National Contexts, Incubator Families and Trends in Incubation Views From Four Countries

Philippe ALBERT, Affiliated Professor, CERAM Sophia-Antipolis (France)

49 Rue de la Gare - 69890 - LA TOUR DE SALVAGNY - FRANCE
Tel. +33 (0)4 78 48 89 89 - Fax + 33(0)4 78 48 89 90
Mobile : +33 (0)6 12 90 50 03
E-mail : [email protected]
Lynda GAYNOR, Sapitwa Consulting, Dublin (Ireland)
48 Hollybank Road, Drumcondra, Dublin 9, Ireland
Tel. +353 (0)1 830 4959 Mobile : +353 (0)86 822 9592
E-mail : [email protected]
ABSTRACT
Successful incubation increasingly mediates in the establishment and maintenance of a deep and
dynamic small business community. National environments are slowly harmonising but the historic,
cultural and economic contexts continue to exert a considerable influence on the most effective
incubator models in specific settings. An understanding of these contexts is essential in order for
policy makers to effectively mould incubators to their milieu rather than simply transposing models
across national borders with disappointing results.
In this paper we discuss some of the contextual differences within four significant economies: the
US, the UK, France and Germany, and the impact they have had on the national incubator
landscapes. The key differences between the countries refer to the degree of decentralisation; the
legal framework and economic philosophy; the role of state laboratories and universities; the level of
entrepreneurship and innovation; the dynamism of financial markets; the legacy of industrial
revolution and level of State support for industry and the existence and roles of representative
agencies for promoting incubation.
The markedly different contexts have resulted in widely varying interpretations and expression of
local economic incubators, corporate incubators, private investor incubators and academic and
scientific incubators within the four jurisdictions.
As a backdrop to the national differences, we identify eight overall trends and challenges facing
incubation policy makers: increasing national and international coverage; institutionalization and
professionalization of incubator management; adaptation and transformation of the incubator model;
differentiation and specialisation; stiffer competition; more co-operation, increasing diversity of
actors and incubators as the entrepreneurial schools of tomorrow.

National Contexts, Incubator Families and Trends in Incubation Views From Four Countries
Philippe Albert, Affiliated Professor, CERAM Sophia-Antipolis (France)
49 Rue de la Gare - 69890 - LA TOUR DE SALVAGNY - FRANCE
Tel. +33 (0)4 78 48 89 89 - Fax + 33(0)4 78 48 89 90
Mobile : +33 (0)6 12 90 50 03
E-mail : [email protected]
Lynda GAYNOR, Sapitwa Consulting, Dublin (Ireland)
48 Hollybank Road, Drumcondra, Dublin 9, Ireland
Tel. +353 (0)1 830 4959 Mobile : +353 (0)86 822 9592
E-mail : [email protected]

1. Introduction
Successful incubation increasingly mediates in the establishment and maintenance of a deep and
dynamic small business community. Over the last 30 years, different types of sponsors, public and
private, have created an increasingly diversified incubator landscape. The trend is towards a rise in
the number of incubators and on-going diversification of configurations. This is accompanied by
increasing professionalism within the management teams, more intense co-operation between
incubators and their stakeholders and finally, more informed entrepreneurs demanding real value
added advice and services.

The actual configuration, role and financing model chosen for an incubator is highly sensitive to the
specific context. There have been significant variations in the evolution of the economic, financial,
legal, entrepreneurial, research and State administration structures in different countries. Although
the environments are slowly harmonising, these historic contexts continue to exert a considerable
influence. The growing use of a standard and globalised vocabulary has masked and understated the
resulting diversity in the incubator landscapes in different economies. An understanding of these
contexts is essential in order for policy makers to effectively mould incubators to their milieu rather
than simply transposing models across national borders with disappointing results.
1

In this paper we outline some of the contextual differences within four significant economies: the
US, the UK, Germany and France, and provide a summary overview of the resulting differences in
the incubation landscape which has emerged within each of these different environments1.

