TBIXI3

theLastWord
64 February - May 2013
Looking High and Low
In Europe and in the United States, business incubator trade associations such as
EBN and NBIA calculate that the survival rate of companies created and supported
within the incubation industry is a figure between 80 and 90 percent. This figure goes
a long way in demonstrating the success of business incubators as organizations
capable of providing sustainable jobs for given territories. This success is achieved
through the application of serious selection processes such as this which have been
highlighted by both Nicolas Rouhana and Olivier Tomat in past issues of this
magazine.
I have few doubts that this figure is realistic. In the EU we can refer to the annual
survey EBN undertakes with the aim of assessing the EC-BIC quality mark criteria,
while in the U.S. the “2012 State of the Business Incubation Industry” prepared by
Linda Knopp for NBIA offers insight into this issue. Therefore, it may be interesting to
fully understand this figure and what it means for the industry itself. Indeed, this
indicator, or any indicator you choose, may assume various meanings and will read
differently whether you are an incubatee, a stakeholder or an incubator.
As an incubatee this indicator should provide you with a decent degree of comfort as
your assessed and accepted-in-the-programme business idea has passed the test! It
means that most likely you have got it right, that you have come up with something
that will have both a good impact in the community where you are basing your
company and a very high probability of providing you with a decent living. Hard work?
Undoubtedly, but it will most likely pay off as you are in the right place at the right
moment!
As a stakeholder you will probably feel comfortable that your investments will most
likely pay off. As incubated companies tend to stick around you should have the
satisfaction of seeing the economic life in your community thriving; after all incubated
companies tend not to be fly-by-night operators. You will have the assurance that the
jobs are there to stay and that a virtuous circle has spun from the investment made in
your incubator. However, are you happy with the total number of jobs created by the
incubator? That is a completely different question which may very well lead to a
certain degree of discomfort, as the average employment by incubated companies
viewed from a mere political perspective (definitely not from a technical one) is on the
low side. Average employment by tenants in a BIC in 2011 was 151, while NBIA
reports 137 as the average full-time employment by an incubator resident and its
affiliate clients.
As an incubator you are facing a trade-off. You may look at the survival rate as your
comfort zone, one of the main indicators of success, and decide to continue
operations as always. Certainly, you are shaping the life of people and you don't want
to mess about with any of that! But on the other hand you might view a 90 percent
success rate as an indication that you are not much of risk-taker. Is it possible that
accepting a lower level of survival rate might, in the end, bring a higher number of jobs
created and if so, how many jobs? How much can a lower survival rate impact job
creation?
I don't know. Academics and researchers, maybe you have the answers for this!
Giordano Dichter
Giordano Dichter is Head of Quality and Technical Assistance at the European BIC Network. He is
passionate about incubation and innovation and always seeks ways to introduce the latter into the former.