Final Report: Facilitation of International Working groups ... · growth ICT enterprise business...

Final Report: Facilitation of International Working groups on High-growth ICT enterprise business

incubation infoDev Grant No. TF 092983

Prepared by: Sebastián Melín, OCTANTIS Business Accelerator March, 2010

Content Index

1. Introduction ................................................................................................2

2. Main Activities .............................................................................................3

3. Main Outcomes High growth working group ...................................................21

4. Conclusions and Next Steps.........................................................................22

5. Annexes ...................................................................................................24

Table Index

Table 1: Participants High growth working group ....................................................4

Table 2: Interviewee information..........................................................................6

Table 3: Summary of Interview Outline.................................................................6

Table 4: Incubator managers participating in Miami activities.................................10

Table 5: Entrepreneurs participating in Miami Activities .........................................10

Table 6: Summary of incubator manager working sessions in Miami........................12

Table 7: Agenda, networking activities Miami, October 2009 ..................................14

Table 8: Members of high growth group participating in Global Forum .....................17

Table 9: Online Discussion events ......................................................................18

Table 10: Main outcomes High growth working group............................................21

Table 11: Entry Process Incubator (Source: @Wales)............................................32

Facilitation of International Working groups on High-growth ICT enterprise business incubation 2

1. Introduction This final report has the objective of showing the activities that were developed during

the Grant No. TF 092983 named “Facilitation of International Working groups on High-

growth ICT enterprise business incubation” as well as the results and lessons learned

which would be of interest and value to the high growth business incubation

community.

The 12 month project which was extended to 14 months was aimed at creating an

international working group with a practical approach that would help give innovative

support (means of sustainability, business models, commercialization, etc.) towards

ICT related start-ups around the world. This was possible through seven areas of

activities; general organization, exchange of portfolio information, interviews with

world class references, Linkedin networking group, networking events, management

guide/toolkit and discussion events. The proposal was lead by Octantis, Business

Accelerator a business unit of Universidad Adolfo Ibáñez located in Chile along with

Enterprise Incubator Foundation from Armenia.

The initial participants are the following; New Zealand Trade and Enterprise, LATU –

Ingenio, Uruguay, Ayala Foundation, Philippines, TRINUS Soluções Empresariais –

FUMSOFT, Brazil, Crea-me, Colombia, University of Guadalajara Technology Incubator,

México, Instituto Gênesis - PUC-Rio, Brazil, Technology and Business Incubator Center-

CITAf, Romania, The Innovation Hub, South Africa, Palestine Information and

Communications Technology Incubator During the development of the project four

other organizations (ICT4EDC, St. Kitts and Nevis, Arc Fund, Bulgaria, Agribusiness

Support Fund, Pakistan and Timisoara Software Business Incubator, Romania) around

the world joined the group, adding value and enriching the group with there

participation.


2. Main Activities This section will describe the activities developed in the project, how they were

developed, the value they add to the participants and the main outcomes.

The section is divided into the seven main activities of the project which have been

defined as the following; general organization, exchange of portfolio information,

interviews with world class references, Linkedin networking group, networking events,

management guide/toolkit and discussion events.

2.1 General organization

The initial organization of the working group was all done through e-mail

messaging as well as conference calls set up mainly between the project leaders as

well as with the infoDev regional facilitator1. The main challenges were

demonstrating the value that the project can have for incubators along with

motivating them to dedicate time and contribute to the project. Each participant

received an overview of the project and was invited to create there profiles on the

Global Network, idisc platform2 and to form part of the High growth working group3

which is a platform designed by infoDev to share information that each participant

can access with a username and password. This platform was useful through the

entire project to exchange information between the participants such as; literature

related to ICT start-ups, presentations, profiles of supported ICT start-ups,

summaries of discussion forums and even pictures from networking events. Today

there are 32 participants from the different member incubators.

1 Cesar Yammal is infoDev Incubator Initiative Facilitator for Latin America and the Caribbean Region 2 http://www.idisc.net/en/IncubatorsMap.html 3 http://www.idisc.net//workgroups/intro.aspx?id=3


The participants of the working group are presented in the following table:

Table 1: Participants High growth working group

Contact Organization Country Bagrat Yengibaryan Enterprise Incubator Foundation Armenia Richard White New Zealand Trade and

Enterprise New Zealand

Manuel Bello LATU – Ingenio Uruguay Michi Barcelon Ayala Foundation Philippines Alexander Prado TRINUS Soluções Empresariais -

FUMSOFT Brazil

Catalina Escobar Creame Colombia Juan Villalvazo University of Guadalajara

Technology Incubator Mexico

Vanessa Eleutheriou Instituto Gênesis - PUC-Rio Brazil Domnica Cotet Technology and Business

Incubator Center - CITAf Romania

Patricia Dlamini The Innovation Hub South Africa Laith Kassis Palestine Information and

Communications Technology Incubator

Palestine

Sebastián Melin OCTANTIS Business Accelerator Chile Uwe Seidel VDI/VDE Innovation Germany Telojo Onu St. Vincent Chamber of

Commerce and Industry – ICT4EDC

St. Vincent and the Grenadines

Nicolás Llano Parquesoft Colombia Todor Yalamov Arc Fund Bulgaria Cao Cong Minh CRC – TOPIC Business Incubator Vietnam Wang Zhen Shanghai Technology Innovation

Center China

Kamran Niazi Agribusiness Support Fund Pakistan Kheeran Bahadoor Mational Computer Board – ICT

Incubator Centre Mauritius

Radu Ticiu Timisoara Software Business Incubator

Romania

2.2 Exchange of participating organization portfolios

This activity consists of each participating incubator creating a profile of the most

promising start-ups that they support in order to give these companies global

visibility through the rest of the participants with the objective of detecting


synergies and possible collaboration opportunities (partnerships, lessons learned,

business reality for similar projects in each country, among others).

