Final nzl incubation 23 sepv2
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Final nzl incubation 23 sepv2
- 1. New Zealand Incubation Country Case Study
- 2. 2014 MBA 434: Tuesday Session UnaisiVuniwaqa S02000455 SeiniFotu S02006013 Hanisivai Visanti S11112274
- 4. Outline Learning Outcomes Concept Overview Snapshot – Case Study SCORE Analysis New Zealand vs Malaysia New Zealand/Malaysia vs Fiji Success Factors Conclusion Recommendation
- 5. Learning Outcomes Understand Business Incubation. Identify best practices – NZL. Identify reasons to incubate.
- 7. Goal Graduate: Successful firms Financially viable Potential: create jobs revitalize neighborhoods commercialize new technologies strengthen economies
- 9. IncubationProcess 3 – 5 years
- 10. Incubation Owners • Private • Private non-profit • Local government • State government • Federal government • University
- 12. Why incubate? Accelerates growth Create jobs Improves entrepreneurial climate Networking
- 13. Why?
- 14. Purpose of study: Snapshot Analyse public policy in incubation development Identify critical success factors for development of incubators
- 15. Incubator policy introduced 2001 Based on Israeli model High-tech and high growth oriented Learning - USA, Australia and Europe Background
- 16. Why Incubators New Zealand? Growth oriented SMEs Remoteness Accelerate new companies – VC Industry SME - 85% market share
- 17. Ultimate Enhance survival & growth Intermediate Promote best practice Networking - interested parties Angel investors Venture capitalist Networking with CRI’s Objectives
- 18. Programme Mechanism Incubator awards annual merit-based financial awards - approved incubators The Incubator Development Unit (IDU) Residing within NZTE Servicing the incubator network Administer incubator awards
- 19. Support Mechanisms NZTE; export support market development assistance international networks training and knowledge programs funding assistance service international growth fund
- 20. Performance so far •First Incubator in 2001 •19 Incubators received grant of 16.73m NZD •A number have closed, merged or ineligible •8 incubators in operation •7 have secured approved status and in receipt of government subsidies •Total of 160 incubatees; an average of 20 per incubator
- 21. NewZealand Incubators E-centre Ltd Ice House Creative HQ CII – Canterbury Innovation Incubator
- 22. New Zealand Stakeholders Central Government (NZTE) Local Councils & Economic Development Agencies Universities Crown Research Institutes Private Sector Organizations & Companies
- 23. Incubation Drivers The two broad drivers are; 1. Boosting export revenues 1. Commercialisation of R&D High value employment creation
- 24. Objectives Incubation Support Program Enhance success and growth of early-stage Promote best practice Enhance networking: among incubator managers and with organizations between incubators and universities / CRIs Encourage technology transfer and commercialisation
- 25. How to Access the Fund Investors must be accredited Evaluation process: desktop evaluation site visit detailed due diligence capabilities - potential investment partner Angel investor networks titled ‘Escalator’ also support companies to be investment ready
- 26. Setting up of viable enterprise Appropriate feasibility study Governance & management Good networking Clear focus & direction Success Factors
- 27. SCORE Analysis Strengths Challenges Options Responses Effectiveness strength challenge option response effectiveness efficient reliable elegant appropriate integrated
- 28. Strengths Achievement of best practice Good networking Push towards financial independence Clear focus and direction Effective partnership between government & incubation industry Funding process
- 29. Challenges Financial sustainability Source & retain - management Measuring effectiveness Data – graduated incubatees “Red tape” $ - registering Commercialisation of innovations
- 30. Peer to peer networking Knowledge sharing Strategic partnerships & alliances: Opportunities University – branding & credibility Banks & business angels - funding CSR Programs Funding Expertise Links to Markets Commercialisation
- 31. Responses/regulations/returns/rewards • Political will • Laws and policies • Key stakeholder support • Satellite incubators - government
