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The Smart Guide to Innovation-Based Incubators (IBI)
EN
February 2010
The EUs Cohesion Policy has been supporting authorities and stakeholders to deliver innovation in their regions for many years.
Promoting incubation and growth of small innovative firms is singled out in the EU2020 strategy, proposed by President Barroso, as one of the ways of creating value by basing growth on knowledge.
Given the huge diversity of regions across the EU27, and the great complexity of innovation processes, we need to gather forces for this task. This guide shows that Commission departments working together can make it happen and reach a larger number of Managing Authorities and stakeholders.
It is an easy-to-read guide for those directly involved with delivering innovation in the regions - those who create and design the projects that make innovative businesses strive, that bring new entrepreneurs to the market place, and that help to transform ideas into action.
We are proud that the European BIC Network, launched in the mid 80s under Cohesion Policy, is now an independent organisation globally recognised for its expertise in incubation processes and the provision of high quality services to businesses and innovation. This guide owes much to their existence.
We hope that you will find it a valuable tool for action.
New knowledge and new ideas are created every day across Europe. Transferring them into real innovation - a new economic activity that creates jobs and wealth - is facilitated by supporting those that have been inspired by new ideas and knowledge.
Business incubators have a long history in supporting research
and development based start-ups from academic and research institutes. But with the changing nature of innovation, the incubators and the support services they provide must also be open to change.
Business incubation for knowledge intensive services or in the creative industries has to respond to needs which are different from those for biotech companies. The case studies included in the guide show this immense diversity of creativity as source for innovation.
Good incubation services have to cover a broad range of innovation support services in the region and in Europe. Ever more start-up companies are born-globals, based on a business idea that immediately addresses an international market.
The guide provides several examples of how incubators acting as networks successfully support young companies to make the most of the opportunities offered by the EU.
Katarna MathernovDeputy Director GeneralDG Regional Policy
Foreword
Franoise Le BailDeputy Director GeneralDG Enterprise and Industry
The Smart Guide to Innovation-Based Incubators (IBI)
The guide was prepared by the EBN team, Mr. Giordano Dichter (Quality &
Technical Assistant Manager), assisted by Mr. Gonalo Reis (Quality Officer)
and by Mrs. Nathalie Marchand (Communication Manager). It was supervised
by Mr. Philippe Vanrie (CEO).
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Contents1. Tostartwith,afewquestionsandtheiranswers........................................................................4
1.1 WhyaSmartGuideonInnovationBasedIncubators?...........................................................4
1.2 Whatisinnovation?.................................................................................................................4
1.3 Whatisincubation?.................................................................................................................5
1.4 Whatisanincubator?.............................................................................................................6
1.5 Whatisaninnovationbasedincubator(IBI)?.........................................................................8
2. SettingupanInnovationbasedincubator....................................................................................11
2.1 TheMissionstatementandthestrategicgoals....................................................................11
2.2 Thepreconditions..................................................................................................................12
2.3 PositioninganIBI...................................................................................................................13
2.4 EngineeringtheIBI................................................................................................................16
2.5 AfocusontheservicesofanIBI............................................................................................19
2.5.1 Servicesinthepreincubationstage.............................................................................19
2.5.2 Servicesintheincubationstage....................................................................................20
2.5.3 ServicesforexistingSMEs.............................................................................................23
2.6 OrganizationofanInnovationbasedincubator...................................................................24
2.7 CostandincomeModel.........................................................................................................27
3. NetworkingofanIBIforthebenefitofanentrepreneur...........................................................29
4. TheimpactassessmentofanIBI...................................................................................................33
4.1 Firstsomequestionsandtheiranswers..........................................................................33
4.1.1 Whatismonitoring?...................................................................................................33
4.1.2 WhatisBenchmarking?.............................................................................................33
4.1.3 Whymonitorandbenchmark?.....................................................................................33
4.2 Indicators...............................................................................................................................34
4.3 Applyingindicatorstotheincubationprocess......................................................................35