The leaders of the project developed an initial template for the summary of the ICT

start-ups that was later validated by the rest of the participants. The final template

for the start-ups is in Annex 4.1, this template was completed by a total of 42

start-ups from 8 incubators in 7 countries, this information is available on the idisc

platform4.

The process of completing the profiles is of value to the incubators because it gives

them concise, organized information that can be available for parties interested in

the start-up. The process of completing the document is also valuable as a thought

process, organizing the main subjects of the business and presenting them in an

attractive way that will be of interest to potential value networks.

The final step in this activity was not completed, it was a challenge to connect

entrepreneurs from different countries and motivate them to search for

opportunities in partner start-ups around the world. This leaves an opportunity for

future collaboration with the steps that have already been advanced; we refer more

on this in the conclusions section.

2.3 Interviews with world class references

This main activity consists of interviews with world-class references in ICT

incubation and acceleration. The interviews were established with IC2: Austin

Technology Incubator, USA, @Wales and SmartXchange, South Africa. In the

following table is the information of the staff members interviewed from each

organization.

4 Under the files section in the folder Profiles of supported ICT start-ups


Table 2: Interviewee information

Incubator Country Interviewee Contact details IC2 : Austin Technology Incubator

USA Isaac Barchas, Director

[email protected]

@Wales Wales Evan Jones, Head Digital & Incubation

[email protected]

SmartXchange South Africa

Robynne Erwin, CEO

[email protected]

The main objective was to learn from the experience of the incubators that have

been successful in supporting ICT start-ups in different countries around the world

with diverse business realities.

This activity kicked off with the project leaders developing an outline for the

interviews, which was uploaded to the idisc platform and later validated by the rest

of the participants. The final template for interviews can be found in Annex 4.2.

The main areas of interest included in the outline are summarized in the following

table.

Table 3: Summary of Interview Outline

Area of Interest Description History of incubator General information related to the initial

steps of the incubators. How it was financed? Who the partners are?

Business model Aspects of the generation of income of the incubator. How is it being sustainable or aiming to be sustainable?

Incubation operation Information related to the stages of the entrepreneurs that the incubator supports. What is the methodology used to support each phase? What services are offered?

Application model (dealflow generation)

Marketing efforts to attract dealflow towards the incubator. What activities are developed? How many applications are received? What is the success rate?

Management team Structure of the management team and staff. What are the roles and responsibilities?

Numbers of the Historical and current volume of


operation supported start-ups, revenue generation, volume of investments in supported companies.

Financing network Information on the surrounding ecosystem related to investment opportunities for start-ups. What relationships are there with capital networks?

International operations

Relations with international players. What international relations/partners are there?

The conferences with each organization lasted between 1 and 2 hours, discussing

the main subjects of the outline previously constructed and sent to each

interviewee. In this section we will show the main findings. For the complete detail

of the conference calls, see Annex 4.3, 4.4 and 4.5.

The diversity of the organizations that were interviewed gives a wide breadth of

practices and experiences. In the case of ATI, it is an organization with over 20

years of experience that forms part of a world-renowned university (University of

Texas, Austin) in a virtuous business ecosystem in Austin, Texas, where venture

capital and angel investors are available and active, human talent is accessible and

there is a local and state government that has supported the incubator initiative

from the initial stages. The experience in Wales is quite different; the incubator

industry began forming recently in the year 2000, strongly subsidized by the

government as a strategy for development. The government has also established a

virtuous support system towards entrepreneurs, where there is access to seed

capital as well as funding for more advanced stages. There are also active business

angel networks and venture capital funds (see annex 4.4 for details). The last

incubator that was interviewed is SmartXchange, located in Durban, South Africa.

It has been operating for 6 years with a strong subsidy from the local government.

The incubator forms part of a larger initiative of the city that promotes the use of

information and communication technology as a catalyst for change and

development. For the long-term success of the incubator it is necessary to create

capacity and mobilize the whole ecosystem to provide support towards

entrepreneurs and Small Micro and Medium Enterprises (SMMEs). Large efforts

have been done to align players locally to achieve the incubator goals.


The main findings in the interviews are detailed in the following points:

• Local support through government agencies has been key to success in all

cases. Not only through funding the operation of the incubator but also

generating direct support towards entrepreneurs (seed capital, co-

investments) and helping in mobilizing key players in the ecosystem to align

objectives, which is important for the incubator to reach its goals.

• Talented and well connected managers from the initial stages of the

incubator are important to give visibility and credibility to the organization.

The ability of the manager to create valuable links and partnerships is key

to deliver the value proposition of the incubator. The incubator also requires

very talented people in their staff. It is recommended to work on a talent

model for incubator staff.

• It is extremely important to understand the incubators value proposition.

How does the incubator add value to its clients? How can the incubator truly

make a difference and generate impact in the development of a start-up? All

of the selection criteria of the incubators that were interviewed included the

item related to the value that the incubator can add to the

entrepreneurs/start-ups/companies. This is important to maintain a good

relationship and high satisfaction with the client companies, which will turn

into effective word of mouth marketing.

• Both ATI and @Wales support entrepreneurs that have business plans and

validated business models. It is a reality in emerging economies where

business ecosystems are less developed and the pool of entrepreneurs are

generally less prepared in business knowledge, that incubators play a role in

more early stage support. SmartXchange has a preincubation phase where

they support entrepreneurs in the construction of the business plans and

business models as well as in capacity building and prepare them for the

next steps in the growth of their companies.

• Application and selection models all have a common denominator that has

proven success; an initial internal review by the incubator staff that makes a

first selection and then an external panel or committee of experts that

makes the final decision. Of all applications received on a yearly basis, on

average 5-10% meet all the selection criteria and are accepted and


supported by the incubators. This means volume of dealflow is key to be

able to meet incubator goals.

• Big part of the success of the incubator has to do with the development of

the business ecosystem in general that will support and strengthen the

entrepreneurial community. In all cases it has been a process to create the

ecosystem, it takes time and it is part of a collaborative effort. It is

necessary to have support from different players, private and public.