- 32. Effectiveness Is it Efficient? Proper utilisation of funding and quality mechanism in place Is it Reliable? Linkages Universities for Learning and Growth and Re-engineering process Is it Appropriate? SME Development stimulates NZ Business Environment Is it Integrated? Promotes PPP with Government providing an enabling environment
- 33. New Zealand Malaysia Objectives Generate hi-tech growth-orientated internationally exporting SMEs Technology transfer and Innovation Strategy Framework Incubator Sup-port Program (ISP) Zealand Trade and Enter-prise Incubator Development Unit National Incubator Development Frame-work Period of grant funding Annual basis Self sustainability 2014 Open ended Long term funding % of funding 50% of running costs 100% running & start-up costs Ownership/ Universities Universities Partnership Commercial entities National Authorities Structure Regional economic agencies Voluntary Organisations Monitoring & Evaluation Regular statistic report Annual performance benchmark Performance data – former tenants Government – none Incubator management - informal
- 34. Fiji vs Malaysia & New Zealand • Scale and types of business • Support by government • Stakeholder support • Data collection
- 35. Fiji vs Malaysia & New Zealand • Policies • Learning and Growth • Sustainability • M&E
- 37. To contribute to competitiveness and local job creaction 5 4 3 2 1 0 To help universities and R&D centres commercialise know-how To help companies generate spin-of activities To contribute to technology transfer and innovation and wealth creation To help disadvantaged communities/individual with projects Importance of Objectives NZ Malaysia Fiji
- 38. Incubation process Proper management: performance assessments report regular statistics Clear governance rules Entry & exit procedures & standards Government funding Annual assessments & rating Operations Management Financial performance Best practice?
- 39. Monitoring & evaluation Incubation Post incubation Best practice?
- 40. How incubators cover costs 55% 18% 1% 12% 7% 7% Subsidies - National Authorities and public agencies Income from banks and other private sector organizations Income from universities and other R & D organizations Rental income and other incubator charges Other earned income Investment income
- 41. Conclusion Innovation - socio-economic development Incubators strong engine: economic development job creation Long term success - SME BI vehicle ideas – socio-economic value Develop graduate ideas SME economic backbone Incubation future business model
- 42. Recommendations Feasibility assessment – potential incubatees Innovation – local market Competitive percentage – owners equity Partnerships & strategic alliances Private sector partnership Attractive remuneration Succession planning Process measure success Monitoring program - graduates
- 43. References • http://www.slideshare.net/hanisivai/savedfiles?s_title=business-incubation- 26891501&user_login=mustafachangi • http://www.slideshare.net/hanisivai/savedfiles?s_title=business-incubation-rajeshagrawal& user_login=niabidocs • http://www.slideshare.net/peshwaacharya/business-incubators-38574758?qid=4403512c-5559-4ced-af6d- 16683e83f301&v=default&b=&from_search=24 • http://www.slideshare.net/markslong/introduction-to-business-incubation?related=1 • http://blog.earthgrid.com/accel/the-institutions-of-business-development/ • http://www.newzealand.com/int/artice/auckland-nightlife/ • http://ikartin.dot5hosting.com/3315.html • http://www.cbicc.org/Economic_Development/Incubator_Program.aspx • http://palamas.info/wp-content/uploads/2012/01/success.jpg • http://sweetclipart.com/multisite/sweetclipart/files/us_dollar_sign_black.png • http://www.bbicbahrain.com/images/pic-incubation. jpghttp://www.1000ventures.com/design_elements/selfmade/biz_incubators__fincurve.gif • http://www.urenio.org/wp-content/uploads/2010/03/Smart-Guide-Innovation-Incubators.jpg • http://www.yunussb.com/wp-content/uploads/2013/09/Colinsrt.jpg • http://www.theepochtimes.com/n2/images/stories/large/2011/10/23/AllBlacks130005300.jpg
- 44. Acknowledgements Our Lord God Almighty Professor James McMaster, Professor Management Studies Ravi Chand, National Centre for Small and Micro Enterprises Development AkanisiWaqanicakau, National Centre for Small and Micro Enterprises Development Our families
- 45. Kia ora | Thank you!
Notas do Editor
- Ice Breaker Use this to engage the audience. Ask for a show of hands of All Black fans and rearranging seating arrangements to ensure each table has an All Blacks fan. Then move into a warm up exercise using Papeeta!