5. Tosummarize12tipsifyouareplanningtosetupanIBI.........................................................37
6. Bibliographicreferences................................................................................................................38
6.1 Publications...........................................................................................................................38
6.2 Websites................................................................................................................................38
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TableofFiguresFigure1:theincubationprocess.............................................................................................................6Figure2:IBIs,whereentrepreneurshipmeetsinnovation.....................................................................8Figure3:breakdownofprojecttypologywithintheBusinessInnovationCentres(sourceEBNqualitysystem)....................................................................................................................................................9Figure4:Vision,Mission,GoalsofanIBI..............................................................................................11Figure5:thepreconditionsforsettingupanIBI.................................................................................13Figure6:factorsinfluencingthepositioningofanIBI..........................................................................14Figure7:IncubatorswithinScienceandTechnologyParks(Source:IASP)...........................................15Figure8:publicsupporttotheregionalsystemsforinnovation..........................................................15Figure9:mainissuesconcerningthesetupofanIBI...........................................................................16Figure10:thelegalstatuswithintheEBNnetwork(source:EBNqualitysystem)...............................17Figure11:targetbeneficiariesandendusersofanIBI........................................................................18Figure12:keyqualificationswithintheEBNnetwork(Source:EBNQualitysystem)..........................19Figure13:thepreincubationstage......................................................................................................19Figure14:theincubationstage.............................................................................................................20Figure15:somenumbersonphysicalincubationinEurope(source:EBNQualitysystem).................21Figure16:breakdownofaccesstofinanceservicesofferedinEuropebytheBICs(Source:EBNQualitysystem)..................................................................................................................................................22Figure17:mainservicesforSMEsofferedbyanIBI.............................................................................23Figure18:toolstoeasetheincubationprocess...................................................................................23Figure19:servicesmostoftenprovidedintheUKIBIs(Source:UKBI)................................................24Figure20:issuestoconsiderwhenplanningtheinternalorganizationofanIBI.................................24Figure21:theneededinfrastructure....................................................................................................25Figure22:thehumanresources...........................................................................................................26Figure23:thesizeoftheBICsnetworkedbyEBN(Source:EBNQualitysystem)................................27Figure24:mainsourcesofincomeofanIBI.........................................................................................27Figure25:maincategoriesofexpensesofanIBI..................................................................................28Figure26:examplesofnationalnetworksofIBIs.................................................................................31Figure27:exampleofspecialpurposenetworksforIBIs.....................................................................32Figure28:SMARTIndicators.................................................................................................................35Figure29:someindicatorsassociatedtotheincubationprocess........................................................36
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1. To start with, a few questions and their answers.
1.1 Why a Smart Guide on Innovation-Based Incubators?
InnovationbasedincubationisnotthemostrecentsubjectinEuropeperse.itisoveraquarterofacenturythattheEuropeanCommissionhastriggeredthephenomenathroughtheestablishmentofpoliciesand actionsaimedatboosting innovationwithinEuropeasamethod to support regionaldevelopment practices and SME competitiveness. Indeed itwas over 25 year ago that DGRegiolaunchedtheconceptoftheEuropeanCommissionBusinessandInnovationCentres(ECBIC).Thiswas lateron takenonboardbyDG Enterprise and Industrywhichdeveloped aquality system tomanagetheECBICLabel.Over150fullycertifiedBICsarenowworking inEU27onmorethan200sites, networked and supported by EBN (the European BICNetwork), anNGO based in Brussels,created25yearsgoat the initiativeof theEC,aswell! ManyothernonECledexperienceshavesprungaroundEurope,and innovationbased incubatorsarenowarealityallovertheworld.Afterover25yearsofpracticesandpolicieslessonshavebeenlearnedontheconceptofinnovationbasedincubationandmorespecificallyontheconceptofinnovationbasedincubators(IBI).Itisnowadayspossibletounderstandwhatarethekeyelementsoftheirsuccess,whattotake intoconsiderationwhen a region, or a local territory, is thinking to resort to this tool to strengthen and carry outpolicies for innovation and SME support, and, mostly, what to do and what not to do whenpositioning,engineeringandorganizingan IBI.Hence,theaimoftheSmartGuide istoprovidethelocalstakeholdersofaregionincludingtheManagingAuthoritiesofCohesionPolicyFundsaninsightonthescopesofIBIsandonthepathsandstepsneededtosetupsuccessfulones.ThisSmartGuideisaddressedtothem.Itiscomposedoftwoparts,thefirstonehighlightingtheconditionstomeet,theactorstogather,theservicestodevelop,thecoststofaceandthetargetstomeasure,tocreatesuccessful IBIs, the second one describing study cases which have been analyzed in Europe andbeyond1.