2.4 Linkedin Networking group

This main activity had the objective of creating a Linkedin5 group that will be able

to link all project participants with peer incubators and stakeholders from the ICT

business community. Linkedin is an interconnected network of experienced

professionals from around the world, representing 150 industries and 200

countries. You can find, be introduced to and collaborate with qualified

professionals on a global scale.

The group formed is named “International Working Group on High-growth ICT

Enterprise Business Incubation”. The first step was to have the participants create

a personal profile in order to be able to participate in the group; the following step

was for them to join the group, currently there are 103 members in the group from

the international ICT business community coming from all the participating

incubators. This gathering of incubation and ICT talent can be a source of new

business opportunities and high quality global networking. The group is ongoing

and will be beneficial to expand the global network of the incubators and their

entrepreneurs in a very simple and low cost manner.

2.5 Networking events

The project included a networking event in Miami, FL, USA, where Octantis

Business Accelerator has its international branch and the participation in the 3rd

Global Forum on Innovation and Entrepreneurship organized by infoDev.

5 http://www.linkedin.com/


2.5.1 Networking activities in Miami, FL, USA

The objective of the meeting in Miami was to generate interaction between

participants of the “High-growth ICT enterprise business incubation working group”,

and give a practical hands-on approach to the working group through the

participation of start-ups from different member incubators. The activities in Miami

were necessary for participants to meet face to face and have live working

sessions.

The members of the incubators that participated in the activities in Miami are the

following.

Table 4: Incubator managers participating in Miami activities

Name Organization Country

Norayr Vardanyan Enterprise Incubator Foundation Armenia

Michi Barcelon Ayala Foundation Philippines

Sandra Ramirez Crea-me Colombia

Sergio Yates Instituto Gênesis - PUC-Rio Brazil

Sebastian Melin OCTANTIS Business Accelerator Chile

Gaston Salinas OCTANTIS Business Accelerator Chile

The activities in Miami included participation of selected entrepreneurs that were

supported by participating incubators of the high growth group. The main criteria

for selection was the following; start-ups in the ICT or related sector, had the US

market as an attractive market to expand towards and have an interesting initial

value proposition for this market. The entrepreneurs selected were the following:

Table 5: Entrepreneurs participating in Miami Activities

Name Start-up Country

Michael Poblete Pobletech Philippines

Marcio Nunes Bitix Brazil

Vadim Tanasiev SoftTehnica Romania

Romaine Reid Edge Source St. Vincent & the


Grenadines

John Francis CaribbeanDownload.com St. Kitts and Nevis

The activities kicked off Wednesday October 21st, 2009 at the Miami campus of

Universidad Adolfo Ibáñez, located at 1200 Brickell Avenue Suite 300. The initial

activity was a brief introduction of the activities to come in the three days in Miami

and then presentations of each incubator and a final space for questions and

answers. The presentation of each incubator was a good opportunity to quickly get

an idea of spaces for collaboration between organizations. All the presentations of

incubators are uploaded on the idisc platform.

The next activity Wednesday was focused on the entrepreneurs. It was identified

that the selected entrepreneurs were not totally ready to enter the US market and

it would not be of value to connect them with potential partners, clients, etc.

because they were not ready for that type of conversation yet. The decision was to

work with the entrepreneurs on a world-class presentation focused on investors

that would define a truly attractive value proposition and clear steps to satisfy

future clients needs. A member of the Octantis team, Gastón Salinas, gave a brief

presentation on the value of a good “elevator pitch” and the main elements it

contains. This was followed by a presentation6 of each entrepreneur, which was

followed by feedback that was given by all the incubator managers as well as his

peer entrepreneurs. After the workshop at the end of Wednesday, the

entrepreneurs left with feedback and homework to complete their presentations

and have a final version to present on Friday.

The three main weaknesses in the presentations of entrepreneurs and where the

feedback was focused were the following:

• Entrepreneurs focused on the technology and its characteristics more than

the benefits it can bring to the potential clients. More of a technology push

than a market oriented focus.

• Lack of focus on a specific business, entrepreneurs are constantly searching

for new opportunities, which is positive, but they need to generate and

6 Entrepreneurs had been given the instructions to prepare a presentation of their start-ups.


package a final product (even if it is not perfect) that they can get to a

client and generate revenues.

• All initial presentations lacked a financial model and a clear offer towards

potential investors.

The first activity for Thursday was a Presentation of advances in the “Technology

Business Incubators Management Guide” developed by EIF, Armenia. Valuable

feedback from the incubator managers was incorporated to the final product, for

more details please see section 2.6.

During the rest of the day, entrepreneurs worked on their presentations guided by

Gastón Salinas from Octantis. In parallel, incubator managers participated in

working sessions sharing experiences, methodologies and challenges faced in the

support of ICT business and specifically high growth potential ICT start-ups.

A summary of these discussions is presented in the following table:

Table 6: Summary of incubator manager working sessions in Miami

Subject Key Findings/Issues

Core Challenges to incubation of high-growth ICT enterprise

• Attracting quality dealflow, marketing

• Window of opportunity, time to market for ICT start-ups may be very short. Can be a show stopper!

• Early stage financing. Investment gap present in most emerging countries that difficult dynamic growth.

• Maintaining focus with entrepreneurs

• Entrepreneur’s connection with the market. Are they solving a real pain in the market?

• Effective presentations to investors, key to attracting investors.

• Generation of first sales

• Building teams, incorporating talent, management teams

• High growth and high performance

Lessons learned • Importance of ecosystem in supporting ICT start-ups


• Peer to Peer value, learning many-to-many

• Access to capital is good, but smart money is much better

• Innovation is not about technology, but about creating value to clients and to gather some of that value for the company.

• Team is critical. No good opportunity can be reached by a weak team. Team can grow and change if necessary.

Innovative methodologies and tools

• Matchmaking and incorporating co-entrepreneurs as a means to strengthen teams.