- EU Centre for Strategy & Evaluation Services: “A business incubator is an organization that accelerates and systematizes the process of creating successful enterprises by providing them with a comprehensive and integrated range of support, including: incubator space, business support services, and clustering and networking opportunities …[and]… a successful business incubator will generate a steady flow of new businesses with above average job and wealth creation potential”… Incubators Goal A business incubator‘s main goal is to produce successful firms that will leave the program financially viable and freestanding. These incubator graduates have the potential to create jobs, revitalize neighborhoods, commercialize new technologies, and strengthen local and national economies
- Incubators Goal A business incubator‘s main goal is to produce successful firms that will leave the program financially viable and freestanding. These incubator graduates have the potential to create jobs, revitalize neighborhoods, commercialize new technologies, and strengthen local and national economies
- What is business incubation? According to the EU Centre for Strategy & Evaluation Services: “A business incubator is an organization that accelerates and systematizes the process of creating successful enterprises by providing them with a comprehensive and integrated range of support, including: incubator space, business support services, and clustering and networking opportunities …[and]… a successful business incubator will generate a steady flow of new businesses with above average job and wealth creation potential”…
- The incubation period takes 3 – 5 years before a firm can graduate from the program i.e. it is deemed financially viable Business incubators are designed to enhance the success of early-stage entrepreneurial companies Speed the establishment of self-sustaining companies.
- What is business incubation? According to the EU Centre for Strategy & Evaluation Services: “A business incubator is an organization that accelerates and systematizes the process of creating successful enterprises by providing them with a comprehensive and integrated range of support, including: incubator space, business support services, and clustering and networking opportunities …[and]… a successful business incubator will generate a steady flow of new businesses with above average job and wealth creation potential”… Business incubators are designed to enhance the success of early-stage entrepreneurial companies Speed the establishment of self-sustaining companies.
- Incubation process
- Why incubate? Create jobs Improves entrepreneurial climate Accelerates growth NZL incubators target innovative firms rather then service or retail firms
- Why incubate? Most of all to secure better chances for your success – 87% more!
- Case study was produced as part of the World Bank infoDev project on developing a policy framework and implementation strategy for business incubators. Why New Zealand? NZ incubation system provides possible applicable model on independent entities supported by both Government and other stakeholders
- Policy was put in place in 2001 soon after Asian financial crisis, which had an adverse impact on NZ. Initial set up of incubators was based on Israeli model – hi-tech and growth-oriented-combined with deliberate learning from USA, Australia and Europe.
- Why IncubatorsNew Zealand? Generate growth oriented and internationally competitive SMEs Country’s remoteness from the rest of the world and relatively small domestic market The incubators to accelerate the development of new companies to graduate and become VC Industry Support SME which comprises 85% of the New Zealand market share
- The ultimate objective of the Incubator Support Programme is to enhance the survival and growth of early-stage businesses via the development of high quality incubators. The programme’sintermediate objectives are to: •promote best practice among incubators in New Zealand; •enhance networking among incubator managers and with organisations that have an interest in incubation and incubated businesses (i.e. angel investors, venture capitalists); and •enhance networking between incubators and CRIs (Community Research Initiatives) and universities to encourage technology transfer and commercialisation.
- These objectives are achieved through two mechanisms: the Incubator Awards (annual merit-based financial awards to approved incubators) and the Incubator Development Unit (IDU) residing within New Zealand Trade & Enterprise
- The mainprogrammes supporting enterprise development in the country are provided by NZ Trade and Enterprise. These support services include the following. Export support and market development assistance Access to international networks, Training and knowledge programs, Funding assistance service and international growth fund
- Institutional Environment for Incubators in New Zealand where they each play a role in the Incubation Policy Development & Implementation
- Two broad drivers of incubation policy with consequential high value employment creation that was particularly important at that time. The main objectives have been achieved by stimulating a ‘pipeline’ of high-growth businesses through incubators and other programmes.
