level

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Central objective of the Charter

• Create top-class small business support systems,
  easy to access, to understand and relevant to the
  needs of business

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I. Awareness and visibility - results

• 75 of EU small business lack information on the
  availability of support services
• Better take up of support services by female
  entrepreneurs and by entrepreneurs with secondary
  and university education

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I. Awareness and visibility - results
Graph 1 Information and participation rates of
businesses
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I. Awareness and visibility - results

• Main reason for 60 of enterprises not to make
  use of support services they do not see any
  need for external help.

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I. Awareness and visibility - results
Graph 2 Main reason for not using support
services
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I. Awareness and visibility - conclusions

• Two main factors influencing awareness
• Promotion of support services
• Direct contacts and personal visits - most
  welcome promotional methods
• Word-of-mouth
• Organisation of contact points
• looking for support services at local / regional
  levels

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I. Awareness and visibility - conclusions

• KEY CHALLENGES OF SUPPORT POLICY
• Promotional tools should focus on direct and
  personal contacts
• Co-ordination between service providers

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II. Types of support - results

• EU Small businesses need specifically targeted
  support services
• 70 according to their size
• 77 to their sector and
• 73 according to their phase of development
• There seems to be a certain mismatch between
  demand of services and offer in Europe

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II. Types of support results (II)

• Regional differences as far as enterprises needs
  are concerned
• Demand for support services related to the
  development of the business location

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II. Types of support conclusions (III)

• KEY CHALLENGES OF SUPPORT POLICY
• Small business need more tailor made support and
  more targeted services
• Coherent support services in the area of
  professional information and finance
• Demand for specific types of support differs by
  the location of an enterprise

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III. Conditions and Delivery - results
Graph 5 Satisfaction with use of support services
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III. Conditions and Delivery results (II)
Graph 6 Satisfaction and participation rates
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Objectives of 2001-2005 Multi-Annual Programme
for SMEs
DG Enterprise main functions

• Promote entrepreneurship
• Enhance growth and competitiveness
• Improve administrative and regulatory environment
• Improve financial environment
• Facilitate access to Community support services
  and networks
• Contribute to the  open method of
  coordination  - Exchange of information -
  Identification of best practices -
  Implementation and monitoring

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DG Enterprise main functions
Enterprise Policy Main Activities

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European agenda for Entrepreneurship
Policy areas mentioned by respondents

• A) Continued efforts needed
• Administration and regulation
• Access to finance
• Support and training services
• Innovation
• Facilitating transfer of businesses
• Entrepreneurship education
• Attitudes towards risk-taking and failure

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European agenda for Entrepreneurship
Policy areas mentioned by respondents

• B) More efforts needed
• Social security for entrepreneurs
• Public procurement
• State aids
• Taxation
• Labour law complexity and inflexibility
• Internationalisation
• The regional dimension

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European agenda for Entrepreneurship
Suggestions about the approach

• A co-ordinated approach to entrepreneurship
  policy
• Involving policy-makers at EU, national and
  regional level as well as businesses
  organisations
• Ensuring synergy among different policy areas
  that affect entrepreneurship (Enterprise,
  innovation, employment, taxation, education, )
• Respecting diversity among different regions,
  types of entrepreneurs and their enterprises

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European agenda for Entrepreneurship
The Entrepreneurship Action Plan
Five key areas for action

1. Fuelling entrepreneurial mindsets
2. Encouraging more people to become entrepreneurs
3. Gearing entrepreneurs for growth and
   competitiveness
4. Improving the flow of finance
5. Creating a more SME-friendly regulatory and
   administrative framework

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The Entrepreneurship Action Plan
European agenda for Entrepreneurship
Key actions 2004-2005

• Fostering entrepreneurial mindsets through school
  education
• Reducing the stigma of failure
• Facilitating transfer of businesses
• Improving social security of new small business
  owners
• Tailor-made support for women and ethnic
  minorities
• Facilitating SMEs business cooperation in the
  internal market
• Fostering innovative clusters
• More equity and stronger balance sheets
• Listening to SMEs
• Simplification of tax compliance