• Sustainability in tutoring and mentoring, possibility of future investors, directors, other valuable roles.

• Exploration of co-incubation opportunities

• Importance of a practical approach to sales. P2P training sessions

• Web 2.0 tools for marketing incubator; twitter, facebook, blogs and others.

On Friday the first activity was a roundtable with Matthew Cole, manager at North

Bay Equity Partners7, organization that provides financial advisory to businesses

that are seeking to raise venture capital in the US, generally clients are searching

between US$ 500,000 and US$ 5 million. The main findings from the meeting with

Matthew Cole are the following:

• Organizations such as North Bay, at this phase of financing are open to

partner with incubators to support their dealflow.

• Investing in emerging markets is also about macroeconomic cycles;

entrepreneurs need to explain to investor’s local cycles and situations and

demonstrate that they are the experts in their backyard.

• It is important to search for Venture Capital that can add value to your

start-up, not only capital.

• Single most important thing investors are looking for is the Management

team. Then the focus is in the following questions:

o Will customers buy? Is there a demand?

o How much will they pay?

o How much does it cost?

7 http://www.northbayequity.com/


o What is the profit?

o Who are your lawyers? Who are your accountants? Who is on your

advisory board?

All of the information provided by Mr. Cole was of great value to the participating

entrepreneurs, as well as to the shaping of the future support provided by

incubators towards entrepreneurs that have in their plans an international

expansion towards the US market.

The final activity of the week was the final presentations of each start-up that had

been worked on with the guide of Gastón Salinas from Octantis. The final results

were positive; the presentations had improved significantly, incorporating feedback

from incubator managers and peers. The process of building the new presentation

also put the entrepreneurs in difficult situations where they were obligated to make

decisions of different nature that focus the business and raise their chances of

success.

The agenda of the three-day activity is in the following table:

Table 7: Agenda, networking activities Miami, October 2009

Wednesday October 21st

Thursday October 22nd

Friday October 23rd

9 am 10 am

Presentation Management Guide/Toolkit, Norayr Vardanyan, EIF, Armenia, feedback Q&A

Meeting Matthew Cole, manager North Bay Equity Partners

11 am 12 pm

Welcome and introduction. Presentations by each incubator manager

Working sessions Final presentations of each start-up

1 pm 2 pm

LUNCH LUNCH LUNCH

3 pm 4 pm

Final presentations of each start-up

5 pm

Elevator pitch Workshop: Presentations of each start-up

Working sessions

Departure from Miami

A major outcome of the networking activities in Miami is that the participants were

able to meet face to face and get to know more about their organizations and


explore potential areas of collaboration. The entrepreneurs were trained to present

in a world-class investors atmosphere. Some of the comments that were received

through e-mail from entrepreneurs that show clearly the value that was added and

the impact it had in their business are the following:

From: Romaine Reid, St. Vincent & the Grenadines

To: Sebastián Melín

Date: November 6th, 2009

“I had a great time with you in Miami sharing and learning from you guys. The

work shop definitely inspired and educated me on how to better prepare a proposal

that will be compelling to investors and enticing for clients. Since my return to St.

Vincent, my partners and I have begun to take steps in reshaping our approach

towards our business so that we can be competitive in the Caribbean Call Center

industry and an attractive option for investors. It was a well worth it trip. I hope all

is well with you and I look forward to hearing from you all in the future.”

From: Vadim Tanasiev, Romania

To: Sebastián Melín

Date: November 24th, 2009

“during my stay in Miami I learned many things that will help me continue to find

and develop new strategies based on strong increase in sales. One important thing

that I understood is to not be very meticulous because that will hold you back,

another thing I understood is that you have share with others if you want to bring

more capital and as a united team is possible to achieve spectacular results. But

the thing that seemed very interesting is to identify the pain and how I fix this

pain, I rebuilt under this system my power point presentation.

We have signed several agreements of cooperation in the region with 5 producers

of fiscal printers, and things are starting to work.”

2.5.2 3rd Global Forum on Innovation and Entrepreneurship

This event took place October 26-30, 2009 in Florianopolis, Brazil. There was a

participation of over 1,000 leaders, entrepreneurs and professionals from around

the world. Specifically on day 4, Thursday, October 29th in the break-out sessions


the high-growth ICT enterprise incubation working group hosted a panel that was

moderated by Cesar Yammal, incubator initiative facilitator for Latin America and

the Caribbean region. The objective of this session was to present the advances of

the infoDev international working group on incubation of high growth ICT

companies, and to discuss these in light of relevant success cases taken from the

experience of Jeff Milanette (Innovative Partners) and the specific experience of

SmartXchange, an ICT hub in South Africa.

Sebastian Melin, leader of the high growth Group gave an introduction to the

working team, highlighted core challenges to ICT business incubation, identified

lessons learned, and concluded with methodologies and tools that should help with

the incubation of high growth ICT-based companies.

Jeffrey Milanette focused his presentation on the importance of sustainability of the

ICT incubator to produce in turn high growth companies. The objectives of a

sustainable ICT incubator include the following: (i) provide a safe, stable and

secure place to start and grow ICT companies; (ii) create employment in both ICT

and other markets; (iii) promote development through training and education; (iv)

provide strong management and leadership; (v) provide access to equipment

required by the client companies; (vi) be a focal point of entrepreneurial activity

and networking, providing access to the business community and potential

partners; and (vii) provide referrals to sources of capital.

Finally, Robynne Erwin explained the experience of her organization in fostering the

growth of small, micro and medium size (SMME) ICT enterprises in the region of

KwaZulu-Natal (KZN), South Africa. More than an incubator, SmartXchange is an

“ICT hub”, whose strategic objectives are to: (i) identify and assist in developing a

quality ICT SMME base in KZN; (ii) be a vehicle for public and private organizations

to work through to realize the vision of KwaZulu-Natal becoming Africa’s ICT Hub;

(iii) build a pool of skilled ICT workers that will enable KwaZulu-Natal ICT

businesses to flourish; and (iv) support initiatives that work to bridge the digital


divide8. For the complete details of the presentations please visit the idisc platform

in the files section under the folder “Presentation 3rd Global Forum”.