We illustrate our argument around the four main incubator families that have emerged from our
previous research: 1) Local economic development incubators, 2) Academic and scientific
incubators, 3) Corporate incubators and 4) Private investors incubators. The contextual factors
which have struck us as having had a significant effect on the pace and type of evolution of each of
these families in each of the countries are summarised in Table 1. The table also indicates the
impact of the factor in each jurisdiction.

1
2
3
4
5
6
7

Contextual Factors
Degree of decentralisation
Legal framework and economic philosophy
Role of state laboratories and universities
Entrepreneurship and innovation
Dynamism of financial markets and level of
informal investment in start ups
Legacy of industrial revolution and level of State
support for industry (Rate of change in the
industrial profile)
Existence and roles of representative agencies
for promoting incubation

USA
High
Laissez
Faire
Strong
Strong
Strong

UK
Low
Laissez
Faire
Weak
Average
Strong

Rapid
Strong

GERMANY FRANCE
High
Low
Bureaucratic Bureaucratic

Rapid

Strong
Weak
Average to
weak
Slow

Strong
Weak
Average to
weak
Slow

Average

Quite strong

Average

Table 1: Contextual Factors Affecting the Pace and Type of Evolution in Incubator Landscapes

We have not attempted to draw any empirical cause-and-effect relationship between the context and
the incubator configurations which were in fact enacted. The unanswered question is whether the
differences in the incubator landscapes which emerged were inevitable given the differing national
histories, orientation and philosophies. Finally, we look at some of the trends and challenges going
forward.

The data and analysis presented in this paper are the results of an ongoing research program on incubators since 1998. Other
publications include Incubators Growing up, Moving out A Review of the Literature Philippe Albert-Lynda Gaynor
December 2001 and Les incubateurs : mergence dune nouvelle industrie Comparaison des acteurs et de leurs
stratgies : France, Allemagne, Royaume Uni, Etats-Unis (Incubators the Emergence of a New Industry Comparison of
Actors and their Strategies : France, Germany, UK, USA) April 2002 Philippe Albert-Michel Bernasconi-Lynda Gaynor.
website : http://www.industrie.gouv.fr/biblioth/docu/dossiers/sect/pdf/incubateurs.pdf (in French).

2.

Contextual Factors Affecting the Evolution of the Incubator Landscape

2.1

Introduction

An environment is a multi-layered, multi-dimensional combination of institutional, economic and

regulatory factors.

These are carefully nuanced together and are in a constant but almost

imperceptible state of change. From this complex of interwoven and interacting forces, our in depth
analysis of the history of incubation and of the incubation environment of several countries leads us
to pinpoint some factors that have had a particularly significant impact in determining the local and
national incubator landscapes:

1. the degree of decentralisation in the Government structures and its impact.

2. the legal framework and the economic philosophy under which it is implemented.
3. the role of state laboratories and universities in the national innovation strategy.
4. the level of entrepreneurship and innovation.
5. the dynamism of the financial markets and general propensity for informal investing in start-ups.
6. the legacy of the industrial revolution and the level of State support for industry.
7. the existence and roles of representative agencies in promoting incubation as a profession and
effective economic tool.
The impact of each of these factors in each national context is now elaborated in more detail.

2.2

The Degree of Decentralisation in the Government Structures and its Impact

The strong federal government structures in Germany and the US contrast starkly with the
centralised planning and decision-making structures which predominate in the UK and France. The
Lnder in Germany and States in the US raise their own taxes and have a great deal of autonomy in
the way the social and economic fabric of their region evolves.

As a result, where regional

administrations have used incubation as a development mechanism, they have been able to play a

very strong role in the establishment, funding and on-going management of such centres. German
incubators, in particular, seem to operate in well-resourced and stable environments.

Contrary to what one might expect, the consequence of centralisation in the UK and France is not a
heavy-handed, government promoted adoption of a standard incubation policy which has smothered
diversity at a local level. Rather the vacuum of initiative in the central funding and decision-making
powers, has been filled by largely under-resourced players at a local level who have been forced to
work with other local entities to create viable consortia. The combination of agencies and
personalities has created great diversity in local economic development incubators, but also
weaknesses as each initiative independently goes through a long learning curve with variable funding
horizons.

