Willie O' Siyanbola, B'Sc Ife, M'Sc, Ph'D Sussex, FMSN Director GeneralChief Executive, National Cen

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Willie O. Siyanbola, B.Sc (Ife), M.Sc, Ph.D
(Sussex), FMSNDirector General/Chief Executive,
National Centre for Technology Management
(NACETEM), Obafemi Awolowo University, Ile-Ife,
Nigeria
TECHNOLOGY INCUBATIONDoes it Work, Can it work?

• Presented at
• A Program Organised by the,
• Federal Polytechnics Nekede,
• Owerri, Imo State

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ACKNOWLEDGEMENT

• The Rector, ENGR. O. I. NWANKWO, fnse
• Director, RD Dr. F.A. Onukogu,
• Other Principal Officers

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Outline of Talk

• Acknowledgement
• Concept of TBICs (Definitions, Types,
  Classification, Characteristics and Benefits)
• Does it work? Success stories of selected
  countries
• Can it work? Scorecard of Technology Business
  Incubation in Nigeria
• Is Otigba ICT Village Experience Any Lessons?
• Concluding Remarks

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RD Commercialization

• Is also Known as Technology Commercialization
• Refers to the process of translating Research
  Results from Drawing Board to Marketplace
• Requires Entrepreneurial Skills distinct from
  Academic Skills
• Uses Technology Transfer Concept to Bring
  Intellectual Properties Developed at the
  Knowledge Centres to the Marketplace thereby
  Bridging the Gap Between Inventions and
  Innovations (Academics Industry)

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Technology Incubation

• A new form of social institution which provides
  services and nurtures high-tech firms during
  their start-up and early growth phases. They are
  technology-oriented variants of business
  incubators.
• Designed to create a favourable entrepreneurial
  environment and facilitate technology transfer
• Catalyse the firm's early growth and enhance the
  success rate of enterprises.
• Known by various names and definitions in
  different countries e.g.Innovation Centres,
  Science Parks and Science and Technology Centres.
• There is no single model or definition of a TBI
  because the concept differs from one country to
  the other.

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Origin and Evolution

• Incubators Nurture Young Firms, Helping Them to
  Survive and Grow during the Startup Period when
  they are Most Vulnerable.
• The concept of incubators was first initiated in
  the United States in the 1950s
• Today, Technology Incubators had become an
  instrument for promoting a more diversified
  industrial base for a regional economy and
  stimulating local job creation and wealth
  generation.
• The incubation process involves a number of
  stakeholders and operates in terms of a simple
  input-output model

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The Incubation Process

• Inputs
• These mainly consist of the inputs made by
  stakeholders (e.g. providing finance), management
  resources, and projects put forward by
  entrepreneurs
• Processes
• The various inputs are brought together in the
  business incubation process through the provision
  of incubator space and other services to
  companies
• Outputs
• Successful companies graduate with positive job
  and wealth creation impacts on local economies.

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Incubation Process
Government
Community Centres
Business Sponsors
INCUBATOR PROGRAMME
Flexible Lease Space Shared Business
Services Business Advice/Mentoring Business
Networking Education and Training Intellectual
Property Support Access to Equity and Debt
Capital
Incubator Management
Entrepreneurs
Graduate Businesses
Community Impact
Economic Impact
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COMMON OBJECTIVES FOR TBICs

• Economic Development
• stimulating job creation and industrial
  restructuring
• Technology Commercialization
• commercialization of RD results and linkage of
  industry with research institutes and
  universities
• Property Venture/ Real Estate Development
• Entrepreneurship

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Classification of Incubators

• Incubators can be classified by
• sponsors/ stakeholders of the incubators
• objective and characteristics of tenant firms
• space and level of manufacturing activity in the
  incubators and
• a mixture thereof.

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Classification of Incubators

• By objectives and characteristics
• sponsors/ stakeholders of the incubators
• objective and characteristics of tenant firms
• space and level of manufacturing activity in the
  incubators and
• a mixture thereof.

