Leon Lourens

1

Models for Technology Business Incubation

Leon Lourens

Introduction

It is NOT the theory or knowledge of business incubation that needs

consideration but the

APPLICATION

African Business Incubation Institute

3

University

Technology Park

Not-for-profit

For-profit

Focused on one sector i.e. information technology

Mixed Portfolio

Government

Private

Mixed-useSocial incubator

Agri-businessAcceleration

Incubation Business Models


Scope of technology incubation

4


Incubator Generations

Generation Determinant

1st Generation Real estate and shared services

Reactive business help

2nd Generation + business development program and

coaching

Proactive business help

3rd Generation + in house equity/debt finance for clients

or channels to external providers

Partnering with the business


4th Generation

incubators

3rd generation incubation incorporating

convergent and virtual models, combined

with more sophisticated integration into the

value chain, such as closing the gaps or

becoming part of the supply chain,

developing infrastructure to access markets

such as independent marketing companies

or becoming the driver behind the

development of whole industries in a

country.


Accelerators and Incubation

AcceleratorInterchangeable with BI but:

• Normally for-profit • Funded by Venture Capitalists• No general focus but growth

potential, internationalisation• In depth hands-on approach

and involvement• Short turnarounds• Exit strategies

Difference to Incubation

• Funding from investment or sector specialists.

• In-depth involvement to achieve short term success.

• High growth potential clients


Technology Commercialisation

• Linked with R&D communities (e.g. Universities)• Helping commercialise IP & R&D through spin out

companies or licencing of technology• Specialized services & intensive support required

- seed funding and access to Venture Capital

• +money +value add services +channels to market +accommodation

• Partnering & facilitative models


• Specialised knowledge, services and infrastructure– Life sciences– Bio technology– IT

• Skilled workforce• Strong linkages• Intensive support• Capital• IP and patents knowhow

Technology Incubators


Stage gate - Summary of a process

Technical Market Business

Investigation Phase

1. Investigation

Technology

Concept

Analysis

Market Needs

Assessment Venture

Assessment

Development Phase

2. Feasibility Technology

Feasibility Market Study

Economic

Feasibility

3. Planning Engineering

Prototype Strategic

Marketing Strategic

Business Plan

4. Introduction Pre-

Production

Prototype

Market Validation

Business Start-

Up

Commercial Phase

5. Full Scale Production

Production Sales and

Distribution Business

Growth

6. Maturity Production

Support Market

Diversification Business

Maturity


Lean Start-up methodology

The question is not: "Can this product be built?" Instead, the questions are

"Should this product be built?" and

"Can we build a sustainable business aroundthis set of products and services?"

“The Lean Startup method teaches you how to drive a startup -how to steer, when to turn, and when to persevere - and grow a business with maximum

acceleration.”African Business Incubation Institute

Lean Start-up


Minimum Viable Product

Don’t expect to build a scalable business in 10 weeks (although

some have) but set the start-up on a solid foundation. The

objective is to:

• Validated the customer/user need

• Identified (built) and verified the Minimum Viable Product

• A crisp pitch to communicate the idea

A Minimum Viable Product is the smallest thing you can build that delivers customer value

Minimum Viable Product

An MVP has three key characteristics:

• It has enough value that people are willing to

use it or buy it initially

• It demonstrates enough future benefit to retain

early adopters

• It provides a feedback loop to guide future

development


Disruptive technologies

Examples of disruptive technologies include:

• Mobile technologies – Apps (uber), IoT, Cloud comp.• Automation of knowledge work, • Advanced robotics, • Autonomous or Near-Autonomous Vehicles

(drones);• Next-generation Genomics; • 3D Printing; • Advanced Materials; and • Renewable Energy, etc.


Disruptive technologies

The decision on adopting disruptive technology relies on:• Market research, • Customer segmentation, • Financial capability of the organization and• Risk approach.


• Patenting - Denies others the right to use the patent without the consent of the

patent holder for some period of time.

• Copyright - Gives the author of an original work exclusive right for a certain time

period in relation to that work, including its publication, distribution and adaptation.

• Trademark - A distinctive sign or indicator used by an individual, business

organization or other legal entity to identify that the products or services originate

from a unique source.

• Trade secrets - A formula, practice, process, design, instrument, pattern, or compilation of

information which is not generally known or reasonably ascertainable, by which a business can

obtain an economic advantage over competitors or customers.

IPR Protection

Standard ways to protect IP...

Money is not everything....

Technology ventures typically will not attract general business investors.

Technical entrepreneurs need to align with individual investors and investment

firms that have detailed sector knowledge and a relevant network, due to the

extra dimension of uncertainty related to technical development and production

processes.

Finance and Capitalisation

It is important for incubator managers to emphasize to incubatees that they should be pursuing “smart” rather than “dumb” money.


Other considerations

• Soft landings and internationalisation• Incubator business models• Funders, sponsors, costs, clients• Networks (universities, financiers, first adopters)• Your environment• And more….


Examples

21

Thank You!!

Developed by & copyright: Leon Lourens in conjunction with Steve Giddings and Julian Webb.

Email: [email protected]: +27 82 371 5490

mailto:[email protected]