National Business Incubation Association; Your source for knowledge and networks in business incubation

Is there a recipe for incubation success?

August 1998

When representatives of NASA's Kennedy Space Center wanted to know if there is a recipe for successful technology business incubation, they asked Cris Johnsrud, director of research and planning at the Southern Technology Applications Center (STAC), to find out.

"The answer is no," Johnsrud says, "but there are certain ingredients that successful technology incubators seem to have in common."

To uncover those ingredients, Johnsrud consulted many sources. "We looked at information from our online data sources, we talked with individuals who operate business incubators and relied a lot on NBIA publications – collections of materials on best practices and creating technology-based incubators. We also looked through files of correspondence and the history of incubator development – and then we looked for similarities," she says.

The STAC research emphasizes that there is no single element that guarantees an incubator's success. Instead, Johnsrud says, success is tied to a combination of the following factors (and others):

Partnerships with key organizations

"Incubators must have access to venture and seed capital, local entrepreneurship support organizations and networking opportunities for fledgling firms to meet people who can help them," Johnsrud says. "They also must have access to research facilities with labs, equipment and expert scientists and engineers."

Consistent use of selection criteria

"People who are involved in the selection of companies for incubator tenancy have to be on the same page. They must have a solid understanding of the kinds of companies that will be accepted, the selection criteria and how those criteria will be applied to applicants," she says.

Implementation of management practices

"Incubators need good managers. Successful incubators are generally managed by someone who has been through the experience of starting a business and knows what entrepreneurs really need. Also, most of the findings agree that successful incubators are managed by people who roll up their sleeves and get involved with the companies – who put the companies on a very-well-understood, appropriate progress curve, with periodic reviews," Johnsrud says.

Use of incubator financing strategies that are supported by stakeholders and partners

"How do you keep the incubator financed for the long term? What's the income stream for the incubator? An incubator needs a business plan, just like its tenant companies do. And that plan needs to be approved by the board of directors, stakeholders and partners," Johnsrud says.—Meredith Erlewine

Keywords: best practices

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