1.2 What is innovation?
Probably thereareasmanydefinitionsof innovationas thenumberof innovationpractitionersonthefield,sowhenassessingwhat innovation is, it isadvisabletousethewidestdefinitionpossible.Whereas itcanbestatedthatTo innovate istheapplicationofsomethingnewforaspecificuse.Whoeverwilluse the innovationwill thereforeperceiveanaddedvalue in its introduction,addedvaluewhichmaybemeasuredinmanyways,notonlyinfinancialterms.Thisleadstothefollowingdefinitionofinnovation:
Innovationisachangethatcreatesand/oraddsvalue,andprovidesacompetitiveadvantageHEREandNOW
1ToviewthestudycasespleaserefertothefollowingURL:http://ec.europa.eu/regional_policy/sources/docoffic/working/sf2000_en.htm
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To innovate implies a very sharp understanding of the reality, and a high degree of creativity.Understandinghow thingswork,how theycanbe improvedandwhat isactuallymissing (yetnonexisting).Applyingcreativityand imaginationtocreate,scoutandfindnoveltieswhichuserswouldperceiveashavinganaddedvalue, thereforeprovidingawider, ifnotcompletelynew,market forthem,andthereforehighlightingtheexistinglinksamonginnovationandentrepreneurs.
Already in 1934 the Austrian economist Joseph Schumpeter, the first economist to address theimportanceof innovationwithin theeconomic cycles, consideredentrepreneurshipwitha specificemphasisoninnovation.Inhisview,stillvalidtoday,innovationdealswith:
newproducts, newproductionmethods, newmarkets, newformsoforganization
Moreover innovation and entrepreneurship are profoundly embedded in their territorial realities,whichintheEU27,differenormouslynotonlyintermsofeconomicsectors,butalsointermsoftheirhistory, their cultures, their traditions and their political background. Therefore, while the basicconceptsofentrepreneurship, innovationand incubationand theassociated terminologymustbecommonlyacceptedandshared,whenputtingintopracticeactionstowardsthecreationofnewIBIs,the different realities and situationsmust be taken into account since differentworldswill havedifferentneedsandthereforedifferentanswerstosatisfythem.
1.3 What is incubation?
Incubation is a process which tends to be activated whenever there is a need to supportentrepreneurs in developing their own business. The concept of innovation is not yet beingconsideredasinnovationandentrepreneurshiparetwoseparatephenomena,albeitintertwinedtoagreatextent.The samedefinitionsofentrepreneur varywithina rangewhereatoneextremeanentrepreneurisanyonewhoisselfemployedorinbusiness,andattheotheranentrepreneurisapersonwhopioneerschange.
The process, or parts of it, is put in place whenever there is a need of nurturing wouldbeentrepreneurstothinkoverandfurtherdevelopthebusiness ideaandtransforming it intoaviableandsustainableactivity.
Therearethreestagesofincubation:
Preincubation relates to the overall activities needed to support the potential entrepreneur indevelopinghisbusinessidea,businessmodelandbusinessplan,toboostthechancestoarrivetoaneffectivestartupcreation.Itusually impliesafirstassessmentofthe idea,training,anddirectonetooneassistancenecessarytoputtheclientintheconditionstowriteafullycompletebusinessplan.Universityaffiliatedincubatorsareusuallypreincubators.
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Incubation concerns the support given to the entrepreneur from the startup to the expansionphase.Typicallythis isamidtermprocess, lastingusuallyforthefirstthreeyearsofactivityofthenewlyestablishedcompany,whicharetheyearsinwhichitissafetosaywhetherthenewventureissuccessful andhas a good chance todevelop into a fullymature company. The actions activatedgenerallyareaccess to finance,directcoachingandmentoringservices,aswellashostingservicesandspecifictraining.Thereforephysicalincubation,althoughaveryimportantservice,isasubsetoftheoverallincubationprocess.