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The Entrepreneurship Action Plan
Possible key actions 2006 and beyond

• Conducting entrepreneurship campaigns
• Fostering the creation of more fast-growing
  enterprises (gazelles)
• Promoting entrepreneurship in social sectors
• Enabling micro-enterprises to recruit by reducing
  the complexity of regulations
• Facilitating SMEs access to public markets

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Innovation and Technology Transfer
Other EU programmes and policies on SMEs with a
bearing on BIs

• Innovation policy
• Gate2Growth business plan assistance
  project-investor matching (www.Gate2Growth.com)
• Networks
• Innovation Relay Centers 68 IRCs to promote
  technology transfer
• Innovating Regions in Europe network
• CORDIS (www.cordis.lu)

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Innovation Scoreboard
/ High performance, High trend Moving ahead
/- High performance, Low trend Losing
momentum
-/- Low performance, Low trendFalling
further behind
-/ Low performance, High trend Catching up
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Overall innovation performances
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Innovation Scoreboard M. State 1
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Enterprise investment in LLL
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Biotech Innovation Performance
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Innovation performance vs GDP
R² 0.55
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Innovation Scoreboard M. State 1
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Innovation Scoreboard M. State 2
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Report on Benchmarking of Business Incubators

• Available on http//europa.eu.int/comm/enterprise
  /entrepreneurship/support_measures/incubators/inde
  x.htm
• Highlights issues such as
• Role of Business Incubators
• Business Incubators definitions and typology
• Geographical aspects and scope of incubator
  activities
• European Policy context

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Business Incubator type (I)

• Two years ago the following issues were raised at
• the Best practices in Science Based incubators
• conference
• Traditional Business Incubators
• New economy incubators
• Other, e.g. virtual incubators (such as the
  Synergy Incubator - virtual service delivered
  through a virtual medium, the internet)

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Business Incubator type (II)

• New economy incubators
• Are private-sector, profit-driven with the
  pay-back coming from investment in companies
  rather than from rental income
• They tend to focus mainly on high-tech and
  internet-related activities and unlike
  traditional incubators, do not have job
  creation as their principal aim
• New economy incubators often have an
  essentially virtual presence with financial and
  business services at the core of the offering
  unlike their traditional counterparts that
  usually centre on the provision of physical
  workspace.

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Setting Up and Operating Incubators (I)

• Business incubators should be designed to support
  and be part of a broader strategic framework
  either territorially orientated or focused on
  particular policy priorities (e.g. development of
  clusters), or a combination of these factors

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Setting Up and Operating Incubators (II)

• Incubators should be promoted by an inclusive
  partnership of public and private sector
  stakeholders

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Setting Up and Operating Incubators (III)

• There are a number of different set up funding
  models but the evidence from this project is that
  public support for the establishment of
  incubators in Europe will remain critical for the
  foreseeable future

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Setting Up and Operating Incubators (IV)

• There are different ways in which incubators
  cover their operating costs with many incubators
  relying on public subsidies, but dependence on
  this source of revenue funding should be
  minimised

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Business Incubators functions (I)

• The provision of physical space is central to the
  incubator model. Standard good practices now
  exist with regard to the most appropriate
  configuration of incubator space

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Business Incubators functions (II)

• The value added of incubator operations lies
  increasingly in the type and quality of business
  support services provided to clients and
  developing this aspect of European incubator
  operations should be a key priority in the future

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Business Incubators functions (III)

• The type of activities client companies are
  pursuing, in particular the technology/knowledge
  intensity of these activities, is the key factor
  (rather than physical features or operating
  modality) that should be used to differentiate
  one type of incubator from another

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Business Incubators functions (IV)

• Across Europe, there are a variety of different
  business incubator models and precise modalities
  should reflect local, regional and national
  circumstances and priorities

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Evaluating Business Incubator services and impacts

