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What is a "business incubator"?

In the last two decades in a niche business incubators have another view - Internet incubator (or virtual business incubator), which is a venture capital investment model, which aims to accelerated training and fast time to market of Internet companies and their projects.

most important functions of business incubators are:

  • providing premises for offices/studios for hire, often (in some towns/centers) at below market rates with flexible terms for more space on demand;
  • administrative and technical services (telephone, copying, rooms for conferences/meetings, secretariat, etc.);
  • consulting/business planning for beginners and potential entrepreneurs.

Also available a wide range of other (consulting) services, technology transfer, proposals for workshops and trainings, etc.

main objective of business incubators - to help those who open their own business, especially in the early stages. The greatest benefit to entrepreneurs in business incubators generate full concentration on the business goals and reducing the cost of the administrative apparatus.

incubator-graph

role of business incubators in the life cycle of the company

Flexible rent and possibly equipment, administrative support (accounting, reporting, secretary, lawyer, etc.), shared services, advice in establishing contacts and conclusion economic transactions, as well as proximity to the same active and dynamic young entrepreneurs - this is the assistance provided by a business incubator for start-up phase of overcoming difficulties.

Business incubators in chronological order of appearance and the basic idea of creation can be divided into three main types:

  1. Business incubators are designed to revive the decaying economic activity in the regions of unclaimed market industrial infrastructure.

    These business incubators have the support of local authorities and fulfill a social function to reduce the unemployment rate and filling the treasury, in consequence, by increasing tax revenues from "grown" in such business incubators. The first incubators of this type, and business incubators, in principle, there were another 50 years in the UK. However, the most common especially after 1983 business incubators were in the U.S.. In the last ten years, their number has grown from a few dozen to 575, incorporated in the National Association of Business Incubators. Incubators created under this scheme, open to the free areas of plants and factories in the former warehouses, schools, restored buildings, in general, in all areas, which could be adapted for the formation and the care of small business.
  2. Business incubators are designed to support and accelerate the innovation and entrepreneurial activity in universities. Incubators, the occurrence of which was due to this reason, the role in support of high-tech entrepreneurship.
  3. Business incubators are designed primarily to create an attractive environment for private investors - "business angels".

    Easy incubator scheme for venture capitalists is that they are thus able to control a number of parameters of its customers, while creating conditions for them to work. These incubators provide support, as high-tech firms, and non-technology entrepreneurship. An example of the successful development of an incubator for the third scheme can serve as a business incubator in Austin, Texas (Austin Technology Incubator). It was created in 1989, and then occupy a small area of only 400 square meters. meters. However, in 1997, its area increased to 20,000 square meters. meters, and the number of companies included in it has risen to 28. Now the total capital of these companies reached $ 100 million. 90% of all companies that were born here, are successfully developing. While 33 companies have been released from the incubator to float freely, and 6 of them are publicly listed.

    interesting that gradually the scheme to attract private investors to finance the venture capital firm moves and university incubators (incubators second type). In particular, so now runs Oxford Innovation Centre in the UK.

Today incubators formed by the mixed scheme, but as they are "mature" tend to specialize. For example, are incubators for companies producing software or working in the field of biotechnology, etc.

Business incubators facilitate entrepreneurship around the world. So, we know that the first year ceases to exist about 90% of the new companies. In cases where companies are formed in a business incubator, only 20% of new firms die in the first year. These statistics show how business incubators can be helpful to entrepreneurs.

These agencies can help in the event that a company looking for an investor. Important advantages of the business incubator is also a creative atmosphere and the opportunity to communicate with their own kind, the image of a serious company, a set of inexpensive but necessary services, flexibility of management in an incubator.

Business incubators have proved so successful form of support for a new business, that in recent years the number continues to grow rapidly, not only in the U.S., where they join the National Association of Business Incubators, but also in other countries. Anything in the world, there are already more than 2,000 independently operating business incubators. After the U.S., they were the most common in Western Europe.

in 1998 created the first Ukrainian association of business incubators - Ukrainian Association of Business Incubators and Innovation Centers (UBICA). Association members are 100 individuals and 60 entities. Mainly it is the leaders of business incubators, business support centers, and other public organizations. At the same time, members of the Association are successful entrepreneurs, scientists, Ukrainian and foreign consultants.

But to speak of the mature form of Ukrainian business incubators are not necessary. Despite the official government support (for example, the Cabinet of Ministers in 2001 on the full support of the local authorities acting and existing business incubators), this idea is not widely used and developed. In Ukraine at the end of 2008 the de facto existed and has 75 business incubators in fact engaged in activities only.

In Ukraine, business incubators were opened for a long time at the expense of international donors. This leads to the fact that the business incubator is stopped after completion of the program funding, with the means of regional and local programs for the development of small businesses can not provide sufficient volumes of business incubation. Many business incubators have become common commercial entities that rent rooms for rent. Some existing business incubators are not engaged in incubating new businesses, and work constantly firms through open-ended contract.

 

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