It involves working the idea into a business plan, consideration of protection options, and determining how to market and distribute the finished product. The major legal mechanisms for protecting intellectual property are copyrights, patents, and trademarks. IP rights enable owners to select who may access and use their intellectual property and to protect it from unauthorized use. To be patentable, an invention must be novel, must have utility, and would not have been obvious incubator those possessing ordinary skill in the particular art of the invention. Refer to trade secret. There are three kinds of patents in the United States: Patents do not protect ideas, only structures and methods that apply technological university. Each type of patent confers the right to exclude others from a precisely defined scope of technology, industrial design, or plant variety. In return for the right to exclude, an inventor must fully disclose the details business the invention to the public so that others can understand it and use it to further develop the technology. Once the patent expires, the public is entitled to make and use the invention and is entitled to a full and complete disclosure of how to do so. Your source for expert commentary on IP management issues. University to the blog. Formation of a Business Incubator. In Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices eds. A Krattiger, RT Mahoney, L Nelsen, et al. Available online at www. We are most grateful to the Association of University Technology Managers AUTM for having allowed us to update and edit this paper and include it as a chapter in this Handbook. The original paper was published in the AUTM Technology Transfer Practice Manual Part IV: Chapter 3 co-authored with DE Massing. Sharing the Art of IP Management: Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged. ZablockiOffice of the Vice President for Research, University at Buffalo, State University of New York, U. Editor's Summary, Implications and Best Practices. Business incubators, as economic tools, have become increasingly common in the last decade and a half for stimulating local development. Incubators provide facilities and services for example, business planning and legal, accounting, and marketing support to catalyze small-business growth. In fact, incubated companies have a dramatically higher rate of survival than an average spinout does. This chapter explains what steps to take to set up an incubator, including the basic structure and the kinds of services generally offered. Successful incubator programs are discussed, and a helpful bibliography focused on case studies is provided. An invention sometimes requires the efforts of a spinout enterprise to be commercialized. Without a corporate infrastructure to execute an established commercialization process, an institution, such as a university, may be reluctant to invest in the steps needed to move technology out of the laboratory. In contrast, a spinout may be more favorably positioned to embrace new technologies because of access to capital and grant monies. Philosophically, moreover, a spinout is generally more willing to accept risk than an established concern constrained, perhaps, by shareholder interest. Forming a spinout is a critical option for moving an invention into the marketplace. To succeed, three components must be assembled: This chapter focuses on the last of these. It is intended to provide fundamental background information for use by strategy technology transfer practitioner and includes information on terminology, incubator formation, and successful incubator programs, as well as a helpful bibliography. Consequently, a new business incubator is a facility for the maintenance of controlled conditions to assist in the cultivation of new companies. Commonly classified by ownership and capital sourcing, there are three types of incubators: Numerous sets of subclassifications of the latter two types exist, depending on their status as for-profit or nonprofit entities. Other attributes of the business incubator that distinguish it from other commercial enterprises include the range of services, the ease by which tenants can cancel their lease, and the reduced often subsidized rent during the incubation term. In the s, small became big in economic development circles. During this period, state and regional economic development strategies shifted from seeking to attract companies from elsewhere industrial recruitment to focusing on assistance for the homegrown entrepreneur. This shift in economic development strategy occurred for good reason. Seminal studies by David Birch at M. Economic development officials and policy planners sought to create jobs in their states and regions by university the growth of small companies. Small business incubators became a preferred vehicle for providing assistance to new companies. In the s, incubators were referred to as the most potent economic development tool to be introduced in this decade. Today, there are more than incubators. The incubator concept is simple and appealing. An incubator is a multitenant facility providing affordable space and an incubator that promotes the growth of small companies. Initially, some incubators provided an inexpensive physical environment to spinouts in what had been old or vacant buildings. Later incubators concentrated on the companies themselves, helping them to grow by creating an entrepreneurial environment. A range of services was developed to assist the small company: Today, however, most incubators prefer the company-centered approach, charging market rates for rent and offering services as the value-added benefit of locating in the incubator. Thus, incubators are probably best defined as programs rather than facilities. Their purpose is to stimulate job growth in various sectors of the local economy. Some incubators, particularly those with ties to higher education, emphasize technology-based development. Communities that lack the critical infrastructure of technology-related business and research-intensive universities may direct incubators to serve developing companies in the manufacturing and service sectors. Incubators have also been used to encourage entrepreneurial activity among disadvantaged populations, including women and minorities. For example, the New Enterprises for Women Building in Greenville, Mississippi, targets assistance to low-income, minority women. These varied economic development purposes are reflected in the NBIA survey, which found that the most important objectives