• By a mixture of indices
• Technology Incubators
• Technology Innovation Centres
• Technology Business Incubators

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BASIC SERVICES PROVIDED BY TBICs

• Physical Infrastructure (shared office,
  production space, laboratory and testing
  facilities)
• Management Support (expert advice on business
  know-how, technology assessment, market studies
  and marketing, recruitment of qualified staff )
• Technical Support (links to technology and
  manufacturing extension services, libraries and
  data bases, consultancy)
• Access to Finance (organize access to venture
  capital, loan guaranteeing for tenants, share of
  equity in tenant firms)
• Legal Services (legal assistance in company
  incorporation, drafting of licensing agreement,
  patents etc.)
• Networking (connecting tenants with other firms
  with similar technology focus and other
  specialist on relevant data bases)

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DISTINCT CHARACTERISTICS OF TBIs
Generally linked to knowledge centres e.g.
universities, polytechnics, research institutes.
LINKS
Established within a technology park or close to
other sources of technological support
LOCATION
Management mentoring staff require specific
expertise in development of technology-led
businesses
STAFF
May require specific equipment (computing,
testing, rapid prototyping, etc.) and other
technical expertise
SERVICES
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BENEFITS

• For RD community
• research commercialisation
• interaction with industry
• additional income

TBI

• For tenant companies
• access to resources
• reduced risk time to market
• improved business skills

• For corporate sector
• technology acquisition
• investment choice
• social responsibilities

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BUSINESS INCUBATORS AROUND THE WORLD IN SELECTED
REGIONS (2001)
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INCUBATION PRACTICES AROUND THE WORLD

• Incubators have been widely utilised in several
  countries of the world as an economic
  development tool.
• According to a recent 2001 estimate, there are
  over 4000 incubators world-wide.

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TBI PROGRAMMES IN OTHER COUNTRIES

• Singapore
• Malaysia
• Philippines
• Egypt
• South Africa
• China
• Israel

• Germany
• United States
• Japan
• United Kingdom
• Republic of Korea
• Uzbekistan

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GENERAL CHARACTERISTICS

• Tenant firms of Technology Incubators are
  start-ups or spin-off firms, which are
  established specifically to Exploit Technologies
  that are developed most often in the nearby
  Tertiary Institutions, Research Institutes or
  Private Laboratories
• The proximity of the incubators to the knowledge
  sources enables the firms to have adequate
  interactions required to sustain the exploitation
  of the emerging technologies.

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GENERAL CHARACTERISTICS (contd)

• The effectiveness of the incubation process could
  be measured by the rate of graduation of the
  tenant firms.
• The performance of the graduated firms needs
  monitoring to enable the incubators follow their
  progress in the business world.
• Thus, coordination, monitoring and impact
  evaluation of technology incubator outputs are
  essential.

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Some Interesting Statistics

• Reports indicate that about 47 per cent of
  incubated firms survive after four years and only
  38 per cent survive after six years in the United
  States of America (USA) .
• In France, only 8 to 20 per cent of incubator
  firms fail after two years as compared to 31 per
  cent of new firms in general,
• While about 50 of graduate firms in Australia
  were still in business eight years after
  graduation compared to only 5 per cent of
  non-incubator firms

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Some Interesting StatisticsSpecific Countries
Examples

• UZBEKISTAN
• ISRAEL
• CHINA

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TBIs IN UZEKISTANObjectives

• Development of SME business by creation of
  favorable economic conditions for setting up and
  growth on new enterprises and business projects,
  in particular innovative ones
• National TBI programme operational since 1994
• 23 TBIs established
• RD Background
• 14 general ST programmes new technologies,
  materials, etc.
• 18 sectoral ST programmes IT, environment,
  agriculture, etc.
• 11 basic research programmes physics, chemistry,
  biology, etc.

