Summary of the report

LESSONS LEARNED FROMVIRTUAL BUSINESS INCUBATION

Structure of the presentation

Defining virtual incubation Reviewing virtual incubation tools

Virtual service delivery On-site, E-learning through websites, 1-on-1 ICT based

exchange, ‘online recruitment’, virtual communities, crowdsourcing.

VBI typologies Hand holders, network boosters and seed-capital

providers Key lessons learned

“What is virtual business incubation?”

Physical incubation clients served in a physical building (only)

Virtual incubation is “the full range of business incubation tools and services that are not (necessarily) provided to clients residing inside the facilities of a business incubator”

As shorthand, “virtual” = location-independent.Definition: (V)BI Service concept = package of incubation services(V)BI Tools = way to deliver a service

Conventional & virtual

‘Conventional’ business incubation - Intense contact with

clients- Capital intensive- Limited outreach

‘Virtual’ business incubation- Outreach potential- New revenue

generation models- Impact on business

growth?

VBI: How and under what conditions?

On-site; incubatees are invited to come to a physical location.

E-learning and websites; The incubator provides online training materials and online information.

1-on-1 ICT exchange; The incubator provides its services (also) through E-mail, SMS, phone, Skype, MSN and online collaboration tools.

“Online recruitment”; An incubation service provider is a ‘broker’, who mobilises and matches incubatees, mentors, interns and investors through the web; Services are provided virtually and/or physically

“Virtual communities”; Online and physical networking and exchange or the entrepreneurs amongst each other; incubator is mere facilitator

The online crowd; Services are provided by an online crowd, each member of the crowd provides a small part of the needed service. The incubator may facilitate this crowdsourcing or crowd funding

Prevailing conditions - Business

environment- Mission of the

incubator- Target group of the

incubator (location, skills, ICT access, …)

Virtual Incubation Tools

On-site services

Delivering BDS to non-resident clients can: expand geographical coverage (can) increase its cost effectiveness (if facilities are readily available), exposes entrepreneur to a new business environment, and allows for exchange between entrepreneurs from different backgrounds and regions.

Lessons If in a remote location, local partner to mobilise local knowledge, networks and

reputation. In the start-up phase, entrepreneurs highly value interacting with peers. Incubators

need to actively facilitate this interaction. If incubatees and incubator staff need to travel, this can be costly and time

consuming; Interacting with the entrepreneur without experiencing their workplace can be less

effective

Websites and e-learning

Websites and E-learning: Websites can provide information or online training materials.

Expand outreach and geographical coverage of an incubator, incubatee can learn / look for information at own pace, whenever and wherever convenient.

Lessons Depends on the skills and access to tools and the motivation of the incubatee, Training topic; If related to changing the habits, motivation or mind-set of the trainee,

face-to-face training is far more effective Costly to develop quality e-Learning training modules and materials. Cooperation with

existing e-learning portals is recommended. Information made available through the Internet (website) needs to be kept up-to-

date. Social media tools can be added to a site at little or no cost, and are a good tool for

enhancing the brand identity of the incubator, again requires maintenance.

1-on-1 ICT based exchange

1-on-1 interaction with ICT Mentoring of monitoring the incubatees through ICT (phone, email, skype) can save time and

(travel) costs, and is a fast way of communication, which can be important in some situations.

Lessons: Depends on complexity of the issue to be addressed. Complex issues need to be addressed in

face-to-face contact. Simple tasks can be performed through ICT. Success of ICT based communication also depends on a relationship of trust between the

incubatee and the service provider. These relationships do not develop overnight, and often require face to face contact, and/or a business incubator with a strong reputation.

For specific advice that does not involve disclosing too much about the background of the entrepreneur and the business, ICT based advice is considered fast and efficient.

Video skype in another location (outside the incubatee office) can help to ensure that the incubatee makes him or herself fully available for the conversation.

Online collaboration tools can make exchange through phone and skype more effective. Remote supporting of incubatees through a diverse means of ICT poses management

challenges to the incubator, if it is not systemised.