of incubators were economic development The great variety of the types of companies incubated further confirms the diversity of purpose in business incubation. Small business incubators have proven to be effective economic development tools, even though they may not have fulfilled early optimistic expectations for job creation. Their greatest benefit may be enhancing company survival rates. Incubated companies have a dramatically higher rate of survival than the average spinout. Job creation statistics are more modest. The average incubator in the study was four business old and occupied a space of about 20, square feet in size. Each incubation facility averaged 12 tenants with 54 employees. Graduate companies those that relocated from the incubator provided an average of The establishment of new incubators peaked inand the new wave of economic development initiatives in thes focused on helping existing businesses survive and prosper in the face of global competition. Small business incubation is now an entrenched and accepted economic development tool used in both urban and rural areas throughout the United States. Incubators are now used to promote the growth of entrepreneurial ventures of every imaginable type. Conducting a feasibility study for a proposed incubator can achieve a number of important objectives and, if properly done, can provide a solid basis for judging the economic and political viability of the proposed project. The feasibility study represents the first in a series of early development phases that, for planning purposes, can be described as follows:. Meeder 4 suggests a number of reasons why conducting a feasibility study is wise. A feasibility study should also reveal examples of critical errors made with respect to other incubator programs. Such errors might involve facility and site selection, structure of the governing board, funding arrangements, income assumptions, or the nature of the business assistance business. Meeder suggests that a thorough feasibility study will help avoid the two classic errors of incubator formation: While recommending the use of a consultant, Meeder notes that selecting a consultant without direct incubator experience can result in a business that provides general strategy, but lacks concrete recommendations. An adequate feasibility study will answer essential questions about how to proceed in a systematic fashion and how to secure funding during all the phases of incubator development. Indeed, business thorough study by a qualified consultant can and should provide the information necessary to determine whether the project should be pursued. A core group committed to starting a business incubator must recognize that its efforts cannot be pursued in a vacuum. The dream of a few must become the dream of many. An incubator represents an important community investment, both practically and symbolically, and requires broad-based community support to be incubator. In Forging the IncubatorMeeder suggests that meetings with community leaders can strategy several objectives. Community meetings allow proponents of the incubator to:. Engaging in this process should clarify the prospects for starting an incubator. The process should help to identify potential sites, funding sources, project champions from key organizations, and sources of assistance university support, both individual and organizational. Strategy process may, however, also uncover serious impediments to realizing the project. Meeder suggests that project supporters make serious efforts to placate opponents; indeed, project supporters should not assume that the project will be successful in the face of persistent opposition. Real estate developers, for example, may resist the project because they believe an incubator will cut into their market. Strategy persuasive argument, in this case, is that the strategy will only incubate companies for a limited period of time and that the incubator should serve to increase both the quantity and quality of companies incubator to rent space. Community consensus building should help locate organizations that will identify with the successes and failures of the proposed incubator. These organizations business known as stakeholders. The support of these stakeholders is critical to initiating an incubator program. At the same time, potential supporters of the incubator effort understandably have varied motivations and expectations. Their level of understanding of the university and methods of business incubation will vary greatly. Stakeholders need to be identified and then cultivated. The first step is to secure commitment from potential stakeholders who have the strongest interest and who are most likely to provide financial support for the endeavor. Once stake-holders have committed to the project, the organizational structure needs to be formalized. A governing body, typically a board of directors, provides the organizational vehicle for maintaining, building, and strengthening commitment to the incubator program. Experience has shown that incubators that fail to achieve consensus on mission and goals invite trouble from their board, since members will create their own strategy mission statement and begin to act accordingly. Incubator managers should seek to expand the number of valid stakeholders. New stake-holders should be welcomed as long as they have something tangible to contribute. On the other hand, allowing tenants to serve on the board can create conflicts of interest, so tenant participation on the board should be evaluated on a cost-benefit basis. Additionally, incubator managers must remain sensitive to external conditions, which may strengthen or weaken the commitment of stakeholders to the incubation enterprise. Finally, by-laws are crucial. They provide an objective means of removing nonparticipatory board members and, at the other extreme, board members who are exerting undue influence. A business incubator will operate in a particular locale with its own rich history, so it university act with an eye to the regional economy and institutions. To become an accepted part of this complex social fabric, an incubator must establish its distinctiveness and unique purpose. From a business perspective, the incubator needs to identify its market niche. Successful businesses carefully attend to the work of defining the market position of their products and services relative to their competitors, as well as to modifying their market position in response to changing customer preferences. Developing a market niche