The high level of decentralisation has also resulted in economic activity being dispersed in a number
of locations throughout Germany and the US. This contrasts with the concentration of economic
activity in France and the UK where the industrial and financial powerhouses radiate from the
capitals of London and Paris, cities where private investor incubators were situated during the
internet bubble.

2.3

The Legal Framework and the Economic Philosophy under which it is Implemented

Both France and Germany, which have traditionally had strong socially-oriented economic
philosophies, operate under the civil law regimes 2 (where definitions, procedures and norms are
prized and decisions are based primarily on compliance or non-compliance with detailed laws). In
the UK and the US, on the contrary, laissez-faire economics dominates and a common law regime
operates (where the concept of precedent prevails).

Also occasionally referrred to as Napoleonic or Roman law

In a practical way, this impacts new company development in terms of the level of bureaucracy
which each system entails. In the civil law regimes it can be difficult for the system to interact with
a new concept until it has been defined to an acceptable level. For this reason, the introduction of the
AFNOR norm of an incubator in France in 1998 was probably an important milestone in the process
of acceptance of the concept of incubators by the administration.

In France and Germany, the hurdles to establishing new companies (particularly by State-funded
researchers) and the burden of complying with the mandatory reporting requirements has impeded
new company formation. Moreover, the burden of worker-friendly legislation, drafted with large
industrial conglomerates in mind, has stifled small company creation which cannot not afford to bear
the social costs. These issues have been mitigated by recent legislation promoted by most countries
to encourage SME development.

The legislative environment also impacts on innovation and technology transfer process which
incubators often mediate. In France, entrepreneurs have found it difficult to work at a practical level
with legislation to stimulate commercialisation of intellectual property generated within State
structures (Universities and State Laboratories). The fact that a higher proportion of research was
carried out by the French through national laboratories - but such research was difficult to
commercialise in practice - may explain to some extent the disproportionately low number of
academic and research incubators relative to the US and the UK.

In contrast, the commercialisation of technologies emanating from universities in the US is strongly

supported by the Bayh-Doyle Act (1980). In 1997, the main American universities earned 483
million dollars in annual license revenues (according to a survey by A.U.T.M.)3.

Survey of 175 American and Canadian universities and institutions Assessing the Effectiveness of Technoloy Transfer
Offices at US Research Universities - E. M. Rogers, J.Yin and J. Hoffmann The Journal of the Association of University
Technology Managers Volume XII 2000. Note : It has not been possible for us to identify similar recent data for the three
European countries.

2.4

The Role of State Laboratories and Universities in the National Innovation Strategy

France, Germany and the US have networks of state laboratories. The UK on the other hand relies to
a much larger extent on university laboratories. The Frauenhfer Institutes in Germany and NASA in
the US, which both work closely with industry, have been important centres for research and
innovation. France is also populated by a number of significant state-sponsored research laboratories
notably INRIA4, CEA5 and CNRS6. These state laboratories are considered to be the drivers of
competitive advantage in the knowledge economy and there is a high level of intellectual property
generated through them. However, while the Frauenhfer Institutes in Germany continue to drive
technology transfer largely through working directly with industry partners, NASA and some French
institutes have adopted incubation as a second potential conduit to direct industry collaboration.

The UK has only three such laboratories operated under the Council for the Central Laboratory of the
Research Councils (CCLRC); Daresbury Laboratory located in Cheshire, Chilbolton Facility in
Hampshire, and the Rutherford Appleton Laboratory located in Oxfordshire. While the Rutherford
Appleton Laboratory is at the heart of the innovative millieu around the South East and is core to the
current desire to achieve Excellence in British Industry, the other two have relatively little interaction
with a national innovation infrastructure.

2.5

The Level of Entrepreneurship and Innovation.

