How to create a successful start-up incubator

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Crank it up: but first you need to know where you would like to go

“Start-up incubators can support students in developing entrepreneurial skills and provide tailored support for early-stage, high-growth businesses and ideas. They can also create a virtuous cycle of job creation, university-industry collaboration, and show tangible benefits of academic ‘impact’.”

That is the assessment of Britta Wyatt, a consultant for global technology transfer and innovation management consultancy business Isis Enterprise, part of the University of Oxford’s technology transfer company, Isis Innovation.

A recent Isis Enterprise review of UK universities found that start-up incubators were becoming a necessity rather than simply “nice to have”. Ms Wyatt subsequently devised a list of recommendations for creating a successful start-up incubator, summarised below:

Think about your objectives
The incubator should reflect the needs of the university and the student body, Ms Wyatt says. When considering creating an incubator, universities should ask themselves searching questions about its structure and aims. Among key questions are: is it designed to bolster the local business ecosystem and create links between the university and industry; will it build student entrepreneurial skills and new ventures independent from research; and can it foster an entrepreneurial ecosystem?

Understand your clients
There will be many groups interested in the incubator inside and outside the university. Once they have been identified, actively seeking feedback from them helps a university to determine if its vision for the incubator service fits with actual needs.

The ‘ideal’ incubator?
Ms Wyatt said the study indicated that there is no ideal model. However, the most successful structure is “tailored to the specific needs” of the groups the incubator is trying to help.

University start-up incubators supported an average of “30 ventures per year”, and “most had one/two core employees…[and] programme managers had an entrepreneurial or business background”.

Be creative with your funding
Often university start-up incubators are free to participants, unlike typical business centres. “[One] model for capturing returns from participants is via equity investment, royalty agreements or loans,” she says. As such arrangements usually pay returns only in the long term, she warns that universities should expect to provide some degree of continuing support to the incubator.

Build your business case
A strong business case for internal approval and attracting partners and funders is absolutely crucial, Ms Wyatt says. Although long-term financial returns are possible, it is useful to outline earlier impact and community benefits that can come from accelerating start-ups.

Geared for success
“A university will need to look closely at its intellectual property and benefits-sharing policies, [making sure that] these are both attractive for participants and structured so investors will make good returns,” she says. Just as important is creating an awareness across the university that helps to attract participants.

Ms Wyatt said the tips were loose enough that they could apply to any university, and emphasised that they do not constitute a “one-size-fits-all model”.

But she stressed that one of the most important things to consider was how to help secure investment for the businesses that do get off the ground.

“Fortunately there is a lot of seed funding available right now, but there is a bit of a cliff when it gets to the next stage of funding. People seem to be aware of that as a challenge, and we’re waiting to see how that plays out,” she said.

john.elmes@tesglobal.com