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TBIs IN UZBEKISTANResults/Impacts

• 400 business projects prepared
• 100 graduates
• 245 tenants
• More than 100 companies received risk capital
• 2800 jobs created
• 12000 people trained

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ISRAELS TECHNOLOGY INCUBATOR PROGRAMMEObjective
s

• Nationwide technology incubator programme was
  launched in 1991 to utilize the ST potential of
  immigrants from the Soviet Union. There are 26
  technology incubators in Israel today.
• Technology incubator support fledgling
  entrepreneurs and opportunity to develop their
  innovative technological ideas and set up new
  businesses in order to commercialize them.

Incubator Tenants
immigrants
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ISRAELS TECHNOLOGY INCUBATOR PROGRAMME Results

• More than 250 technological projects are being
  carried out in the incubators
• By the end of 2006, over 1000 projects had
  matured and left the incubators
• 51 of the graduates are still in business and
  have 1,400 employees
• Total private investment obtained by the tenant
  companies is more than 1.5 Billion Dollars
• Technology incubators have become massive
  repositories of potential ideas for new high-tech
  ventures in the future

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Total Cumulative Private and Government
Investment In Graduate Incubator Companies in
Israel by 2006
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TBIs IN CHINA

• Philosophy
• First TBI formed in 1987
• Modeled after best practices used in developed
  countries
• Adapted to specifically suit Chinas unique
  business conditions
• Objectives
• To offer hi-tech stat-ups with optimal incubation
  services
• To offer an environment for market exploration
  and international cooperation
• Training founders of companies to become mature
  entrepreneurs
• Form part of major measures to help develop
  Chinas hi-tech industry

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TBIs IN CHINA Results

• As at 2001 China has
• More than 400 various types of TBIs
• Comprising -
• 280 Innovation Centres
• 48 University-related Science Parks
• 44 Pioneer Parks for Returned Overseas Scholars
• 22 Science Parks

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China TBIs Result 2001 and 2006
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China TBIs Development Trend 2008 3 Billion
incubation fund

• Plans to Encourage the Entrepreneurship to Bring
  out the unprecedented tide of technology
  innovation
• Perfect technology incubation system
  comparatively
• Become the new beginning, hot spot, brilliant
  spot for the implementation of Indigenous
  Innovation and the development of local economy

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TBIs IN CHINA Impacts

• Export earnings rose to US 1.5 Billion
• More Incubation expertise already being exported
  (at the invitation of UNDP, UNESCAP and UNESCO)
• Over 200 incubator managers trained
• Good infrastructure (real estate, information
  network and venture capital)
• 4- step incubation process developed
• Abundant lessons and resources to draw on during
  Chinas reform of ST and economic development
  campaign

PROJECT ENTERPRISE LARGER CORPORATION
MULTINATIONAL
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TECHNOLOGY BUSINESS INCUBATOR IN NIGERIA

• Concept was introduced to the Nigerian Government
  by UNDP UNFSTD in 1988
• Consortium of 3 firms was commissioned to advise
  on the desirability and implementation modality
  (those 3 firms are NISER, OAU and a private
  consulting outfit)
• First TBI in Nigeria was established in Agege in
  1993, followed by Kano and Aba in 1994 and
  1996 respectively. The 3 centres are industrial
  nerve centres in the regions where they are
  located
• These centres were established by the Federal
  Government to be managed by the FMST. Since then,
  17 additional centres have been established
  across the country (see map)

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MAIN OBJECTIVES

• To boost the industrial base of the country
  through commercialisation of RD results, upgrade
  and enhance the application of indigenous
  technologies
• To nurture the start-up and growth of new
  innovative business engaged in value-added and
  low, medium and high-technology related
  activities over a period of time
• To promote functional linkage between
  Research/Industry
• The Programme was established by Decree No 5 of
  1995 and has been under the supervision of FMST,
  through NBTI.