- To enhance the success and growth of early-stage businesses via the development of high-quality, financially self-sustaining incubators. To promote best practice among incubators in NZ, enhance networking among incubator managers and with organizations To enhance networking between incubators and Universities/CRIs to encourage technology transfer and commercialisation Incubator Support Program (ISP) Equity Royalty Deferred debt
- Initial funding of incubator programs is usually provided by provided by public authorities How they carry out their work/process? Incubators invests time & money in feasibility studies Successful incubation program are developed Interested company prepares & submit a fleshed-out business plan Screening committee review the plan to determine whether they meet the criteria for admission Criteria: An effective plan Availability of market Growth of market out turn Sales growth & associated profitability Well-formed governance structure for self-perpetuation
- What makes Incubation successful Appropriate feasibility study An effective feasibility study will help determines whether the proposed project has a solid market, a sound financial base and strong community support. Clear Focus & Direction – Governance & Management Having a clear idea of which is the process behind the selection of participants and mentors all together gives you a wider understanding of the proposed mission and goals of the incubator. It should be obvious that no business incubator can be successful if every member of its governing board, its management and the public think it should be achieving different goals. All supporters should come together to gain consensus and aim to achieve the same desires.
- Clear Focus and Direction As a result of industry and government collaboration. Partnership between govt and Incubation Industry Based on share goals and a commitment of best practice incubation Funding process: Balances nicely an outcome orientation with quality processes leading to diversity of models, each carefully tailored to the local condition.
- Challenge: Regardless of the ownership structure, one of the most significant challenges of business incubators is to achieve financial stability. Financial stability defined narrowly as “earned revenue covering all business incubation expenses”. Recommendation: Implement more stringent selection criteria for potential incubatees are inline with core objectives and local market needs Thorough feasibility assessment of potential incubatees Innovations need to be tailored to local market conditions Negotiate sustainable percentages in start-up post graduation Developing partnerships and strategic alliances Private sector partnership Challenge: Finding and retaining management teams with right mentality and skills set. Recommendation Attractive remuneration package inclusive of shares in graduate innovations Develop a succession plan Challenge: Limited systematic data available to measure the effectiveness of business incubation. This is because it takes at least three to four years to incubate a promising enterprise but four to seven years for real growth in business revenue Recommendation: Develop appropriate indicators for measuring effectiveness such as – number of innovative enterprises created. The viability, revenue size and growth rate of those enterprises. The investment size attracted as a proxy for perceived market value. Lack of data of survival rate of graduate incubators Recommendation: Develop program to monitor and support graduate incubatees. Implement skills to bridge the “gaps” that cause the failure in “incubation” period
- Opportunities: Joining Business Incubator Networks for peer to peer networking and knowledge sharing Strategic partnerships & alliances through: Universities – expertise & space as well as branding and credibility Banks & Business Angels – funding by supporting potential cliental Capitalise on funding, expertise and links to markets through corporate social responsibility programs Commericialisation of equipment
- The Government with its Political Will to stimulate its SMEs as its engine for growth in its Business environment provides the necessary support through funding and legal framework and policies. Key Stakeholder Support is evident with Central Government for funding, Local Councils in some cases are contributing sponsors, Universities for Learning and Growth, Crown Research Institute for Technical Assistances and Private Sector Organization for support. The government is also looking at ways to support through funding Satellite Incubators which at the present is not part of the NZTE. This will mean changing the law to influence the government funding criteria rule which is currently omitted due to absence of on-site management and physical premises.
- Comparative of New Zealand Incubatorvs Malaysian incubcator
- When comparing Fiji’s Business Incubation set up with the two countries, as apparent the two countries are quite well established. As for scale of the businesses that are nurtured under the incubation model Fiji’s example is relatively small with only 5 businesses that are currently facilitated in a space provided for by the National Centre for Small to Medium Enterprise Development in Suva. It has a capacity for 10 but currently they only have 5. In NZ’s case the government provide some funding apart from other form of support to the Incubators whereas for Fiji the only form of support is the office space which is rent free, telephone, internet connections and computers. The center is still lobbying with government for funding if it is seriously considering the role of SMEs as stimulants for Economic Growth. Stakeholder Support in Fiji’s case is still very much wanting at this stage. Compared to the two countries these are again well established and the fact that they have been in existence for some time may have been a contributing factor. In Fiji’s case one of the problematic area in the Data Collection process. This is yet to be established.