In contrast to the US, the rankings for France, Germany and the UK in terms of entrepreneurship can
only be described as mediocre. According to the 3rd GEM report 7 which evaluates the level of
entrepreneurial activity in 29 nations, France, the UK and Germany have similar rankings (given the
4

5
6
7

inria.fr Institut National de Recherche en Informatique et en Automatique (French National Institute for Research
in Computer Science and Control).
cea.fr Commissariat a lEnergie Atomique (French Atomic Energy Commission)
cnrs.fr Centre National de la Recherche Scientifique (National Centre for Scientific Research)
GEM : Global Entrepreneurship Monitor 2001, op. cit. This report calculates the percentage of adults (18-64
years old) involved in the set up of a company or who run/own companies which are less than 42 months old. The
correlation with others indicators shows that this is a satisfactory proxy for the level of entrepreneurial activity of each
country .

degree of approximation in the measurement method). However, they are all below the European
average, appreciably behind the USA and far below the leaders (Mexico, Australia, Brazil).
USA
U.K.
France
Germany
European average (17 countries + Israel)
Average of 29 countries

12.0
7.7
7.2
7.0
8.0
9.5

GEM Index of Entrepreneurial Activity (number of people per 100 adults)

As regards innovation, as measured by the Innovation scorecard 2001 8, the UK tops the European
list while Germany and France rank close to the European average. Nevertheless, in terms of trends,
the UK, and particularly Germany and France, are regressing while the USA continues to retain a
strong position.

6
5
4

Germany

France

England

USA

0
-1

Overall Index of Innovation by Country (2000)

In light of the uninspiring rankings, the three European countries have been promoting much more
aggressive strategies to stimulate entrepreneurship, new company creation and innovation. Where
investment in research is undertaken in order to strengthen the national economic base, incubators
are increasingly seen as mediating the process.
8

2001 Innovation Scoreboard Commission Staff Working Paper Commission of the European
Communities September 2001. The rating is calculated based on 17 indicators and gives the relative position of each
country against the European average. The rating for the USA is calculated independently.

2.6 The Dynamism of the Financial Markets and General Propensity for Informal Investing
The US, Germany and the UK have large financial centres of international stature in New York,
Frankfurt and London respectively.

The Stock Exchanges together with the attendant venture

capitalists feeding into the system have all played a substantial role in facilitating company
development.

The US has by far the most active venture capital industry. It is estimated that, in 2001, 700 of the
1,100 venture capital firms worldwide are located there. Within Europe the total investment in
venture capital (seed + start up + expansion) in the high-tech sector was about four times higher (as
percentage of GNP) in the UK than in either France or Germany. However, contrary to the widespread perception, the United Kingdom has traditionally invested very little in start ups, though this
is changing.

In 2000 the United States not only invested, four times more money (USD$24 Billion) in the initial
stages (seed + start up) than the three European countries but the investments were made in half the
number of companies resulting in 8 times more money per company on average9.

A key consideration for companies in incubators is access to informal investment from family,
friends, colleagues and business angels. While this informal investment is 33% greater than venture
capital investment in the United States, it is twice as high in German and a stunning 500% higher in
the UK. There are few informal investors in France, with respect to the other three countries.

These differences can be explained by the fact that American business angels finance an important number of startups investing higher amounts than in Europe. Moreover, companies financed by American venture capitalists enjoy higher
financing rounds, particularly in the Biotech sector. Furthermore, in 2000, the valuations of American start-ups reached
stratospheric levels.

2.6

Legacy of the Industrial Revolution and the Level of State Support for Industry

The crisis in the textile, mining, ship-building and other heavy industries transformed the industrial
bases of the US and the UK to a much greater degree than in France or Germany. By the 1970s the
industries were under pressure from other low cost locations and as they were wound down, swathes
of inner cities and numerous rural communities were left derelict with high levels of unemployment.

The process of rehabilitation of town centres and port areas involved real-estate projects. A number
of these incorporated well managed incubators as a partial response to the need of these communities
to re-orient themselves economically around other skills and opportunities.

The rebuilding of cities in France and Germany after the Second World War and the strong support
by the Governments for heavy industries which were seen as critical to the national economy aerospace, motor and steel production- meant that incubation was invoked to a much lesser extent by
either country to address problems of urban regeneration.

