Models for technology business incubation

1. 1
Models for
Technology Business Incubation
Leon Lourens

2. Introduction
It is NOT the theory or knowledge
of business incubation that needs
consideration but the
APPLICATION
African Business Incubation Institute

3. 3
University
Technology Park
Not-for-profit
For-profit
Focused on one sector i.e. information technology
Mixed Portfolio
Government
Private
Mixed-useSocial incubator
Agri-businessAcceleration
Incubation Business Models
African Business Incubation Institute

4. Scope of technology incubation
4
African Business Incubation Institute

5. Incubator Generations
Generation Determinant
1st Generation Real estate and shared services
Reactive business help
2nd Generation + business development program and
coaching
Proactive business help
3rd Generation + in house equity/debt finance for clients
or channels to external providers
Partnering with the business
African Business Incubation Institute

6. 4th Generation
incubators
3rd generation incubation incorporating
convergent and virtual models, combined
with more sophisticated integration into the
value chain, such as closing the gaps or
becoming part of the supply chain,
developing infrastructure to access markets
such as independent marketing companies
or becoming the driver behind the
development of whole industries in a
country.
African Business Incubation Institute

7. Accelerators and Incubation
Accelerator
Interchangeable with BI but:
• Normally for-profit
• Funded by Venture Capitalists
• No general focus but growth
potential, internationalisation
• In depth hands-on approach
and involvement
• Short turnarounds
• Exit strategies
Difference to
Incubation
• Funding from
investment or
sector
specialists.
• In-depth
involvement to
achieve short
term success.
• High growth
potential clients
African Business Incubation Institute

8. Technology Commercialisation
• Linked with R&D communities (e.g. Universities)
• Helping commercialise IP & R&D through spin out
companies or licencing of technology
• Specialized services & intensive support required
- seed funding and access to Venture Capital
• +money +value add services
+channels to market
+accommodation
• Partnering & facilitative models
African Business Incubation Institute

9. • Specialised knowledge,
services and infrastructure
– Life sciences
– Bio technology
– IT
• Skilled workforce
• Strong linkages
• Intensive support
• Capital
• IP and patents knowhow
Technology Incubators
African Business Incubation Institute

10. Stage gate - Summary of a process
Technical Market Business
Investigation Phase
1.
Investigation
Technology
Concept
Analysis
Market Needs
Assessment
Venture
Assessment
Development Phase
2. Feasibility
Technology
Feasibility
Market Study
Economic
Feasibility
3. Planning
Engineering
Prototype
Strategic
Marketing
Strategic
Business Plan
4. Introduction
Pre-
Production
Prototype
Market
Validation
Business Start-
Up
Commercial Phase
5. Full Scale
Production
Production
Sales and
Distribution
Business
Growth
6. Maturity
Production
Support
Market
Diversification
Business
Maturity
African Business Incubation Institute

11. Lean Start-up methodology
The question is not: "Can this product be built?"
Instead, the questions are
"Should this product be built?" and
"Can we build a sustainable business around
this set of products and services?"
“The Lean Startup method teaches you how to drive a
startup -how to steer, when to turn, and when to
persevere - and grow a business with maximum
acceleration.”
African Business Incubation Institute

12. Lean Start-up
African Business Incubation Institute

13. MinimumViable Product
Don’t expect to build a scalable business in 10 weeks (although
some have) but set the start-up on a solid foundation. The
objective is to:
• Validated the customer/user need
• Identified (built) and verified the MinimumViable Product
• A crisp pitch to communicate the idea
A Minimum Viable Product is the smallest thing
you can build that delivers customer value

14. MinimumViable Product
An MVP has three key characteristics:
• It has enough value that people are willing to
use it or buy it initially
• It demonstrates enough future benefit to retain
early adopters
• It provides a feedback loop to guide future
development
African Business Incubation Institute

15. Disruptive technologies
Examples of disruptive technologies include:
• Mobile technologies – Apps (uber), IoT, Cloud comp.
• Automation of knowledge work,
• Advanced robotics,
• Autonomous or Near-Autonomous Vehicles
(drones);
• Next-generation Genomics;
• 3D Printing;
• Advanced Materials; and
• Renewable Energy, etc.
African Business Incubation Institute

16. Disruptive technologies
The decision on adopting disruptive technology relies
on:
• Market research,
• Customer segmentation,
• Financial capability of the organization and
• Risk approach.
African Business Incubation Institute

17. • Patenting - Denies others the right to use the patent without the consent of the
patent holder for some period of time.
• Copyright - Gives the author of an original work exclusive right for a certain time
period in relation to that work, including its publication, distribution and adaptation.
• Trademark - A distinctive sign or indicator used by an individual, business
organization or other legal entity to identify that the products or services originate
from a unique source.
• Trade secrets - A formula, practice, process, design, instrument, pattern, or compilation of
information which is not generally known or reasonably ascertainable, by which a business can
obtain an economic advantage over competitors or customers.
IPR Protection
Standard ways to protect IP...

18. Money is not everything....
 Technology ventures typically will not attract general business investors.
 Technical entrepreneurs need to align with individual investors and investment
firms that have detailed sector knowledge and a relevant network, due to the
extra dimension of uncertainty related to technical development and production
processes.
Finance and Capitalisation
It is important for incubator managers to
emphasize to incubatees that they should be
pursuing “smart” rather than “dumb” money.
African Business Incubation Institute

19. Other considerations
• Soft landings and internationalisation
• Incubator business models
• Funders, sponsors, costs, clients
• Networks (universities, financiers, first adopters)
• Your environment
• And more….
African Business Incubation Institute

20. Examples

21. 21
ThankYou!!
Developed by & copyright: Leon Lourens
in conjunction with Steve Giddings and Julian Webb.
Email: Leon@incubationinstitute.com
Tel: +27 82 371 5490