Participants of the high growth group that were able to participate at the Global

Forum are in the following table:

Table 8: Members of high growth group participating in Global Forum

Name Organization Country Sebastian Melin OCTANTIS Business

Accelerator Chile

Bagrat Yengibaryan

Enterprise Incubator Foundation

Armenia

Sophia Muradyan Enterprise Incubator Foundation

Armenia

Michi Barcelon Ayala Foundation Philippines Sergio Yates Instituto Gênesis -

PUC-Rio Brazil

Radu Ticiu Timisoara Software Business Incubator

Romania

Todor Yalamov ARC Fund Bulgaria

Through the Global Forum it was possible to meet and attract two new members of

the high growth group, Radu Ticiu from Romania and Todor Yalamov from Bulgaria

who later contributed actively in the group.

2.6 Technology Business Incubator’s Management Guide

The Management Guide is intended to be a resource that summarizes existing

experience and presents an analysis and recommendations on technology business

incubation that can be beneficial to incubators, start-ups, and other key

stakeholders. The document is designed and prepared as a management guide

reference for business incubators involved in ICT business incubation and is based

on a research and analysis of existing best practices and incubation models.

The guide has the following general outline; general discussion of business

incubators and technology incubators, incubation strategy in the long term which

includes, finding niche in services, financing incubators, managing the incubator

8 Taken from “Rapporteur Report – High Growth Enterprise Incubation”, Cesar Yammal


and sustainability. A second main topic is related to key challenges in technology

start-up incubation focusing on the generation and management of deal flow and

other areas such as team and management, financing the start-up and others. The

guide finishes with an analysis of three business cases focusing on sustainability,

incubator development and internationalization.

The complete study is available in the idisc platform in the files section under the

folder “Management Guide”.

2.7 Discussion events

The objective of the discussion events is to create a virtual space to exchange

ideas, opinions, questions, doubts and debates on a subject of common interest.

This has been an opportunity for participants to give their opinion and share their

experiences with the rest of the incubation community in the high growth group,

generating a learning experience from each other’s peers.

The team in charge of the discussion events was Crea-me from Colombia;

specifically the team behind this activity was Catalina Escobar, Claire Philippoteaux

and Sandra Ramirez.

The five online discussions that were held are summarized in the following table:

Table 9: Online Discussion events

Subject Key Findings Date

Access to financing sources in the different stages of ICT entrepreneurship

• Preparation is key for success. Incubators need to know what potential investors are searching for and act as a bridge between entrepreneurs and investors.

• Looking at investment as a first step is not a good strategy: entrepreneurs should be looking for opportunities to grow their business, networking, coaching and other support that will lead them to access financing sources that will in turn lead them to a more successful company.

• Large quantities of meetings with investors are necessary to become invested in. Makes networking even more important.

April 17th, 2009


Importance of angel investment networks in the development of high-growth ICT entrepreneurship

• Angel investment networks are key for the development of high growth entrepreneurship initiatives.

• In general angel investing networks have appeared after the business incubators are formed. Many incubators have supported the beginning of angel investing networks (OCTANTIS and Genesis PUC-Rio).

• In participating countries (Brazil, Colombia, Chile, Romania, Philippines, others) business angels are either recently established or in the process of establishing formally. Cases with public or multilateral support (IADB, infoDev, Corfo in the case of Chile) towards the creation of Angel Networks have been successful.

June 19th, 2009

What determines the level of investment readiness for ICT start-up

• Investors are searching for large markets as well as growth potential. Entrepreneurial teams are many times the most important at the moment of making an investment (skills, experience, can they make the delivery?).

• Areas where incubators can help entrepreneurs get “investment ready”: technical and market validation, connecting entrepreneurs to potential clients and industry experts, attracting talent to the team, conforming advisory bards that can add credibility to the start-up.

September 28th, 2009

Core challenges unique to incubation of high growth ICT enterprise

• Attracting quality dealflow is a main challenge for ICT incubation. This has lead to many different approaches at all participating incubators:

o At Octantis they developed a business plan competition named ChileEmpresario that mixes workshops, networking and tutoring in a 5-6 month process. Facebook has also been a novel way to reach out to entrepreneurs.

o Timisoara Software Business incubator is actively using a Twitter account tu promote their events and attracting high value networks for their projects. They are also promoting “Incubated Coffee” events, which is an open house once a week for an open discussion on relevant subjects.

o In St. Vincent they are using “Technology Breakfast” events to facilitate networking. Entrepreneurs showcase their innovations and receive feedback from peers as well as mentors and investors that are invited. Another interesting methodology adopted is “The Knowledge Cafe” which serves as

December 21st, 2009


knowledge sharing between mentors, potential investors and enterprises in participatory interactive sessions focused on specific topics creating possibilities for action in groups.

• Financial support must be a key issue for incubators to consider in the support process. Not only because this is a means of growth but also because when entrepreneurs run put of cash they must look for alternate ways of generating income which does not allow them to focus on their core business.

Next steps for the working group, how to develop a High Growth International Institute?

• For a continuing group it is necessary to be more active in each region and clearly state benefits for participants and attractiveness to become a member.

• Suggestion of having two lines of work; incubators and entrepreneurs.

o Incubators: activities to improve quality of performance, international task force formed by incubator managers that can share strengths with the rest of the group, selected webinars of topics of interest, online capacity building for managers, management exchange program between incubators.

o Entrepreneurs: Promotion of incubator clients. Matchmaking services for start-ups. Create linkages between incubated companies.

• Proposal of the creation of a wiki portal that will serve as a collaborative website to power the high growth community. Some content can be open to all and the rest only for members.

