I NCUBATORS : A N A NGEL I NVESTOR ’ S B EST F RIEND ? by John Cook and Carolyn Dewar C HAPTER 4 I. OVERVIEW Business incubators were created originally as a way of making use of abandoned industrial space. However, recent events have encouraged incubators to focus on providing true value-added services. According to the National Incubator Association: “A business incubator is an economic development tool designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services. A business incubator's main goal is to produce successful firms that will leave the program financially viable and freestanding. These incubator “graduates” create jobs, revitalize neighborhoods, commercialize critical new technologies and strengthen local and national economies. Critical to the definition of an incubator is on-site management, which develops and orchestrates business, marketing and management resources tailored to a company’s needs. Incubators usually also provide clients access to appropriate rental space and flexible leases, shared basic office services and equipment, technology support services and assistance in obtaining the financing necessary for company growth.” 1 Business incubators have experienced a tremendous surge in growth over the last two decades, swelling from just 12 in the United States in 1980 to over 900 by 2000, with 3000 in existence around the world. 2 Much of this
S U M M A R Y Incubators have emerged over the past two decades as a fundamental instrument of economic growth and company creation. However, the demise of a number of “for profit” dot.com incubators in Canada and elsewhere has been swift and highly visible, and some have questioned their sustainability. Despite this, the basic needs facing new businesses remain constant – the need for resources, skills and financing. As technology start-ups struggle to establish themselves and investors seek new opportunities, incubators retain an important role in facilitating the development of new businesses. Not-for-profit incubators in particular remain a cornerstone of government policy in Canada at all levels and there are plans to create more. This next generation of incubators can fulfill four important functions for angel investors. These are: • Supporting and developing their angels investments in early stage companies. • Providing a source of high potential and qualified deal flow. • Facilitating the creation of win-win relationships between angels and entrepreneurs. • Accessing a large community of interested parties who can provide networking opportunities for the new company.
1 Source: National Business Incubator Association (Web site). 2 National Business Incubator Association, 2000.
29
Powered by FlippingBook