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ENVISAGED BENEFITS OF TBICs IN NIGERIA

• The expected benefits of TBICs to the Nigerian
  Economy are listed as follows
• Promotion of Indigenous Industrial Development
• Innovation and Commercialization of RD Results
  from Research Institutes and Knowledge Centres
• Economic Diversification Through the Development
  of SMES
• In Manufacturing and Services
• Linkage of SMEs with Big Businesses by Acting as
  Local Suppliers thus Reducing Dependence on
  Imports
• Job Creation by New SMEs to Reduce Unemployment

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CHARACTERISTICS OF NIGERIAN INCUBATORS
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SOME ACHIEVEMENTS OF THE INCUBATORS
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OBSERVATIONS ON THE INCUBATORS IN NIGERIA

• Although there are 17 TBIs, many of them are yet
  to become functional even after about 15 years
• Tenants get engaged in buying and selling while
  many are businesses that had nothing to do with
  research findings, technology value addition
  and commercialization of technology
• Originally conceived as a tripartite arrangement
  between the Federal Government, host State and
  the entrepreneurs each with distinct functions
  and roles
• Admission criteria were set but never strictly
  adhered to.

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OBSERVATIONS ON THE INCUBATORS IN NIGERIA (contd)

• Activities take place in all fields of RD
  without focusing on any area of specialisation
• On mangement
• None of the existing centres had an Advisory
  Board or Council that directly supervises its
  operations
• Seed capital to tenants on admission virtually
  suspended for lack of funds and unwillingness of
  tenants to repay the loans
• Most of the TBIs are located near/inside
  industrial layouts (wiyhout adequate facilities)
  without adequate linkages to a university or
  Research Institutes
• Level of support services are generally poor

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STRATEGIES FOR IMPROVED PERFORMANCE

• The sponsors should be focused as to what
  functions the incubators should serve business
  development, technology development,
  manufacturing, etc.
• Develop selection process for the tenants.
• Fix appropriate tenant entry and exit criteria
• Conduct feasibility study find the local needs
  and choose the best suited location.
• Ensure Adequate Funding Running of the
  Incubator and Venture Capital.
• Use stringent criteria to select the management
  team the ability of the staff in pushing
  inventions into innovation is very important.
• Ensure adequate provision of the services
  production space, secretariat services,
  management consultancy, etc.
• Plan for regular evaluation of the activities of
  the incubator benchmark against standard
  organisations.

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IS OTIGBA ICT VILLAGE A CLUSTER-BASED TBI?
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IS OTIGBA ICT VILLAGE A CLUSTER-BASED TBI?

• Origin/Evolution
• Started around 10 years ago on a low key.
• Developed from a 10-shop computer market to over
  2000-shop village in the span of 12 years.
• Activities have grown from ordinary sales of
  computers/accessories to cloning branding of
  computers and mobile phones
• Now diversified as far as providing non-technical
  ICT-driven services.
• Daily sales run into millions of naira
• Partnerships in sales/purchase with foreign firms
  already exist
• SMEDAN now has Business Development Offices been
  sited

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IS OTIGBA ICT VILLAGE A CLUSTER-BASED TBI?

• IMPACTS
• Employment Generation
• Wealth Creation
• High rate of knowledge and skills acquisition
• Attraction of attention to Nigerias ICT sector
  (Intel top officials visited the village in 2004)

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IS OTIGBA ICT VILLAGE A CLUSTER-BASED TBI?

• PROBLEMS
• Choked Location
• Poor access to funds/ venture capital
• Little or no commitment from government
• Linkages to knowledge Centres not formalised
  and strengthened

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What should the mgt. of Fed. Poly. Nekede do?

• Leverage on existing competencies amongst rank
  and file.
• Think Global but act local

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RECOMMENDATIONS

• Following examples of good practices in
  Technology Incubation.
• Maintain Strong Link to NACETEM for Capacity
  Building and Knowledge Support.
• Work with the National Board for Technology
  Incubation (NBTI) to attract Venture Capital
  Funds (that could be directly provided to
  tenants on a revolving basis)

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RECOMMENDATIONS

• Emulate these good practices
• Clearly defined Objectives and Mission
• Strong Advocacy for Government Commitment
• Recruitment of Entrepreneurial Managers
• Selection of Tenants according to needs and fits
  
• Tailoring and Leveraging existing services
• Building on local and international linkages
• Diversification of sources of finance
• Sharing of experience through networking
• Performance Evaluation Mechanisms

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• THANK YOU FOR YOUR ATTENTION