The biggest challenge facing the business incubation industry in the United Kingdom is the need to generate a higher profile and greater momentum among funding agencies and target markets, according to UK Business Incubation’s (UKBI) most recent survey of UK incubation programs. UKBI’s Annual Mapping Survey 2002 Executive Summary says respondents reported the two main barriers to incubator development are a lack of funding and a lack of awareness of business incubation programs, including among potential clients. Respondents also reported that the time between when incubators apply for funds and when they receive funds is too long.

Based on 157 telephone interviews with incubator managers, the summary provides insight into the state of business incubation in the UK, where there are more than 200 incubators. UKBI is a public/private initiative established to increase awareness and understanding of business incubation’s role and benefits in the United Kingdom.

“The vast majority of our incubation environments are still fairly new and on a steep learning curve,” says Peter Harman, deputy chief executive with UKBI. “The knowledge and understanding, therefore, of stakeholders and funders is also growing rapidly in parallel with the incubation community.” UKBI will encourage public and private funders to become involved more closely with incubators and client companies by, for example, serving as mentors. Harman says this will help potential funders better understand incubation and program and client needs.

Another significant issue, according to UKBI, is a lack of graduation policies and lack of enforcement of those policies, which may limit incubators’ business-creation potential. Although 82 percent of responding incubators reported having entrance policies, only 49 percent reported having graduation policies. Moreover, only one-quarter of those with graduation policies strictly adhere to them. Because 78 percent of respondents reported their incubators were full, and 51 percent reported they could not meet demand for space and services, UKBI’s summary extrapolates the possibility that some incubators may allow clients to stay longer than necessary instead of using graduation policies to keep clients moving through their programs. However, 23 percent of the programs surveyed had not graduated any clients, perhaps because most of those programs were so new.

Other findings include:

• Forty percent of incubator managers believe their operations will be very sound and grow during the next year, reflecting general industry confidence.


• Nearly half (47 percent) of incubators provide business assistance services to off-site small businesses, thus providing a community outreach service.


• The number of services that UK incubators provide increased from the previous year. For example, 85 percent of responding programs offer in-house networking services, compared to 57 percent the previous year, and 63 percent offer in-house business development services, up from 46 percent in 2001. This increase in client offerings may be due in part to an increase in the number of incubators with on-site management teams from 54 percent in 2001 to 69 percent in 2002.