Postincubation, relates to the activities to be carried out when the company has reached thematurityphase,and therefore is ready towalkon itsown feet. It is the timewhen, If ithasbeenphysicallyincubated,thecompanywillleavetheincubator.Variousservicesmightstillbeneededbythe SME for example to increment its sales or improve its productive processes, such asinternationalization services or innovation introduction through scouting and detection activities.Incubatorspositionedaspostincubatorssometimerenamethemselvesasaccelerators.
1.4 What is an incubator?
An incubator is a placewhere the incubation activities are carried out, andwhere thewouldbeentrepreneurs and the existing SMEs find a suitable place, in terms of facilities and expertise, toaddresstheirneedsanddeveloptheirbusinessideas,andtransformthemintosustainablerealities.
An incubatormaystillbean incubatoreven if itdoesntprovidephysical incubationservices,andconcentratesonvirtualincubation2.
2Virtualincubation:thisterminologyappliestoincubatorswithoutwallsandtoeplatformsofonlineservicesdeployedbyincubatorswithphysicalpremises.
Figure1:theincubationprocess
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Typologiesofincubators:
Preincubators typicallyoffer the services related to thepreincubationphaseof incubation.Theyoffertheexpertise(coachinganddirectadvice)andthefacilities(minimumaworkstation)tosupportpotential entrepreneurs in thedevelopmentof theirbusiness ideas and in the elaborationof thebusinessplan.
Academic incubators arebased inuniversities and research centres andprovide support to thosebusinessideaswhicheitherareelaboratedbystudentsorarespinoffsofR&Dactivities.
Generalpurposeincubatorsprovideallthesetofservicesfromthepretothepostincubationphaseandprovidethesupporttoallthosewhohaveafeasible ideanotwithstandingtheprovenanceandtheeconomicsectorinvolved.
Sectorspecific incubatorsprovideall thesetofservices from thepre to thepost incubationphaseandprovidethesupporttoallthosewhohaveafeasibleideawithinaspecificeconomicsector(e.g.environment,agrofood,chemicals,etc.),whichistheexpressionoftherealendogenouspotentialoftheterritorywherethe incubator is located.Accordingtothespecificitiesofthesector,thesemayrequirespecificinfrastructuretomeettheneedsoftheclientcompanies.
Enterprise hotels, while providing business services to the supported entrepreneurs, concentratetheireffortmainly inphysical incubationactivitiesandareacommon reality in largemetropolitanareas,whereproductionandofficespacerepresentanimpedingfactor.
The Esinet Network, bringing together IBIs active in Space & Sat technologies
ESINET was launched in 2002 with the main objective to create an interactive community of start-ups, spin-off, entrepreneurs and early stage ventures sharing common interest for innovative Space & Sat technologies, systems and applications.
ESINET has become the platform of successful space and satellite tech transfer applications that leads to company creation and acceleration, anchored on a limited number of flagship Innovation and Incubation Centres: the ESA-BICs, which are located in ESA sites (Noordwijk, Frascati-Rome, Darmstadt, Redu-Wallonia, Vila Franca-Madrid) or ESA associated sites (Oberpfaffenhofen, Toulouse, Harwell, etc), and EBN Incubation Centres (Bordeaux, Barcelona, Lige, Stevenage, Nottingham, Burgos, Trieste, Sofia, Luxembourg, Caen, and others).
Moreover, ESINET brings together a community of SMEs and large corporate from both the space sector and non-space sectors, major regional stakeholders and established entrepreneurs, all supported by ESA and EBN on their road to success.
http://www.esinet.eu/
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1.5 What is an innovation-based incubator (IBI)?