for a business incubator requires similar attention to these tasks. Within the real estate market, the incubator must distinguish itself from other multiple-tenant properties. For a technology-related incubator, the distinction may be readily apparent, for example, in that incubator facilities may offer wet and dry lab space. Certainly, rent subsidization can be attractive to cash-poor start-ups. The availability of shared support services is another appealing feature of incubator facilities, although provision of such services by for-profit organizations has become a growth industry. Economic development programs for small businesses proliferated in the s. Incubator managers thus provide the point of contact for entry into various programs. Many efforts to assist small business are, by contrast, programmatic in nature and limited by the scope of their intent. A well-positioned incubator, on the other hand, will help its tenants access the range of existing programs and, in addition, provide access to informal networks for business and financial advice and assistance. For example, a retired executive may agree to help out a struggling firm or a business angel may appear, discretely looking for new investment opportunities. The incubator program may also delimit itself and define its market by the type of company or client served. While high-tech incubators may limit their scope of service to technology-focused companies, some incubators may be even more targeted incubator example, restricting their services to biotech companies. The customer for the incubator should be determined during the feasibility phase, during which new-business registrations, by industry type, are classified and certain industry sectors identified for their spinout potential. Whatever the mix of services offered and the assessment of the market to be served, the incubator must somehow package its product to effectively position itself. The basic structure of an incubator facility is determined by owner attributes and regional demographics. A typical organizational format includes executive and advisory boards, a CEO or operations manager, and support staff. Selections for university positions and other representative forums may come from the following: The role of the manager or chief executive officer of the incubator is both internal and external. This person is chiefly responsible for:. The manager has multiple constituent groups representing both the sponsoring funding segments and the user spinout population. Appropriately selecting advisory board members allows the manager to establish and maintain networks for the dissemination of information and policy to these disparate groups. Table 1 provides typical staffing levels for incubators. T Incubator I NCUBATOR S TAFFING. An important function is marketing the incubator, which will be driven, in part, by the results of the market analysis conducted during the feasibility study. The market analysis should consider the following major aspects of the local economy:. Large corporations can supply an important market for new businesses and are also the chief sources of spinout companies in a region. The number, type, and rate of filing of new-business permits can provide important indicators of potential demand for incubator space. An inventory of available space broken down by type office, manufacturing, and so on is essential for determining potential demand. Market information can also be secured by offering a workshop or seminar that highlights some of the proposed business-service components of the incubator for example, a workshop on developing an effective business plan or one on the accounting needs of small businesses. This information can provide the basis for a market strategy that is integrated into the overall incubator budget. Proactively gathering market information is recommended over a reactive mode, which does not typically serve to effectively market the incubator. A reactive approach is tempting when an business manager is stretched thin with other responsibilities. However, a written marketing strategy allows other parties board of directors, advisory board, related organizations to assist. As Meeder 6 points out, the most successful sales organizations have a standard sales script or routine with which everyone involved is familiar. The marketing effort should include typical means of communication, including brochures, newsletters, and press releases about new tenants, tenant successes, and graduations. In addition, the incubator story may be included in the communications of sponsoring organizations. Other organizations may also be interested in cosponsoring seminars university interest to entrepreneurs. Such marketing efforts are necessary but not sufficient. Studies have shown that most entrepreneurs learn about the incubator through word of mouth. To market the incubator effectively, it is incumbent on the incubator manager to continue to develop and maintain a network of contacts in real estate, banking, patent law, business and economic development, both formally, through boards of directors and advisors, and informally, through professional organizations and business contacts. As the incubator concept has evolved, the range of services offered by incubators has greatly expanded. Early incubators provided access to a photocopier and a conference room, clerical support, and perhaps switchboard services. Today, incubators themselves provide, or provide access to, a broad spectrum of office, business consulting, and professional services. The most common in-house and outside services offered are given in Table 2. In recent years, incubators have greatly expanded the variety of office services they provide. For example, the menu of office services offered by an incubator based in Pennsylvania in operation for three years includes: Professional services may be provided at special discounts to incubator tenants. Some incubators arrange for new tenants to initially receive some professional services at no cost or at a deep discount. Given that entrepreneurs have no time to spare, professional service providers are often regularly available at an incubator and make themselves available for support and consultation. In developing the spectrum of services for a new incubator, several options need to be explored. First, there is the essential question of which services will be offered. Next, incubator managers must consider which of these services will be offered in-house. This will depend on internal resources and the external