06 January 2013
By Dr Uday Phadke, Chief Executive, Cartezia.
As policy-makers, businesses and entrepreneurs wrestle with the challenge of turning research and innovation into commercial value, investors and those charged with re-starting stalled economies search for ways to stimulate and support this transformation. Over the last fifteen years a wide range of environments designed to support, nurture and accelerate start-up businesses have emerged, with the term incubator being the most widely used word to define a wide variety of such environments, with very different characteristics, so that the word gradually began to lose meaning, as category errors proliferated. More recently the word accelerator has been used more frequently (and sometimes interchangeably) with the word incubator to describe these new business support and growth environments.
This confusion is bound to continue as the words are used more liberally, especially by policy-makers and investors to suggest the more positive attributes of intervention in the pursuit of economic growth. Rather than look for semantic clarity, I think it would be helpful to analyse the type and value of such interventions available, so that such intervention environments can be better designed and executed.
The graphic analysis below suggests a way of assessing and comparing the value-added by different types of incubators, seed-camps, accelerators and other forms of intervention. This illustrates three key points:
- Most incubators and accelerators fail to provide support beyond the early stages of growth; the gap between what they provide and when support from private equity and venture capital kicks in, remains the major challenge in creating sustainable growth.
- This lack of support for crossing the 2nd Chasm in the eco-system shows the need for better-designed interventions; investors and policy-makers take note.
- In the absence of such support, ‘customers’ of incubation and acceleration services should look critically at the precise value on offer from those promoting their wares currently.