January 25th, 2010

The first online discussion was initiated through a forum on the Linkedin group,

which was available during one week for comments by the members, following that

week there was an online discussion through Skype. Participation in the forum

through Linkedin was low and the following conversation through Skype was

difficult to moderate and follow. The decision that was taken for the rest of the

online discussions was to initiate and inform through the Linkedin forum and then

have the interaction through a Skype chat, which is more organized and worked

effectively. The summary of the five online discussions can be found in individual

documents on the idisc platform.


3. Main Outcomes High growth working group The main outcomes of the high growth working group are summarized in the following

table:

Table 10: Main outcomes High growth working group

General Activity Outcomes

General organization

• 32 participants on the high growth working group on idisc platform

• 21 organizations participating from 18 countries

Exchange of participating organizations portfolios

• 42 start-ups from 8 incubators in 7 countries completed profile template and on idisc platform

Interviews with world class references

• 3 documented interviews with Austin Technology Incubator (Texas, USA), @Wales and SmartXchange (South Africa).

• Valuable best practices and lessons learned.

Linkedin Networking group

• Linkedin group formed with over 100 members.

• Ongoing group oriented to expand global network of participants and generate unimaginable business connections

Networking events

• 6 incubator managers from 5 countries participating in networking activities in Miami

• 5 entrepreneurs in ICT related field with a high growth potential from 5 countries trained to present to investors

• Participation in break-out session in 3rd Global Forum on Innovation & Entrepreneurship, proved an opportunity to transmit advances of the working group and raise awareness and interest in the group.

Technology Business Incubator’s Management guide

• Management guide completed and available on idisc platform

Discussion events

• 5 online discussion events took place, contributing valuable insights on topics such as; “Core challenges unique to incubation of high growth ICT enterprise”, “Access to financing sources in the different stages of ICT entrepreneurship” and others.


4. Conclusions and Next Steps The project participants hope to have been able to contribute in offering novel insights

that will be of interest to those involved in high growth ICT business incubation

(incubator managers, service providers, policymakers and others).

The first step has been taken in conforming a group that has reached a level of

outcomes detailed in the previous section that can be expanded; this section focuses

on the next steps that can be taken with the support of infoDev.

It has been agreed by the most active participants of the group that there is interest to

give continuity to the high growth working group which will also take advantage of the

momentum generated up to now. The experience with this working group hands us

elements to improve activities, general management and group in general.

For a continuing group it is necessary to be more active in each region and clearly

state benefits for participants and attractiveness to become a member or keep being a

member. One of the main challenges was to be able to generate interest and

motivation in the members of the group, there was a learning aspect in this area. The

project leader(s) must focus on having a few committed followers that in turn become

leaders of the group and are capable of motivating others9. The challenges are to build

an identity of the group, commit to the cause of the group and to the people who form

part of the group.

It is suggested to have two lines of work, incubators and entrepreneurs. Specifically for

incubators the following activities are proposed: activities to improve quality of

performance, creation of an international task force formed by incubator managers

that can share strengths with the rest of the group, development of selected webinars

on topics of interest, online capacity building for managers and management exchange

programs between incubators. In the case of entrepreneurs activities aimed at

promoting incubator clients, matchmaking services for start-ups and the creation of

9 http://www.ted.com/talks/derek_sivers_how_to_start_a_movement.html


linkages between incubated companies in different countries. It is proposed to create a

Wiki portal that will serve as a collaborative website to power the high growth

community. Some content can be open to all and the rest only for members.

Some parallel activities that are suggested are the following: Find the best way to

establish business opportunities by connecting entrepreneurs from different countries,

always with the aim of accelerating growth of start-ups. A good place to start is

following up on the start-ups that participated in the Miami networking activities and

also the start-ups that have uploaded their profiles on the idisc platform. An interesting

activity to support would be to help incubators in discovering and understanding the

international requirements of their supported start-ups, this information can be useful

as input for a larger project aimed at supporting specific internationalization efforts of

selected high growth potential start-ups. This can also lead to co-incubation and

softlanding initiatives, because incubators will understand international requirements of

their start-ups and have at their hand the international incubation network to explore

these collaborative opportunities.


5. Annexes 5.1 Template for profiles of ICT Start-ups

City, Country Website Incubator

• Executive Summary

• Main Innovation / core comparative advantage

Name of the Project

Logo

Summary of the business. Describe the products and/or services that are offered and the different parties that are involved in the business process.


• Business Opportunity

• Future Developments / Trends

•

• Possible International Collaborations / Partnerships

Description of the solution that is provided revealing important basics about the technology that is being used. Description of how this solution is better than previous solutions / solution of the concurrence. Patents / Trademarks / Copyrights filed / owned Identify the client segment and explain why they will be interested in the products and/or services. Describe the necessity that is being satisfied and the objective market.

What are the entrepreneur’s ideas to work with international partners? What contacts serve the entrepreneur? What are areas where a collaborative development adds value for the company / project?


The Team

5.2 Outline for Interview with World Class References

History of incubator/accelerator:

Founding date, founders, initial financing, focus on a certain project type, partners,

private or public organization, for profit or non-profit?

Biggest challenges to overcome and how they did it?

Business model:

How does your organization generate income? Equity, stock options? % of sales?

Renting of space/infrastructure/labs? Royalties?

Incubation operation:

What phases are included in your support model towards entrepreneurs?

What is the timeframe of these phases?

What type of services do you offer in each phase?

Application model / Deal flow generation / Selection:

How does your application model work?

Last Name First Name E-mail 1 2 3 4

What are the next steps in developing the business?


How many applications do you receive monthly?

What efforts are made in marketing?

How do you structure the selection process?

Management team:

Structure, roles and responsibilities.

Numbers:

Offices, Number of employees?

How many business ideas/projects have applied historically?

How many companies have you supported? How many projects/companies do you

currently support? What industries do they belong to (ICT)?

How many patents have supported companies generated? What are current

revenues of supported companies? Amount of total investment in companies

supported (private vs. grants)?