• The performance of business incubators should be
  judged primarily in terms of the results
  achieved, i.e. the impact they have on
  businesses, wider economic development and other
  priorities

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In seeking to achieve best practice particular
attention should be paid to (I)

• Benchmarking and best practice sharing should
  focus on the four key incubator service areas
  identified in the report
• entrepreneur training,
• business support,
• financing, and
• technology support

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In seeking to achieve best practice particular
attention should be paid to (II)

• Business incubators should be encouraged to
  periodically undertake impacts assessments
• As a starting point to any EU-level initiative,
  priority should be given to developing a set of
  common definitions and quality standards for
  European business incubators

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A European Definition?
A business incubator is an organisation that
accelerates and systematises the process of
creating successful enterprises by providing a
comprehensive and integrated range of support,
including

• Incubator space
• Business support services
• Clustering and networking opportunities

By providing their clients with services on a
'one-stop-shop basis and enabling overheads to
be reduced by sharing costs, business incubators
significantly improve the survival and growth
prospects of new start-ups. A successful
business incubator will generate a steady flow of
new businesses with above average job and wealth
creation potential. Differences in stakeholder
objectives, admission and exit criteria, the
knowledge intensity of projects, and the precise
configuration of facilities and services, exist
and will distinguish one type of business
incubator from another.
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Points for reflection (I)

• Information base about BIs and STPs
• Development of definitions (commonly agreed)
• Improving understanding
• Variety of BI and STP is decisive for success
• BI and STP must continuously improve quality of
  services

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Points for reflection (II)

• Benchmark development
• Toolboxes
• Certification/accreditation
• Interaction between local level/knowledge
• Information / Experience

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BIS as cornerstone instrument for a successful
implementation of all relevant, Lisbon objectives
specific, instruments and policies (I)

• WHY? - Privileged forum for
• Incubation of ideas and innovation (not just a
  coaching site)
• High quality training (not just provision of
  office space and facilities)
• Social integration (not just for hi tec ventures)
• Promotion of sustained growth (not just for hit
  and off you go approach
• Wider networking and partnerships (not just for
  local approach)
• Establish standard schemes with potential sources
  of finance
• Establishing the links between the teaching world
  and first steps in working life

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BIS as cornerstone instrument for a successful
implementation of all relevant, Lisbon objectives
specific, instruments and policies (II)

• Debate and info dissemination on sensitive issues
  such as, e.g. reform measures, career guidance
• Promote the taking of proactive action on major
  upcoming issues for the EU such as
• Ageing population
• IPR / EU patent
• CSR, Environmental Welfare issues with ways to
  tackle the problems posed and disseminate good
  practice from the outset at shop floor level
• Disseminate good practice

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Business Incubators Database (I)
Incubators by country 774
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Business Incubators Database (II)
Incubators by country 774
AUSTRIA 15
BELGIUM 13
BULGARIA 2
CYPRUS 5
CZECH REPUBLIC 1
DENMARK 10
ESTONIA 2
FINLAND 37
FRANCE 81
GERMANY 202
GREECE 8
IRELAND 7
ISRAEL 24
ITALY 22
LATVIA 2
LITHUANIA 4
LUXEMBOURG 2
MALTA 1
NETHERLANDS 10
POLAND 3
PORTUGAL 8
ROMANIA 1
RUSSIAN FEDERATION 1
SLOVAKIA 1
SPAIN 28
SWEDEN 21
SWITZERLAND 3
UNITED KINGDOM 260
All countries 774
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Business Incubators Database (III)
Incubators by sector Top 10
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Business Incubators Database (IV)
Incubators by sector Top 10
Top Ten Business Sectors represented by CORDIS Business Incubators Top Ten Business Sectors represented by CORDIS Business Incubators
SOFTWARE DEVELOPMENT 138
E-BUSINESS 129
COMPUTER TECHNOLOGY 123
INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT) 117
BIOTECHNOLOGY 113
ENVIRONMENT 108
E-COMMERCE 104
MULTIMEDIA 104
COMMUNICATION 103
ENGINEERING 98