2.7

The Existence and Roles of Representative Agencies in Promoting Incubation

The presence of a national representative body has implications for the intensity and credibility with
which incubation is promoted as a viable development tool to relevant decision makers at a national
level, in local governments, in financial institutions as well as in State laboratories, universities and
the corporate sector.

In the United States the NBIA has played an important role in the professionalisation of incubators.
The UK Science Park Association (UKSPA) has long been a point of reference for science park and
incubator management both in the UK and internationally. More recently the UK Association of
Business Incubators has emerged (UKBI) to focus more on the issues of importance to incubator
9

management specifically.

In Germany, ADT (Arbeitsgemeinschaft Deutscher Technologie-und

Grnderzentren) has long been an important national representative body.

France has still several representative groups: The Elan Assocation, FTEI (France Technopoles
Entreprises Innovation), France Incubation.

This complicates the professionalisation of French

incubation activities in the country as well as representation abroad.

3. An Overview of the impact on the Incubator Models in each Jurisdiction

3.1

Introduction

Having looked at some of the differentiating factors , we now turn to their impact on each of the
different incubator families i.e. 1) Local economic development incubators, 2) Academic and
scientific incubators, 3) Corporate incubators and 4) Private investors incubators.

The different characteristics of each family of incubators can been summarised in the following table

GOAL
MAIN ACTIVITY
OBJECTIVES

Local Economic
Development
Incubators
Non-profit
Mixed-uses
- job creation

Academic and
Scientific
Incubators
Non-profit
High-Tech
- commercialisation
of technologies

- re-industrialisation /
revitalisation
- development of
entrepreneurial
- economic
spirit
development
- civic responsibility
- support to particular
target groups or
- image
industries
- new sources of
- development of
finance
SMEs and clusters

10

Corporate
Incubators
For Profit
High-Tech
- to develop
entrepreneurial
spirit among
employees keep
talents

Private Investors
Incubators
For Profit
High-Tech
- profits by selling
stocks from a
portfolio of
companies allowing
to risks to be spread.

- monitoring - access - co-operation

to new technologies
between companies
and to new markets
within the portfolio
- profits

TARGETS

Local Economic
Development
Incubators
- small commercial
craft or service
companies.

Academic and
Scientific
Incubators
- projects internal to
institutions prior to
company creation

- In some cases, high- - external projects

tech companies.
OFFERING

- hosting and shared

services
- administrative
assistance
- consulting
Eventually :
coaching trainingnetworking

- concept testing

- internal and
external projects,
generally related to
the activity of the
company.

- technological startups generally ICT

related

- financial resources

- management and
strategy advice

prototype and
market testing

- intellectual property - access to

advice
commercial
markets
- seed capital
Eventually :
- basic management
- long-term strategic
advice
partnership
Eventually :
- access to business
angels and venture
capitalists
- access to industrial
networks
- strategic advice
- coaching
- hosting

TRENDS

Private Investors
Incubators

- technical advice and support

access to financing

KEY PROBLEMS

Corporate
Incubators

- supply of one or
several types of
financing and search
of complementary
financing.
- personal networks

Eventually :
- hosting and
- Access to multiple
administrative
competencies
assistance
- legal services,
public relations,
recruiting, etc

- durability lack of
stability of
resources

- legitimate inside the - Strategic position of - quality of projects

institution
the incubator for the
sourcing
corporate structure.
- legal status,
- level and conditions
- quality of
governance,
- management
of the incubator
management and
independence and
independence and
payment in
provided-services operational
ability to mobilize
comparison with
highly dependent on
flexibility.
internal resources.
provided services .
the quality of the
manager
- income sources
- Durability of the
- valorisation of the
mission of the
incubators
- governance, risk of - management quality
incubator
participation at the
conflicts about the
entry and the
objectives,
- access to external
- conflicts about the
liquidation.
bureaucratic redresources and
objectives between
tape, time spent in
network .
the owners / the - durability of the
negotiating with the
managers of star-up
incubator
different partners.
and the company.
- regular
- rapid development - testing of the
development.
under the aegis of
concept in
- increasing territorial
public programs.
numerous
coverage
companies
- likely to develop

11

- high levels of
consolidation and
restructuring of the
sector.
- still looking for a
successful model.