An IBI isabusinessdevelopmentcenter fornewentrepreneursandSMEs that intend todevelopinnovativeideas
Thereisasubsetwherethedomainsofentrepreneurshipandofinnovationfindacommonground,where ideas are both innovative and profitable, which can be translated in sound businessesaddressingspecificmarkets.Ifentrepreneurshipcanexistwithoutinnovation,theinversecannotbestated.An innovation requires entrepreneurship to finally exploit the added value the innovationgenerates.
In thiscase theentrepreneurcanbeseenas theagentofchange thepersonwhocancreatevaluefroman innovative idea inacontextofchangeanduncertaintyandthemarket isthetriggerforittohappen.
Figure2:IBIs,whereentrepreneurshipmeetsinnovation
Innovationbased incubators work in the intersection between the sets of innovation andentrepreneurshipsupportingentrepreneurstoprofitfromtheaddedvalueofinnovativeideas.
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Innovationbased incubators support innovative business projects which could be eithertechnologicallyorientedornontechnologicallyoriented.Technology therefore isnot theonlyunitonwhichtomeasurethedegreeofinnovationofabusinessidea.
Innovation canbe found indeed in technology,but also indownstream applications (of a generictechnology),inadvancedandinknowledgeintensiveservices,inbusinessmodels,inmarketingandcustomerledprocesses,indesign,instandards,inorganizationandmanagement,
originatesfromtheintentiontosatisfytheneedsexpressedbythemarket generatesincrementalinnovation usuallyfitsintoalreadyexistingmarketsandtheirevolvements
Demandpullinnovation
originatesforR&Dactivitiesandfromcompetitiveadvantagesprovidedbynewtechnologies
generatesmoreradicalinnovations generatesnewmarkets
Technologypushinnovation
Other
Nontechnologicalinnovationoriented
Technologicalinnovationoriented
2006
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Figure3:breakdownofprojecttypologywithintheBusinessInnovationCentres(sourceEBNqualitysystem)
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The EC-Business and Innovation Centres (EC-BICs)
BICs are support organizations for innovative small and medium sized businesses (SMEs) and entrepreneurs.
They are recognized through a quality certification scheme, which enables them to obtain the EC-BIC Label (the only EC label qualifying IBIs at European level and beyond).
The BICs are an instrument for regional development developed initially by the European Commission DG-Regio in the mid 80s and has subsequently been adopted in all Europe and beyond.
Their mission is to contribute to the overall economic and social development of the regions through the implementation of support services to entrepreneurs, helping them to transform into reality their innovative business ideas, and the delivery of tailored services to existing SMEs, aimed at modernizing and innovating them.
To this end Business and Innovation Centres offer a tailor-made, integrated system of services, making sure that the overall incubation process is being delivered, networking its services and activities with those of the other key actors of the regional system for innovation.
BICs can assume many forms and can organize themselves in different ways, as long as they respect the EC-BIC Quality Mark Criteria, which rule the granting of the EC-BIC Label.
Today there are more than 150 BICs networked by the European BIC Network, the major network in Europe dedicated to innovation-based incubators, covering more than 200 operational sites.
For more information http://www.ebn.eu
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Afterthisgeneraloverview,theIBIneedstogoastepahead,andtakeintoaccountthespecificitiesoftheregion,inparticular:
identifyingthoseeconomicsectorswhichholdastrategicpositionasbeingthosewithsoundinnovationpotential;
identifying thenetworkwithwhich itwillwork toaccomplish itsmission,especially if theregionisactiveinR&D.
An IBIwillhardlyaccomplish itsmission if itdoesntcooperatewiththeotheractors intheregioninvolvedinlocaldevelopmentactions.
Strategic goals are even more closely related to the specificities of the regions in which an IBIoperates because theywill be directly linked to the definition of the services and actions itwillundertakeintheareaitserves.TheydefineclearlythedirectionthattheactionsoftheIBIwillfollow,aswellasthequaliquantitativeobjectivestheyshouldreachinthemidterm
Given the mission statement, which should have already identified the areas of competitiveadvantage,settingupstrategicgoalsmeansmainlytohaveavisionofthefutureoftheregioninthemidtermandtoquantifyrealisticandfeasiblequaliquantitativeobjectives,andthereforebeingabletoidentifytherelevantactionsandservicesthatanIBIshouldputinplace.
