Business Incubation Explained

Why Business Incubation?

Business Incubation is extremely interesting phenomenon. This is due to several main reasons.

Firstly, it’s considered as one of the most important economic development tools nowadays. Innovation-driven countries for almost 3 decades have been implementing policies in order to support SMEs and stimulate entrepreneurship. There is plenty of statistics proving how many jobs have been created or % of GDP generated due to SMEs.

Secondly, it’s rather mature industry itself with more than a 5 decades since the first Business Incubator appeared (Batavia Industrial Center in 1959). Some authors (Lalkaka), however, believe that first generation of business incubators appeared during 1980s. Today, with new technological trends (crowdsourcing and croudfunding, gamification, microinvestments, WEB 3.0) new generation of Business Incubators is coming. Projects like Kickstarter, GrowVC, FundedByMe, SeedRS, Fundable, AngelList are extremely succesful attracting millions of microinvestments.

Lastly, business incubation as a system of nurturing startups includes a set of value-adding services for ventures, such as:

  • business services (business strategy, marketing assistance, business idea feasibility analysis, business model creation, accounting, legal, etc)
  • access to finance capital services (access to angel and VC capital, pitching, in-house venture funds, access to commercial loans)
  • people connectivity and networking (mentoring, coaching, virtual communities, networks of angels, mentors, entrepreneurs, investors)
  • training services (workshops, resource library, business topics courses, softskills seminars, etc)
  • brand building services (attract new customers, build a reputation)
  • physical facilities (however, I believe that this is less important in innovation-driven countries and more important in developing countries).

Business Incubation – Framework for Analysis

Considering that I would like to establish a framework for analysis of Business Incubation phenomenon and synthesis of new possible concepts/models/processes according to current trends. Posts in this blog will be more or less alligned with the established framework.

SUITE 1 – Analysis of Business Incubation Methods and Best Practices throughout the World. This part will include:

  • Part 1 – Business Incubation Definitions and Principles
  • Part 2 – A short history of entrepreneurship and business incubation, figures and facts
  • Part 3 – Business Incubation Basics
  • Part 4 – Existing taxonomies, typologies and processes on entrepreneurship and business incubation; pitfalls of existing BIP
  • Part 5 – Business Incubator Operations (Management, Planning, Financing, Organizational Issues)
  • Part 6 – Concept of Innovation Ecosystem

SUITE 2– Synthesis of Virtual Business Incubation Methodology. This general part will include:

  • Part 7 – Virtual Business Incubation Basics (History, Key characteristics and Differences, Business Incubation Models, Virtual Business Incubation Process,  Typologies, Benchmarking Virtual Business Incubation Program, Key Value Propositions of Virtual Business Incubation, Pros and Cons, challenges of Virtual Business Incubation)
  • Part 8 – Virtual Business Incubation Methodology

Suggested Reading for Today

I will also try to suggest one piece of information (article or chapter of a book or presentation) every post. Today’s material is prepared by Mr. Lalkaka in 2007. Rustam Lalkaka is one of the most prominent thinkers on Business Incubation. He have been publishing since early 00’s. Presentation deals with Future trends in business incubation (back in 2007). Most of them are still relevant.


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