Financing network:

Do you have relations with angel investor networks? Venture capital firms? Other

public or private organizations that finance incubator/accelerator programs?

International operations:

Do you have offices away from your main office / outside of your borders?

Have you supported companies in their internationalization process?

How many supported companies have international clients / supply (or value-)

chain?

Does your organization have a network of international partners? Where?

5.3 Interview with IC2: Austin Technology Incubator

Isaac Barchas, Director Date: May 1st, 2009 http://www.ati.utexas.edu/


Austin Technology Incubator (ATI) was founded in 1989 by George Kozmetsky, as part

of the IC2 institute, he had the vision of supporting the transformation of the


tremendous technical talent present into companies as well as using the incubator as a

lab for students who were learning about entrepreneurship. ATI was initially funded by

a small grant from Austin and also the county. The first CEO, Laura Kilcrease, was able

to bring in experience and an extremely valuable network to the incubator.

ATI was born as a not for profit broad based incubator to support technology in

general.

Business model:

ATI generates approximately 1.3 million in revenues annually; 30% from

entrepreneurs, 50% from sponsorship (city of Austin and emerging technology fund),

10% events, 5% law firms (sponsorships) and 5% from equity.

Although equity is not a large portion of the revenues, it is important because it means

a lot for entrepreneurs, which makes them value the partner relationship.


The support process at ATI does not follow any specific phases. It is much more of an

art and not so much a set process.

The typical profile of a team that goes to ATI is the following: 2-3 people that quit a

day job, usually technologist that has a valuable technology and has put there money

into it to push the technology but haven’t been able to solve a business problem,

mainly identifying true markets, financing and talent needs.

30%

50%

10%

5% 5%

Revenue share

Entrepreneurs

Sponsorships

Events

Law Oirms (sponsors)

Equity


Approximately 70% of the support is aimed towards reaching funding. Another

important component is talent, ATI subsidizes talent (surrounds entrepreneurs with

talent) through the following:

o Student faculty at University of Texas, Austin for example in developing a

competitive landscape analysis.

o Professional staff at ATI, unique group of people. (5-6 directors,

receptionist, accountant, marketing)

o Student interns, vary 7-15 supervised by directors, normally graduate,

majority from McCombs School of Business.

o Entrepreneurial community


Isaac Barchas, recognizes that one of the weakest areas of the incubator is the

marketing towards prospective companies. Most marketing is done through face to

face marketing and many talks on campus at University of Texas, Austin.

Yearly approximately 100-120 companies apply of those 6-7 are accepted each year.

Every Friday the ATI team meets to discuss applications, those that seem interesting

move on to a success committee with experts. The main criteria are; looking at market

as the most important (the success committee calls potential customers), team can be

coachaeble, technology is validated (back up validation with experts at the University),

competitive landscape, intellectual property (experience says it is important) and

finally a very important question; Can ATI help to significantly add value?

Numbers:

Currently supporting 21 companies a stable size for ATI is between 20 and 25. Three

companies are in clean energy, six in bioscience, 11 in IT and one in wireless.


Financing network:

ATI has a close relationship with an angel investor network in central Texas and with

others in Texas. The incubator knows what the investors are looking for.

The state has a US$ 2 million fund, they make investments in exchange of warrants.


Most entrepreneurial teams have better international networks than the incubator,

although they provide international contacts as well, that can support in strategic

marketing and identifying who the customers are. Many of the good contacts that are

in the ATI network can help make international introductions.

Final comments/recommendations:

• It is extremely important to understand the incubators value proposition.

o How do I add value to my clients?

• Unless you have a fund sitting next to you, making a profit is very difficult.

• The incubator requires very talented people. Work on a talent model.

5.4 Interview with @Wales Digital

Evan Jones, Head of Digital and Incubation Date: January 20th, 2010 http://www.atwales.com/


11 6

3

1

Sector Distribution of Companies

Information Technology

Bioscience

Clean energy

Wireless


In the late 1990s the Welsh development agency had a goal to support technology

companies. They started off in the year 2000 as a test in 250 square meters, initially

only a virtual incubator. The incubator officially opened in 2001. The incubator

expanded in 2005. All there funds have been public mainly from the regional

development agency in Wales and also the European Union. It is important to mention

that in the year 2000 incubators were not well known in Wales.

Business model:

@Wales generates income in three ways:

• Charge for rent by the desk, which makes the use of space more efficient.

• Receive a fairly significant government grants, rolling subsidy incubators are

government employees.

• Charge for services, which works on the basis of “pay as they go along” they

don’t package the services.

Income sums approximately $200.000 pounds (approximately US$ 300.000) a year,

which is all for the government.


The range of support goes through marketing, technical and finance. Once the

business is selected, first thing that happens is that the incubator goes through the

needs of the business in the three aspects mentioned. By there experience usually

marketing is the largest challenge. @Wales aims at attracting companies that are on

the verge of trading.

The incubator offers nice offices and consultancy, but also training and a coaching

process, it is important for entrepreneurs to learn. Other services such as facilities

(meeting rooms), general office services, printing and photocopying and equipment

hire (laptops, projectors, digital cameras, etc.) are charged separately in most cases

on an hourly/daily/monthly basis.

The building where the incubator is located is open 24 hours 365 days a year. The

team at the incubator is conformed by seven people.