The table below sets out our estimation of the current profile of the incubator landscape in each of
the countries. It is notable that the US has more incubators than Europe and, that in Europe,
Germany has over 25% more than either France or the UK.

USA
Germany
France
U.K.
Total in
Europe

Local
Economic
Developm
ent
800

280
220
100
600

Academi
c and
Scientific
Incubato
N/A
46 %
37 %
17 %
100 %

44
36
87
167

Corporate and Private Investor

Incubators (incl. corporate, venture
capitalists, business angels...)

350
26 %
22 %
52 %
100 %

60
40
100
200

30 %
20 %
50 %
100 %

Estimate of Number and Type of Incubators in the four Countries in 2000

Source: Authors (derived from a variety of reports) 2002

We can see that in the UK there are a disproportionately high number of academic and scientific
incubators as well as those established by independent investors. On the other hand, Germany and
France have a preponderance of Local Economic Development Incubators.

3.2

Local Economic Development Incubators

The development trajectory within the different countries has been relatively similar:
-

Local economic development incubators were initiated by local bodies.

There were no national programmes nor any wish to standardise or homogenise the models.

Initial development occurred mainly in urban regions, often those undergoing rejuvenation,
before extending to other types of environment.

At the start, the emphasis was placed on accommodation and the provision of shared basic
services with advisory and support services added afterwards. Where public funds diminished,
the services provided have been reduced to mere real estate management. Some have become
enhanced managed workspaces although they retain the incubator title.

These incubators have often been re-evaluated, or indeed wound down due to changes in the
local (France) or national (UK) policies.
12

Illusions about the magical role of incubators in attracting entrepreneurs into regions where they
are few and far between have resulted in real disappointments.

However, the role of the local economic development incubators differs in each country. In the US
and the UK, the local economic development incubators have traditionally been used as part of urban
regeneration initiatives and are more likely to be mixed use. In Germany they have formed part of
the national innovation structure and are more likely to house high-tech companies.

3.3

Academic and Scientific Incubators

In Europe, incubators emerging from the academic and research spheres experienced a fresh surge of
activity thanks to new innovation policies at a national and European level as well as policies to
proactively attract students to start-up companies. Two incubation strategies have developed in
parallel within the academic and scientific institutions:
-

Incubators with walls, the most numerous which focused on supporting individuals and their
projects by trying to create synergies and interaction between entrepreneurs.

Incubation programmes, structured around a training programme supplemented by support and

individual advice. These are most frequently developed by Business Schools.

A European study10 identified 4 different structural models among these European programmes:
1. Top down programmes where State funds are distributed by public agencies.
2. Network programmes in which private incubators, public agencies and financiers work in
consort in very dynamic local economies.
3. Incremental programmes, arising from the progressive development of an incubator, or
investment funds,
4. Technopole programmes in which the aspiration is to reorient the whole university culture
towards a more innovative and entrepreneurial culture.
10

European Commission DG Entreprise Innovation Policy University spin-outs in Europe-Overview and good
practice .

13

The majority of programmes in Europe are of types 2 and 3.

In the US, the most famous academic and scientific incubators were established by second or third
tier technology universities and later the top tier technology universities followed. Indeed the
universities with the reputation of having contributed the most to enterprise creation within their
environment, MIT in Boston (Massassachussetts) and Stanford in the Silicon Valley, do not have
incubators. They consider the whole univerisity to be an incubator. There are few incubators linked
to research centres apart from those created by NASA in Los Alamos, Saint-Louis etc.

3.4

Corporate Incubators

The United States had a significant headstart over Europe in terms of corporate venturing and
experienced corporate incubators much earlier. Already by the 1960s 25% of the top 500 American
firms had venture capital funds earmarked for internal and external investments. Since then there
have been booms and downturns in the level of corporate venturing with the annual amounts varying
between USD$100 million and USD$500 million before rising to USD$16.5 billion in 2000 at the
height of the bubble. A considerable proportion of this investment went to incubators or directly to
companies within them.