availability of business services. The availability of qualified outside sources will depend on the success of forging informal alliances with a range of service providers in the public and private sectors. For those services offered in-house, the question of cost recovery will need to be addressed. These most commonly include janitorial service, management assistance, utilities, shared office services, and financing assistance. Other services, such as clerical assistance, are charged back to the company on an at-cost or cost-plus basis. The quality, range, dependability, and accessibility of these services are the value-added features that will provide the strongest lure for attracting entrepreneurs to an business. The incubator should solicit feedback from tenants to ascertain whether or not the services are effectively meeting their needs and to determine whether additional services should be added. While the previous sections have addressed discrete issues related to incubator formation, the need for strategic planning—and the integration of these various elements into a coherent, multi-phased plan—should be apparent. Determinations about one aspect of the plan will affect other aspects. Managers should consider whether self-sufficiency can be achieved solely from rental income, through subsidies from sponsoring organizations, or through grants. Strategic planning compels incubator management to confront tough issues. How will the incubator continue to operate if revenue projections from rental income are not achieved? How will major facility repairs for example, a ruptured boiler be paid for? Addressing these worst-case scenarios through strategic planning can provide both a clear course of action if things go as planned and, if they do not, the necessary contingency plans to navigate what may be a difficult beginning. Strategic planning usefully determines not only what will be done but when it should be done. The initiation of a new phase of the incubator may strategy may not be made contingent upon the successful completion of an earlier phase. At what point in the development process is the manager hired? The notion that timing is everything is certainly true in strategic planning for an incubator spinout. Detailed case studies in the literature are cited but not restated in this chapter since these studies are generally quite lengthy. Some of the incubators noted below are not in operation today, but the histories may still provide useful information. As a guide to the reader, these studies are business in outline form to permit selection based on interest. Incubators have been formed to serve entrepreneurs of every ilk; they have been established by a wide variety of sponsors. It is therefore not surprising that their missions, programs, and objectives have differed substantially. Nevertheless, over the past 15 years, examples of best practices have emerged. Along a more practical vein, some of the specific practices known to affect the relative success university incubator operations include: The New Business Incubator: Linking Talent, Technology, Capital and Know-How. The Job Generation Process. Mimeo of the Program on Neighborhood and Regional Change; Boston. Strategy a Place incubator Grow: Business Location Decisions in the s Mimeo of the Program on Neighborhood and Regional Change. The State of the Business Incubator Industry National Business Incubation Association: How to Design and Implement a Feasibility Study for Business Incubation Programs. Creating Jobs by Creating New Business—The Role of Business Incubators. National Council for Urban Economic Development: What Does It Take to Build a Local Biotechnology Cluster in a Small Country? The Case of Turku, Finland. The Activities and Roles of M. Exploring Public Policy Options for Supporting Regional Innovation. The Role of Technology Transfer Intermediaries in Commercializing Intellectual Property through Spinouts and Start-ups. Developed with support from the Rockefeller Foundation. Concept Foundation, PIPRA, FIOCRUZ and bioDevelopments-Int. Innovation and IP Management: A Contextual Overview 2. Specific Strategies and Mechanisms for Facilitating Access to Innovation 3. The Policy and Legal Environment for Innovation 4. The IP Toolbox 5. Institutional Policies and Strategies 6. Establishing and Operating Technology Transfer Offices 7. Contracts and Agreements to Support Partnerships 8. Inventors and Inventions 9. Evaluation and Valuation of Technologies Balancing Protection with the Public Domain Technology and Product Licensing Dealmaking and Marketing Technology to Product-Development Partners The Public Sector and Entrepreneurship incubator Freedom to Operate and Risk Management Monitoring, Enforcement, and Resolving Disputes Bioprospecting, Traditional Incubator, and Benefit Sharing Putting Intellectual Property to Work: Experiences from Around the World. Country-specific Resources Database and Search Tools Information Resources Publications Sample Agreements Glossaries. Linked-In Groups ipHandbook Forums Other Networking Resources. User Comments and Uploads. National Council for Urban Economic Development 5. Endnotes All referenced Web sites were last accessed between 1 and 10 October Related Chapters The Role of Clusters in Driving Innovation What Does It Take to Build a Local Biotechnology Cluster in a Small Country? The Case of Turku, Finland The Activities and Roles of M. Exploring Public Policy Options for Supporting Regional Innovation The Role of Technology Transfer Intermediaries in Commercializing Intellectual Property through Spinouts and Start-ups. Formation of a Business Incubator Edward M. Introduction An invention sometimes requires the efforts of a spinout enterprise to be commercialized. Incubation and Economic Development In the s, small became big in economic development circles. The feasibility study represents the first in a series of early development phases that, for planning purposes, can be described as follows: Community meetings allow proponents of the incubator to: The Formation Process The basic structure of an incubator facility is determined by owner attributes and regional demographics. This person is chiefly responsible for: I NCUBATOR T YPE U NIVERSITY. I N-HOUSE PERCENT OF TOTAL. O UTSIDE PERCENT OF TOTAL.
The Small Business Incubator and You
The Small Business Incubator and You
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Second, I want to keep peer reviewing and group meetings constructive.
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