- As for policies, Fiji’s case it provides contracts to incubatees for a period of 3 years and this is renewable however, like the other two countries the aim is to provide that necessary support during the start up period. Given the high % of failures in small business due to competition and other factors support through policies as enablers are necessary. In the area of Learning and Growth with NZ and Malaysia linkages with Universities and Research institutions are set up and in Fiji’s case this is yet to be formalized. As in Fiji’s case, sustainability of the program is evidently a problem. The first lot of incubatees have yet to graduate to move one thus the sustainability of the program at this stage still looks bleak. Also the Monitoring and Evaluation framework is yet to be in place.
- On comparing the priority each of the Country placed on the Incubation Model adopted we can note the differences in the weighting placed each of the objectives, on a scale of 1 – 5 and 5 being the top priority. This is very much linked to the type of business environment and economy that is present in that particular country. You will note that for the two countries that is NZ and Malaysia their weightings on their objectives are relatively the same that is on technological innovation and R&D. However for Fiji, given our business environment and other variables our priorities is very much still on job creation and helping disadvantaged communities with little emphasis on R&D and Technological innovation.
- Best practices Incubation Process Performance assessments for proper management Government funded incubators have to report certain statistics on a regular basis Undergo annual capability and performance assessments conducted by the IDU They must have clear governance rules and be able to articulate entry and exit procedures. These governance rules, entry and exit procedures and standards are defined by NZTE but can be interpreted flexibly at local level. Incubators also have their own criteria for screening projects (see examples). They all have plans for self-sustainability which are required as part of the funding mechanism These governance rules, entry and exit procedures and standards are defined by NZTE but can be interpreted flexibly at local level Established criteria for screening projects (see examples) Plans for self-sustainability which are required as part of the funding mechanism
- Best practices Incubation Process Performance assessments for proper management Government funded incubators have to report certain statistics on a regular basis Undergo annual capability and performance assessments conducted by the IDU They must have clear governance rules and be able to articulate entry and exit pro-cedures. These governance rules, entry and exit procedures and standards are defined by NZTE but can be interpreted flexibly at local level. Incubators also have their own criteria for screening projects (see examples). They all have plans for self-sustainability which are required as part of the funding mechanism Monitoring & evaluation of companies during and after incubation Undertakes comprehensive annual: capability assessments and performance appraisal to encourage continuous improvement in operating standards. Clear governance rules in incubator process Articulate entry and exit procedures These governance rules, entry and exit procedures and standards are defined by NZTE but can be interpreted flexibly at local level Established criteria for screening projects (see examples) Plans for self-sustainability which are required as part of the funding mechanism
- Our readings lead us to conclude that: innovation is key to social and economic development a business incubator facility can be a strong engine for economic development and job creation the incubator model creates an environment greatly improving a new enterprise’s chance for long term success. business incubators can be the vehicle to turn ideas into real socio-economic value Capability to innovate is human nature Such a facility will provide our “best-and-brightest” students the opportunities to take their ideas and turn them, along with their hard work, in success stories. In the near future. Potential for SME become backbone of an economy Business incubation future business model
- Challenge: Regardless of the ownership structure, one of the most significant challenges of business incubators is to achieve financial stability. Financial stability defined narrowly as “earned revenue covering all business incubation expenses”. Recommendation: Implement more stringent selection criteria for potential incubatees Thorough feasibility assessment of potential incubatees Innovations need to be tailored to local market conditions Negotiate competitive percentage of equity in start-up firms post incubation Developing partnerships and strategic alliances Private sector partnership Challenge: Finding and retaining management teams with right mentality and skills set. Recommendation Attractive remuneration package inclusive of shares in graduate innovations Develop a succession plan Challenge: Limited systematic data available to measure the effectiveness of business incubation. This is because it takes at least three to four years to incubate a promising enterprise but four to seven years for real growth in business revenue Recommendation: Develop appropriate processes & indicators to measuring effectiveness such as – number of innovative enterprises created. The viability, revenue size and growth rate of those enterprises. The investment size attracted as a proxy for perceived market value. Challenges Lack of data of survival rate of graduate incubators Recommendation: Develop program to monitor and support graduate incubatees. Implement skills to bridge the “gaps” that cause the failure in “incubation” period