In Europe, corporates, led by companies such as Siemens, France Telecom and Bertelsmann,
invested 1 billion euros in venture capital in 200011. This represented about 5% of total investment in
venture capital which is low compared to the United States where corporates represented about 18%
of all investment in venture capital. However, in terms of incubation there was probably only ten to
twenty corporate incubators in each of the three European countries in 2001, and even this activity is
contracting now.

3.5

Private Investor Incubators

11

Corporate Venturing European Activity Report 2000 EVCA European Private Equity and Venture Capital
Association.

14

The geographic location of independent investors is very concentrated in the centres of economic
activity of their respective countries: Massachusetts, California and New York (USA), Mnich,
Cologne, Hamburg and Berlin (Germany), London (UK) and Paris (France) and their future is
considered extremely precarious. Of the incubators created by entrepreneurs existing in October
2000, only ten percent were expected to survive.

Nevertheless, despite so many failures, new projects are continuously being prepared by
entrepreneurs and investors in the hope of the future high tech start up waves

4.

Summary - The National Contexts

4.1

France

APCE12 estimates that there are now in the region of 220 incubators in France of which 70 to 100
provide a full service and 20 to 30 have more than ten years of solid experience. New incubators are
created each year and about thirty incubators were recently created in small townslands. These have
been largely initiated by local administrations and supported only slightly by the State. The growth
is remarkably high considering that policy is neither national, nor co-ordinated, nor extended
throughout the country.

These incubators have very diverse legal status, with differing legal-financial models. As one expert
notes There are as many models as there are incubators in France. This arises without doubt
from the fact that there is no simple judicial status which simultaneously satisfies the accountability
required by the use of public money and the flexibility necessary to manage new enteprises.

As regards incubators for high-tech enterprises, the Law on Innovation and the invitation to tender
for public incubator projects have fortified the growing panoply of State instruments to support the
creation of innovative companies by ANVAR, BDPME-Sofaris, CDC Pme, Ministry of Research and
12

apce.com Agence pour la Cration dEntreprises (Agency for Company Creation)

15

Technology, Ministry of Industry and DRIRE13. These actions have had a mobilising influence and
the initial results are encouraging.

Initiatives at a local level to make companies aware of the support structures are multiplying but, to
date, have only begun to touch on the educational system. The EBN network, a quality accreditation
procedure and the adoption of the AFNOR norm14, under the auspices of the Elan Association, have
contributed to advances in the professionalism of some incubator managers.

4.2

The UK

The success of a few landmark incubators distorts a very modest national picture in the UK. The
traditional local incubators, often privately run, are essentially managed workspaces. Over the last
four years, the public authorities, under the aegis of the DTI (Department of Trade and Industry),
have multiplied the number of incentives and have contributed to improving the regulatory
environment for entrepreneurship. It is currently one of the most favourable regulatory environments
within the OECD15. But the general entrepreneurial mind-set continues to be limited.

State intervention is aimed at creating public/private networks at a local level which stimulate not
only incubators but also the pre- and post- company creation process. The Regional Development
Agencies are responsible for establishing new incubators across the country, but their capabilities for
the task have not yet been tested.

An active community of business angels and the London financial markets has resulted in the
creation of the largest concentration of private incubators. Some of these are publicly quoted
13

14

15

ANVAR (Agence National de la Valorisation de la Recherche) is responsible for encouraging technology

commercialisation.
BDPME-Sofaris is a State Sponsored Development Bank for the development of SMEs.
DRIRE (Direction Regionale de la Industrie, la Recherche et lEnvironnement) are regional authorities responsible for
Industry, Research and the Environment
The AFNOR norm for incubators is a norm under the French administrative system to officially set out what an
incubator is and does.
Global Entrepreneurship Monitor 2001 op. cit

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companies. The national association of incubators, UKBI, plays an important role in the promotion
of incubators and as an intermediary for some State initiatives.

