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Incubation
- 1. Incubation
A new way of Corporate Innovation?
We make ICT strategies work
- 2. Introduction
With the 2001 dotcom crash, many incubators were shut down. In recent years, the incubator
model has experienced a renaissance.
History of Incubation
Number of Global Incubation Hot Spots
The number of
incubators incubators Silicon Valley New York
shrank London
drastically ïź Still the ïź Growing in ïź The most
after the dot- benchmark for relevance relevant
com bubble. innovative ïź 33% growth European VC
clusters in VC deals market
ïź Receives 40% from 2007
of all US VC to 2011
National investments
Business
Incubation
The first Association
U.S. was founded
business in the U.S.
incubator,
opened in
1959.
1959 1985 2001 2006 2011 Time
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- 3. Innovation Ecosystems
2012 ranking of the 20 most active startup ecosystems in the world: Silicon Valley is still the
biggest and most successful ecosystem followed by NYC and London.
Ranking Comparison of Top Startup Ecosystems
01. Silicon Valley
02. New York City
Founder experience & background: Funding:
03. London ïź Silicon Valley founders have, on average, started almost ïź On average, Silicon Valley startups raise
04. Toronto twice as many startups as founders from NYC or London. two to three-times more money in the first
05. Tel Aviv three stages of development: Discovery,
06. Los Angeles ïź Silicon Valley founding teams are 34% more likely to be Validation, and Efficiency.
07. Singapore technical heavy than founding teams from NYC.
08. Sao Paulo ïź But in the scale stage, compared to
09. Bangalore ïź Whereas NYC founding teams are almost 2x as likely to Silicon Valley, New York City startups
10. Moscow be business heavy than Silicon Valley founding teams. raise 27% more money and London
11. Paris
startups raise 30% more money.
12. Santiago
13. Seattle Size: Startup types:
14. Madrid
15. Chicago ïź Silicon Valleyâs ecosystem is still ïź Silicon Valley entrepreneurs are 13 percent more likely to tackle new
16. Vancouver 3x bigger than New York City markets than London entrepreneurs.
17. Berlin
18. Boston ïź 4.5-times bigger than London ïź London entrepreneurs are 21 percent more likely than entrepreneurs
19. Austin ïź 12.5-times bigger than Berlin in Silicon Valley to tackle existing markets with better products.
20. Mumbai
ïź New York entrepreneurs have the highest proportion of companies
trying to re-segment existing markets with niche products.
Mentors:
Startup Success Rate:
ïź The Silicon Valley and New York City
ïź Proportionally, Silicon Valley eco- ecosystems have more helpful mentors than
system has 22% more companies the London ecosystem.
in the âscale stageâ than in NYC
ïź Silicon Valley companies have 46 percent more
and 54% more than in London.
helpful mentors than companies in London.
Source: Startup Compass by Startup Genome Project, May 2012
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- 4. Internal vs. External Innovation
Corporates can leverage the incubation model either through internal innovation or external
innovation.
Incubation Models
Carrier / Company Carrier / Company
Startup
Startup Innovator
Incubator
Project Project
Startup Project
Project
Project
Startup
External Innovation Internal Innovation
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- 5. Where Incubators add Value
By providing a mix of âsocial capitalâ and âcapitalâ, incubators cater to the needs of early stage
startups in the Ideation, Pre Launch or Launch Phase.
Incubatorsâ Role in the Startup Lifecycle
Friends & Family Angel Funds Seed Funds Venture Capital
ïź Incubators provide/ early stage startups with
Carrier Company
high most needed resources to prepare for
a potential launch
Startup
Capital Requirements
ïź Startups are in need of intensive mentoring and
Startup
only small amounts of seed funding
Incubator
ïź A compelling mentorship program is
Startup
Incubator the essence for incubators to
ïź Help startups accelerate growth
Startup
ïź To be connected to potential investors
during scale-up phase
low ïź Incubators cater to the needs of startups shortly
before they receive funding
Ideation Pre Launch Launch Phase Scaling
Startup Maturity/Phase
ï§ Money = Financial investment
ï§ Social Capital = Business Expertise, Mentoring, Network etc.
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- 6. Incubator Overview
Incubators come in different shapes and forms, and are mostly driven by either governments,
large Corporates or independent groups.
High Level Overview
Non-Profit Oriented Profit Oriented
Government Corporate Independent
Technology/Science
University Carrier Non-Carrier
Park/ Community
Goals: ïź Non-Profit orientation Goals: ïź Profit orientation
ïź Policy driven: ïź Profit driven:
Creation of jobs Creation of new businesses and opportunities
regional development Company Development
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- 7. Table of Incubators
Types
There are different incubator business models. In the U.S. the mentoring-centric model is most
prominent while international incubators tend to be rather investment-centric.
Business Models
Predominant model in the US
Facility-Centric Mentoring-Centric1 Management-Centric Investment-Centric2
Examples
Until certain company
Duration 3-6 months 3-5 years (until exit) 1-5 years (until exit)
size is reached
Co-working space and Only during duration of
Facilities Startup facilities Startup facilities
IT services the program
Provide business idea Provide business idea
services (commercial, Intense mentoring; no
Mentoring and mentor/coach and steer execution,
technical and legal) controlling influence
startups tech infrastructure, etc.
Small Investment Higher seed funding; Several rounds of
10-50k seed funding;
Invest vehicle, revenues mostly equity share diluted over funding; equity share
6-10% equity in return
through rent time to <25% >50% until exit
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- 8. Frame Template
Services Provided by Incubators
Services provided by incubators typically include (1) intensive mentoring (2) seed funding and
(3) office space for startups.