2.2 The preconditions
Beforesettingupan innovationbasedIncubator it isnecessarytoanalyzetheregionandverifytheexistenceofsomepreconditionswhich,ifabsent,wouldimpedeitssuccess.
Thepotentialforendogenousregionaldevelopmentaninnovationbasedincubatorwillworksupportinglocalentrepreneurstodevelopsustainablebusinessesinthosesectorswherethereisacompetitiveadvantageandwhereinnovationisanessentialingredient.
Theexistenceofa specific localandglobalmarketdemandan innovationbased incubatorshouldbe setupwhere there is a request, althoughmaybenot yet expressed,of incubationservices.Itmightbenecessarytomakethedemandemergethroughpropercommunicationandnetworkingactivitiesbeforetheactualstartupofthe incubator,butapropermarketresearchmust be undertaken in order to understand whether there is a need for such a specificinstrumentorifitisbettertostartwithotherformsofbusinesssupportorganizations.
Arealneedtocovergap(s)intheservicesupplychainaninnovationbasedincubator,asanypublicinterestserviceprovidershouldbesetupwhenrealaddedvaluewillbedeliveredintheregion.Thismeans thatamongall theotherbusiness serviceproviders there isnonewhich istackling innovation,or that, if there is, the servicesdeliveredaredifferent,oraredirected toentrepreneurs in different sectors, hence the new incubator will not be duplicating alreadyexistingefforts.
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Figure15:somenumbersonphysicalincubationinEurope(source:EBNQualitysystem)
IntellectualPropertyrightsparticularlyfundamentalininnovationbasedincubators,sinceitmainlyapplies for the patenting of innovative products and services, the support on IP issues is alsonecessary fornon innovative companies, if they intend toenteranexistingmarketwithproductswhichmaybealreadycoveredbypatents.
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Page|22
Figure16:breakdownofaccesstofinanceservicesofferedinEuropebytheBICs(Source:EBNQualitysystem)
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3. Networking of an IBI for the benefit of an entrepreneur
Thewordnetworkisdefinedasalargesystemofmanysimilarpartsconnectedtogethertoallowmovementorcommunicationbetweenoralongthepartsorbetweenthepartsandacontrolcentre
In thecaseofan IBI it ispossible todefine twomainnetworkingdomains, the firstonebeing theregion,where themain scope is toassure that the regional system for innovation,backedby theregionalinnovationstrategies,recognizesthefunctionandthevaluefromtheIBI.Thesecondoneistheoverregionalnetworking,whereanIBIcanfindgroundstonetworkandbenchmarkwithitsownkind,other IBIspresentatnationaland/or international level, inotherregionsofthecountryoroftheworld.
WhileithasbeenalreadymentionedwhyregionalnetworkingisfundamentalfortheIBIonceithasbeen positioned,why should it network at an overregional level? There aremany answers, butexperiencehasshownthatthefollowingarethemostfrequent:
Networking enables to benchmark yourself with your peers, catch inspiration, and takeappropriatemeasuresforcontinuousimprovement.
Networkingprovideschances tomeetotherpractitionersanddevelopcommon ideas thatwillbenefittheregionalsystemforinnovationandtheendusersoftheIBI.
Networkingprovideschancestopromotetheinnovationsataninternationallevel,whichcanlead to commercialization and internationalization opportunities for the entrepreneurssupportedandtheassistedSMEs.
Someinnovativecompaniesarebornglobalandcanaccessinternationalmarketsfromtheonset.Networkingprojects like theEurofficeNetworkallowyoungcompanies toexploreinternationalmarkets at very low costs, supporting them to take roots inmanyEuropeanmarketsatatime(e.g.softlanding,businessboosting).
All the aforementioned reasonswillbetter support the IBI inpromoting itself and simultaneouslyincreaseitssustainabilityovertime.
Networkingisessentialatalllevels,internationalandnational,andmanynetworksexist,somebeingdedicatedsolelytoIBIsformoregeneralpurposes,whileotherstrytorespondtospecificnichesoftheIBIsincubationprocessesandservices.
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