The incubator has six stages in the entry process in which they analyze six main

criteria: Do they fit the sector that the incubator is supporting? Is it a compelling idea

and solve a really big pain in the market? Have they adequately planned there

financing? Is the management team capable of carrying the job through? (most

important) Is the project worth doing is the proposal valuable? Can we significantly

add value to the company? In the following table you can see the complete process:

Table 11: Entry Process Incubator (Source: @Wales)

Stage What is it? Qualification for entry

Criteria to be satisfied

Enquiry A brief request for information about @Wales. Typically a phone call or a network conversation

None 1. Digital business

Approach Client is considering an application and would like to know more

None 1. Digital business 2. Compelling idea

Application A request for incubation

Business plan / Application form

1. Digital business 2. Compelling idea

Other factors appear competent

Team distribution The whole team

reviews the proposed incubatee

Initial contact is satisfied that business plan is competent enough for further consideration

1. Digital business 2. Compelling idea 3. Finance appears

OK 5. Proposal will add value

Team meeting part 1

Brief round-table review by all of @Wales

A team member has escalated the business plan

1. Digital business 2. Compelling idea 3. Finance appears

OK 4. Management

appears OK 5. Proposal will add

value

Team meeting part 2

Detail review by all of @Wales

Team meeting has agreed to consider plan

1. Digital business 2. Compelling idea 3. Finance OK 4. Management OK 5. Proposal will add

value 6. @Wales can help


The incubator receives approximately 50-100 yearly, each month is different, for

example, in November and December they rarely receive applications. Of that total 5-

10 start-ups are accepted. At any one time they support between 10-15 companies

and they aim at supporting them during 1 year. After there graduation they establish a

program for 2-3 more years.

Most of the marketing efforts are run through other agencies, specifically government

support agencies.

Numbers:

The @Wales team is conformed by 7 people; head of digital and incubation, IT

innovation manager, marketing manager, finance & systems, network manager, team

support and PR and marketing executive.

There are currently 13 portfolio companies and 9 viable and freestanding graduate

companies. Current in-house companies are turning over 7 million pounds a year (US$

10 million).

Financing network:

The Welsh government owns a bank that co-finances @Wales. One of the purposes is

also to co-invest with venture capital in supported companies.

One interesting fund that has invested in supported companies is the Wales Steel fund.

There is a good relationship with Xenos, The Wales Business Angel Network10, where

there are approximately 40 investors.

Another source of financing is the organization Finance Wales11 which acts as a venture

capital fund and also finances through loans.

In the incubator network there are also independent investors that are searching

constantly for business opportunities.


Welsh government has offices around the world, which serves as possible areas for

companies to leverage their operations internationally. @Wales serves as a softlanding

10 http://www.xenos.co.uk/ 11 http://www.financewales.co.uk/


incubator, supporting international companies establish in Wales. There is good

collaboration with the National Business Incubation Association members.

Most of the companies in the incubator portfolio look at the US, Europe, Australia and

New Zealand. China is in the radar also today.

5.5 Interview with SmartXchange, Centre of Excellence, South Africa

Robynne Erwin, CEO

Date: January 27th, 2010

http://www.smartxchange.co.za/


SmartXchange kicked off in July, 2004 motivated by the vision of very proactive

individuals in the local government. The incubator is located in Durban the 3rd largest

city in the country. Local funding in the local community has evolved, initially

supporting local product development and later focusing on supporting ICT as a

catalyst for change. The local government supported with a 5 year grant for the

incubator. SmartXchange is an ICT hub in the region.

The biggest challenge for the incubator has been the starting up process. Activities

such as the Smartcity forum and dialogue with government and industry have been

very successful. The alignment between the local government and the objective of the

incubator has been key to success.

Business model:

SmartXchange is a not for profit organization. The organization has 13,500 sguare

meters of office space available for supported companies. Currently the incubator

doesn’t charge for space or services. A total of 56% of the budget is currently funded

by the local government.


The first stage is Preincubation, which is planned for 6-12 months. A typical profile

applying to this stage is the following; reasonably good business idea, technically

competent, but less so in business areas, team about to form there company, no deep


market research yet. This stage focuses on validation through meetings and

networking a lot of training in technical and business aspects.

The second phase is the incubation programme, which may last up to 3 years, where

the focus is in business training, technical training, generation of work partnerships,

mentoring and monitoring. At this stage most companies are growing through

bootstrapping.

The final stage, acceleration (planned for 1 year) has begun this year, it concentrates

on innovative companies and it is planned to have a high-growth stream. The objective

is to support in the expansion outside of the province and country. To support this

stage SmartXchange has brought in government partners as well as regional partners

that open international markets, mainly looking at the rest of Africa and Europe. This

stage has in depth business analysis and capacity building, preparation on working in

different countries and government assisted trade missions and international linkages.

In the whole process, industry partners give in-kind support through their expertise

mainly with workshops in new technologies, product development, project

management and others. In parallel, industry experts are very helpful to combine

practical and academic know-how.


90% of applicants know about SmartXchange through word of mouth. When the

incubator began it was necessary to give presentations at universities and city centers.

The incubator has four intakes per year, 6-12 projects apply for each intake. The

incubator meets with all applicants and then selects those that meet their criteria to

participate in a panel that will make the final decision to enter. The main admission

criteria (for the incubation phase) are the following:

• Legal entity in the ICT sector

• SMME in size and nature

• Total annual turnover must be less than R26 million (approximately US$ 3,5

million)

• Total asset excluding fixed property must be lass than R5 million

(approximately US$ 700,000).

Numbers:


The average revenues of supported companies is R5 million (approximately US$

700.000) During 2009 SmartXchange supported 55 Small Medium and Micro

Enterprises (SMME), 10 in preincubation, 38 in incubation and 7 in Acceleration. In

2010 they are supporting 60 SMME of which 16 are in preincubation.

Financing network:

Scarce relations with venture capital funds, in general the experience with venture

capital and entrepreneurs has been negative. Most of the growth of the companies has

been generated by bootstrapping strategies.


The international arena is very new for SmartXchange. During 2009 was the first full

graduation. The acceleration phase will be able to formalize this during 2010.

Final comments/recommendations:

• Big part of the success of the incubator has to do with the development of the

ecosystem in general that will support and strengthen the entrepreneurial

community. It’s a process to create the ecosystem, it takes time and it is part

of a collaborative effort. It is necessary to have support from different players,

private and public.

• It is recommended to build local success first. Financing development and

expansion of the incubator is a main challenge.

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