Services Provided by Incubators
Mentoring Facilities & Networking
Advice from serial entrepreneurs ïŒ Office space
to refine ïŒ IT infrastructure services (e.g. data
ïŒ Commercial strategy Business hosting)
Incubators
ïŒ Technology strategy ïŒ Testing environments
ïŒ Functional capabilities ïŒ Networking opportunities
(i.e. in online marketing)
Funding
ïŒ Seed funding (~ US$ 10-50k)
ïŒ Support to receive follow up funding
from major investors (VCs, Business
Angels and Corporations)
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- 9. Benefits
Benefits of incubation go beyond revenues. Incubators can support accelerating new product
development, get exposed to new ideas, lower investment risk & boost corporate image.
Potential Benefits of Incubation
Accelerate Innovation Lower investment risk
ï§ Fast pivoting and decision ï§ Small amounts of seed
making within startups funding for many startups
ï§ No interference with legacy ï§ No commitment to provide
telco processes Incubator follow-up funding
Access to new ideas Positive Image Effect
ï§ Screening of large number of ï§ Increased brand presence in
early stage ideas high ARPU segments
ï§ Immediate observation of ï§ Support for founders
each ideasâ potential generally positively received
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- 10. Innovation Incubation - Trends and Core Models
The global incubation trend is thriving. Companies in all industries have identified it as a
potential approach to drive innovation and also Telcoâs are very active participants.
Incubator Market Overview
Mar.
2012
Wayra Academy in London
ïź 6 months mentorship program
ïź ~ US$ 50k funding per startup
Jan.
2012
First incubators in Shanghai
ïź Startups receive ~ US$ 10k funding
ïź 2 years incubation program
Sept.
2011 Many corporate incubators have locations in the
Silicon Valley, hoping to benefit from the most
âXoneâ incubator in Silicon Valley
ïź Hosts 24 US startups
efficient and advanced innovation ecosystem
ïź Technical & commercial testing's
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- 11. Innovation Incubation â Incubator Example: TelefĂłnicaâs Wayra Academy
Telefonica started early and established a global incubation ecosystem. While the approach
seems solid it is still to early to evaluate its success.
Telefonica Incubation Activities
ï§ Wayra is a TelefĂłnica Digital initiative. It has grown to a network of
Wayra incubators in Latin America and is expanding in Europe.
Academy ï§ Location: Colombia, Spain, Mexico, Argentina, Venezuela, Chile, Peru,
Brazil, UK, (in plan: Berlin, Prague, Dublin)
ï§ Website: www.wayra.org
Goal: âTo promote innovation and identify talent in Latin America and
Europe in the fields of internet and new ICT areaâ
Business Model: Mentoring Key Findings
ï§ Wayra invests up to âŹ50,000 for 10% stake in the ï§ High selectivity. For
startup company. Office Facility
Columbia 2012 Program
ï§ TelefĂłnica gets the right of first refusal, but not the Wayra got 985 registered
exclusivity. The startups get to choose the final Investment
offer. projects, from which 10 will
be selected.
Management ï§ Well-Managed Brand. The
independent incubator brand
Length: Offering Details name still not well known.
ï§ 6 months, with possible extension of another 6 ï§ 300 mentors and tech experts ï§ Network Effect. Built up a
network of incubators
Budget ï§ 9 locations of global cities worldwide
ï§ Max. âŹ50,000 for each of 10 startups in one batch ï§ Mentoring
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- 12. Innovation Incubation - The key ingredients
To successfully set-up an incubator as part of the corporate innovation governance, five key
ingredients are crucial to build a successful foundation.
Key Ingredients of Successful Incubators
Clear Positioning and
Organizational Design Is value proposition Carrier / Company
the Backbone of
successful incubators
Startup
Strategy & Bridge between startups and
Positioning corporation , incubators requires lean
Startup
processes and agile decision making
Incubator
Incubation Startup
Corporations need to leverage their Core
Processes Competencies to provide unique
Startup
offerings and services for top startups
Org. Incubator
Structure Services
Successful incubators require Innovative
People Management HR Approaches
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- 13. Frame TemplateUS
Detecon in the
Based in San Francisco, Detecon Inc. leverages its wide innovation network, extensive international
experience and deep industry knowledge to help clients innovate more effectively.
Who We Are Innovation & The Silicon Valley
Strategy Consultants
Silicon Valley culture:
ïź >1,500 new startups created each year
ïź global team with global experience ïź Four top US universities
ïź 62% of the Top500 US conferences
ïź in-depth insights into best-practice
ïź 22 public idea sharing meetings/day
Silicon Valley capital:
ïź Over 35% of total US VC investments
ïź 300 VC deals & $2.2bn invest/quarter
Technology Consultants
ïź matched market/technology approach
ïź deep knowledge of technology challenges
Innovators
ïź live network into US research community
ïź Silicon Valley presence
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- 14. Frame TemplateUS
Detecon in the
We are ICT strategy consultants, with deep experience in emerging technologies, who specialize in
recognizing, evaluating and launching innovative business opportunities.
Our Consulting Services
Opportunity Sourcing Business Assessment Go-To-Market
Innovation Intelligence & Technology, Product and Services New Product & Service
Management Strategy Launch Support
Proactively detect, evaluate, and leverage Detail the potential business opportunity of Support to successfully launch
the innovation landscape to create leading innovative new products, services and groundbreaking products and services
portfolios technologies
Trend Analysis Financial Evaluation Business Model Development
Market Scanning Portfolio Planning Marketing Strategy
Corporate R&D Strategy Technical Feasibility Tendering and Vendor Selection
Innovation Strategy Scenario Development Project Management/PMO
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