Key Services of Business Incubation Program (Part 1 of 3)

TOP 7 Service Categories of Any Business Incubator

Key Value Proposition of any business incubator is to assist entrepreneur or startup and launch a new enterprise, foster it’s development, support in overcoming obstacles and reducing risks, thus, increasing its chances for success and building successful company. What are those services in particular by applying which we can get successful companies? We can better understand what services should business incubation program provide if we will look at it using a different from a business mindset.

A good perspective on an incubation process could give systems engineering – an interdisciplinary approach and means that focuses on how to design and manage complex projects and successful systems over their life cycles. Successful systems must satisfy the needs of its customers, users and other stakeholders. Sounds similar if you will think about business, right? (I would encourage all to learn a bit more about this concept and field of practice. Wikipedia and SEBok). There are several key concepts of systems engineering that are relevant to the case of business incubation:

  • Life cycle of a system (or project) – in our case a life cycle of a venture.
  • Target system (or system-of-interest). This is a system which moves from stage to stage achieving certain results or state; or a system which is developed as a result of project activities.
  • Supporting system. This is a system which supports the movement of the target system along its life cycle. In the case of business incubation – from idea stage to the growth stage or scaling stage.

Using systems engineering terms business incubator is a supporting system for a startup (a target system) which “moves” it from point A (idea) to point B (successful venture) using special practices (services) along the life cycle. Business incubation program provides entrepreneurs and small businesses with a comprehensive and integrated range of supportive services. However, these services differ depending on a several factors such as:

  • Industry in which business incubator operates
  • Type of clients (tenants):
    • would-be entrepreneurs;
    • early-stage entrepreneurs;
    • serial entrepreneurs;
    • SMEs;
    • Type of a business incubator:
      • profit vs. non-profit;
      • levels of management support vs. technological level;
      • virtual vs. physical;
      • other;
      • State of the Innovation Ecosystem and Entrepreneurship in the region/country;
      • Life Cycle of a startup (Would-be entrepreneur, Early-stage startup, SME, etc)

As a self-sustaining organization business incubation program should also provide services for itself – it should be managed. Therefore, the whole range of services, that business incubation program could provide, consists of services for target systems (key value proposition for startups – from 0 to 6)[1] and supporting system services (supporting its operations and management – 7th point):

  1. Secretarial Service
  2. Infrastructure / Facility-Based Services
  3. Business Services
  4. Financing and Access to finance
  5. People Connectivity and Networking
  6. Education / Access to knowledge
  7. Brand Building
  8. Management of the Program

 Business Incubation Program Services

 Figure 1 –Range of Business Incubation Program Services (a framework)

Mapping different types of business incubators using the framework

It’s important to understand that every business incubator has its own focus or specialization (key services). Some stress more on physical facilities, office space, secretarial service. This were focus points for business incubators of the first generation. On contrast, seed business accelerators, such as Y-Combinator have accent on access to finance, brand building, fast educational program, networking. Another type is typical physical business incubator. It provides physical facility services, business services, networking and mentoring, financing services. By mapping them on the spider-chart we could get the following picture[2]:

 Comparison of different types of business incubators

Figure 2 – Comparison of different types of business incubators

In the next post we will provide details about each category from the framework. We will also provide a full list of possible services that could be offered by business incubator.

[1] Sources: Rice and Mathews (1995), Lewis (2001), Tornatzky et al. (1996), Campbell et al. (1988),

Clarysse et al. (2005), Hackett and Dilts (2004), Hernadez-Gantes et al. (1995), and Lichtenstein (1992), Virtual business Incubator Paper (2010), A guide to business Incubators NYC  (2005)

[2] Assessment of the business incubators focus was made using weighted-criteria matrix. However, there is a clear limitation that need to be mentioned. Hard data is difficult or impossible to obtain, even  for  the three cases we have listed. Few sources have reliable M&E data sets that would give us a clear measure of results and services they provide. Taking previous facts into consuderation we need to state that this chart is more qualitative than quantitative one.

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