Online recruitment

Online recruitment Through the internet, incubators can reach and mobilise interested mentors / volunteers /

incubatees and select the most suited candidates and improve the quality of the incubator service. Recruiting highly qualified volunteers can save costs without jeopardising quality. Online recruitment can also positively contribute to the brand of the incubator.

Lessons: Online recruitment is a suitable tool for recruiting incubatees and mentors; for access to

finance, other tools need to be used. The incubator needs a well thought through recruitment strategy, to ensure the high quality

of the applications. The incubator needs to invest in building a brand, and build partnerships with networks or

organisations that have relations with the targeted audience (volunteers, mentors, incubatees).

Social media are support recruitment campaigns as additional tools. (spread the word!) The incubator needs to verify the quality of applicants. Face-to-face interaction is usually

still needed.

Virtual communities & events

A vivid community mobilises members to actively contribute, by providing resources. This may improve the quality of services of the incubator, and may cut costs or even generate revenues because members may be willing to pay a membership or admission fee.

Lessons: Successful virtual communities in our sample are based on regular

combined networking or training events, usually outside of office hours. Members join the networks to learn, get inspired and build their network.

Hosting a community is an art, and requires skills and resources. Financing networks work best if they involve investors at geographical

and cultural proximity of the incubatees.

The online crowd

Crowd sourcing and crowd fundingThrough the internet, incubators as well as incubatees can mobilises large numbers of people to contribute their knowledge and/or finances online. Lessons: Crowdsourcing may be suitable for incubators or incubatees with a clear problem

definition, such as feedback on a new product or service design (as suggested by Mobile Monday in the start-up phase), or feedback on specific business model related challenges.

Crowd funding is may offer an access to finance opportunity, especially when incubators can connect with existing crowd funding platforms.

Attractive platform for crowds exist, VBIs can seek cooperation with existing platforms;

Emerging in advanced countries, with maybe limited knowledge for local solutions in other countries;

Types of VBIs

3 types of VBIs: “Hand-holders”; focussed on offering mainly

business development services “Network boosters”; networking focussed

business incubators (two sub-types: BPC+ and 2.0)

“Seed capital providers”, Finance focussed business incubators

Overview

ItemHand-holders Network boosters Seed capital providers

Service FocusBDS(training, mentoring) Access to business networks Access to business finance

Target group Wide range; Special target group to high potential

High potential,Educated Early stage or established

High potential, or ‘Social enterprise’

Outreach10-20 business per year 100-300 businesses per

network / competition 15-30 per season

Service provision Service provider Facilitator Facilitator

FundingDonor / Gvt/ Univ / NGO Foundations, Commercial Commercial

Typical main revenue model Donations,Sponsors, (consultancy) projectsClient own contributions to service fees

Sponsors, membership fees

Admission fees, return on equity

Revenue generation

Virtual service concepts offer new opportunities to generate revenue; some general observations:

For hand holders: challenging to raise additional revenues through out-of-walls/satellite incubation, but more public funding For network boosters: good opportunity to generate revenue through membership fees and admission fees at events (small amount, large group) For seed capital providers: financial sustainability is possible, but for a narrow slice of the market (quick return, later-stage incubatees)

Key lessons

Key benefits of Virtual Business incubation Service quality: New opportunities for tailored and specialised services and network building for incubatees Scale: Possible to increase outreach and customer base significantly (with network boosting). Inventive: More possibilities to cater to innovative entrepreneurs by fast, flexible and creative networks of people Capital: access to new sources of (risk-) capital

Key lessons

Challenges of Virtual Business incubation Different set of skills and abilities in VBI are required; not “easier” than in-the-walls incubation Cost is not necessarily lower; reviewed cases suggest similar or higher overhead Lower capital outlay, but high maintenance and shorter lifetime Brand building is essential to catch the eye of the (online) crowd

Considerations for replication

To design a VBI service concept: Define the desired target group Assess and understand “needs” of incubatees Prioritise demand (=need x price) of incubatees for services and design a lean service package Weigh cost and benefits of virtual tools Assess own staff’s skills and -gaps Consider investment cost/time Decide on strategy, check consistency of concept Act...

THANK YOU!

November 2011

For more information, contact Nienke Stam n.stam@triodosfacet.nlwww.triodosfacet.nl