4.3

Germany

The German network of incubators is the largest of Europe, generously financed but often
bureaucratised. It is the result of association at a local level between the local authorities, the banks,
the Chambers of Commerce and the regional authorities.

In a country where the entrepreneurial spirit is weak, the State and the regions are trying to promote
entrepreneurship in an educational system which is poorly adapted and which is evolving too slowly.

There are numerous support mechanisms for SMEs and programmes for high-tech start-ups are
multiplying thanks to national and regional incentives. Bavaria and Bade-Wrtenberg are the leading
regions.

The private incubators, essentially focused on the Internet, are facing the same difficulties as
elsewhere, and there is a high level of restructuring. The crash of the Neuer Markt dealt them, as
well as the whole venture capital market, a serious blow.

4.4

The US

Incubators in the USA are long-established, numerous, often innovative and located at the heart of an
environment which favours company creation.

The public authorities, the States and the private initiatives often work together. Business angels and
venture capitalists are more powerful than elsewhere and very concentrated in high-tech regions.
Their dynamism has given birth to an important number of private incubators. Despite the high
17

concentration of the sector and the doubts about the models of the dot.com era, a new, sustainable
generation of private incubators should become established in the market.

Some university-based incubators are very dynamic.

Other universities are being encouraged

strongly by their environment to develop technology transfer as the State continues to invest
massively in scientific research. Entrepreneurship education is thriving, with the help of major
foundations.

To date, the large corporates have played a minor role directly in incubation, though they have been
instrumental in directly financing new start-ups.

5.

Trends and Challenges

Armed with the knowledge that local contexts vary widely, we can point to a few overall, and
sometimes conflicting trends, in the rapidly evolving landscape:

1) Increasing national and international coverage.

More and more incubators are appearing everywhere, in rural areas, in small towns, and on large
sites: two incubators are being constructed on one island in Venice, Italy for example. In parallel,
large programmes and being co-ordinated nationally in many countries throughout the world.

2) Institutionalization and professionalization

As incubators become more accepted as tools of economic development, there is a sharper focus on
the development of good practices, evaluation, quality standards (and norms as we have seen in
France). This trend goes hand in hand with a better recognition and therefore professionalization of
the role of incubator manager and incubator staff. An indicator of this is the first M.Sc in incubation
management which is being launched this year in UK.
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3) Adaptation and transformation of the model

The incubator model is extremely flexible and is being adapted to many contexts and many types of
economies from communist countries to middle-east of sub-saharan countries, from areas being
rejuvenated to sleek business parks and from focusing on the socially disadvantaged to high tech
entrepreneurs.

4) Differentiation and specialisation

Omnipresent mix-used incubators are being joined by more and more specialised incubators from
sea-farming in Wales to incubators devoted to nanotechnology or new energy sources.

5) Stiffer competition
The competition between incubators to attract entrepreneurs now takes place not only in the same
area, for instance between public or private incubators or between towns and regions, but between
countries.

6) More co-operation
Incubators are being increasingly forced to work in regional, national or international networks, both
for their own advancement and for that of their start-ups.

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7) Increasing diversity of actors

Many types of stakeholders are involved in business creation support and incubation and there seems
to be a good chance that even churches, armies, hospitals and jails, to mention but a few institutions,
will become involved in incubation. Some are already doing so....

8) Incubators are becoming the entrepreneurial schools of tomorrow

As incubators become stronger and more organised, they appear to be adopting a role as the new,
practical entrepreneurial schools of tomorrow. The traditional educational system does not
seem to be able to change quickly enough to answer to this new challenge and indeed do not
appear to recognise that these new competitors are encroaching on their space and
thriving.

The responsibility of the traditional system is being limited to educating the

salaried workforces of the future.

There is an unstoppable momentum in incubation that enterprise development policy makers must
respond to. As we have illustrated, different contexts demand a different expression of what can
outwardly appear to be an identical model. Thus, the challenge is not only understanding best
incubator models for stimulating small business but also why they work in specific contexts. This
knowledge is vital to ensure that models are not adopted wholescale across national boundaries with
disappointing results because the economic, cultural and legislative context have not been factored
into the process.

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