triodos facet presentation on vritual business incubation for wb info dev
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Summary of the report
LESSONS LEARNED FROMVIRTUAL BUSINESS INCUBATION
“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?
Questions to be addressed
1. How (and under what conditions) does virtual incubation work?
2. What successful examples of virtual business incubators exist?
3. What lessons can be derived from virtual business incubation and how can they be replicated?
VBI: How and under what conditions?
On-site; incubatees are invited to come to physical location.
E-learning and websites; Online training materials and online information provision.
1-on-1 ICT exchange; E-mail, SMS, phone, Skype, MSN and online collaboration tools.
Online recruitment; Recruiting incubatees, mentors, interns, investors
Virtual communities; online and physical networking and exchange
The online crowd; Crowdsourcing, Crowd funding
Prevailing conditions - Business
environment- Mission of the
incubator- Target group of the
incubator (location, skills, ICT access)
Tools
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
‘Hand-holder’ example 3ie
3ie; Technological University in Valparaíso, Chile.Clients inside and outside the walls
“Virtual tools” Incubatee comes to the incubator /
meetings in other locations Email, phone, skype, online
collaboration tools
Acces to finance
Networking
TrainingMentoring
Selection
0
5
3ie
3ie
‘Hand holder’ lessons
Considerations for replication: Most likely to be of relevance in
remote, basic or (to a lesser extent) emerging business environments
Increasing outreach to rural / dispersed groups is possible, but may be more expensive
Lessons ICT, 1-on-1 communication can partially
replace face-to-face mentoring, trust remains essential
Use of online collaboration tools makes ICT communication more effective.
Peer-to-peer exchange in the start-up phase remains crucial, face-to-face
Usually, no new source of revenues Management of quality requires new
structures Replacing training with E-learning is less
effective, is a supplement
‘Network booster’ BiD Network
Business plan competitions + and investment matchmaking
“Virtual tools” Online recruitment Online matchmaking and
coaching Online networking and events
Acces to finance
Networking
TrainingMentoring
Selection
0
5
Series1
‘Network booster BPC+’ lessons
Considerations for replication: Added value more limited
where other BPCs are already active
Internet access for starting entrepreneurs essential
Designed for small, not micro entrepreneurs
Donor-funded most of the time
Lessons High outreach initially, but limited services to a
small group. Cost of a BPC+ needs to be carefully weighed against the benefits.
Good tool to raise interest in entrepreneurship and increase brand recognition of the incubator
Service intensity is typically highest during and after the awarding ceremony
To increase outreach & impact, online recruitment of (int’l) fellows and (local) volunteers, and promoting emergence of and linking to (angel) investor networks are effective
‘Network booster’ the HUB
Bringing people together, typically by hosting regular events. Examples: the HUB and Mobile Monday.
Virtual tools: Online recruitment Virtual Communities Brand building
Acces to finance
Networking
TrainingMentoring
Selection
0
5
the Hub Amsterdam
the Hub Amsterdam
‘Network booster 2.0’ lessons
Considerations for replication: Potential members are not too
dispersed. Attending an event should require less than one hour travelling.
The business environment should offer ample business opportunities in the targeted sector
Members of the target group are diverse and complementary in skills and know how. It is useful to for (most of) them to network;
Local business culture allows for open networking with people of different backgrounds.
Lessons Reaches and mobilises large numbers of people. Members have to be passionate to be involved and
volunteer their time Financially self supporting because of mobilising
members for in-kind and in-cash contributions Limited life-time: generally active for 3-5 years. Over
time, the added value of the network decreases. Needs to be innovative (“hip”, “in vogue”), and
changing itself constantly
‘Seed capital provider’ Y-Combinator
Commercially oriented – short term capital with network boosting and mentoringSocially oriented – patient capital with long term mentoring
Virtual tools: Online recruitment Brand building
Acces to finance
Networking
TrainingMentoring
Selection
0
5
Ycombinator
Ycombinator
‘Seed capital provider’ lessons
Considerations for replication: Commercial: Availability of business and
investment opportunities for firms that can grow quickly with little cash
Advanced venture capital markets
Non-commercial: Availability of patient capital,
funding sources
Lessons Suitable for quick-return start-ups, or already
later-stage innovative enterprises, if commercially oriented
Outreach is limited, with an average 10 -30 companies per year.
Quality of outreach and impact depend highly on the quality of the selection process and the monitoring and mentoring.
Training and mentoring services are light, but if they are highly sector specific, can be of high value.
ICT is mainly used during the selection process, and to boost the brand of the seed capital provider.
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 (small amount, large group), and events For seed capital providers: financial sustainability is possible, but for a narrow slice of the market (quick return, later-stage incubatees); revenue from training/mentoring, not equity shares
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
Key lessons
Key benefits of Virtual Business incubation Service quality: New opportunities to use tailored, diverse and specialised sources and services 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; is not “easier” to do Cost is not necessarily lower; overhead cost same or more Lower capital outlay, but high maintenance and shorter lifetime of asset (of network boosting) 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
Nienke Stamn.stam@triodosfacet.nlwww.triodosfacet.nl
On-site services
Delivering BDS to non-resident clients can: expand geographical coverage of an incubator, (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 an incubator works with incubatees in a remote location, it needs a local partner
to mobilise local knowledge, networks and reputation in that specific area. 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. This can expand outreach and
geographical coverage of an incubator, and also has the benefit that incubatee can learn / look for information at own pace, whenever and wherever convenient.
Lessons The potential of E-learning depends on the skills and access to tools of the incubatees, the
training topic, and the level of responsibility or motivation from the incubatee. If training is related to changing the habits, motivation or mind-set of the trainee, face-to-
face training is far more effective For a business incubator, it is 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, but an incubator will need to allocate time and resources to monitor user content, frequently post new announcements, and reply to requests.
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: Use of ICT in communication between VBI and incubatee 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. The incubator needs to verify the quality of applicants. In the final phase of recruitment,
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: Social media can be used to build and maintain a brand in existing off-line
communities, or for spreading invitations, announcements and news; building an active online community where members exchange knowledge is very challenging.
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: Building an attractive platform for crowds to become active is a sophisticated
challenge, VBIs can however seek cooperation with existing platforms; Crowds so far are mostly emerging in advanced countries, with maybe limited
knowledge for local solutions in other countries; 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.
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