Comparative study technology incubators in Quebec and abroad

1. Introduction

The creation of enterprises to exploit or commercialize technological innovations is one of the engines that drive the economy and one of the sources from which the wealth that can help an industry, a region or a country to grow can be derived. But the process of originating, creating, starting up and developing a technology firm involves long and hard work, and is often doomed to failure. By offering services to help start up enterprises, technology incubators facilitate that process and increase the chances that it will succeed.

The Economic Development Agency of Canada (the Agency) is responsible for promoting the economic development of the regions of Quebec. It recognizes the importance of the role played by incubators and contributes to funding a number of them. As well, in order to optimize the benefits from its investments, it seeks to identify best practices and expand knowledge about technology incubators as a vector for stimulating innovation and development.

With this aim in mind, the Agency retained Tecsult to do a benchmarking study comparing Inno-centre, the other incubators funded by the Agency and other technology incubators in Canada and abroad. Its objective is to position and evaluate enterprise incubators inside and outside Quebec, with priority given to Inno-centre, based on three dimensions: relevance, results and effectiveness. This study is also intended to supplement the evaluation of Inno-centre's performance in 2005 and 2006 that was done by the planning and development branch ( DPEV) of the Quebec Department of Economic Development, Innovation and Export Trade ( MEDIE).

The study therefore consists of an analysis and comparison of the incubators' different business models and their performance, and of the changes observed in incubators in recent years, with the aim of identifying the best ways of doing technology incubation and identifying issues and trends. Its aims included finding answers to the following evaluation questions, which are divided into six groups:

Characteristics of incubators:

  1. What services are offered by the incubators?

     
  2. What are the various models used for payment for the services provided by the incubators?

     
  3. What are the results achieved by the firms that come out of the incubators?

Funding of incubators:

  1. What rate of self-funding should be the goal for incubators?

     
  2. Should the rate of self-funding vary for different types of incubators?

     
  3. What measures could be taken to improve incubators' self-funding?

     
  4. Are there alternative ways to obtain the results the Agency aims to achieve at lower cost?

     
  5. What type of business model would be most likely to optimize the return on the Agency's investment?

Competition:

  1. Are incubators funded by the Agency in competition among themselves or with the research application development corporations, or do their activities complement one another?

Relevance and results:

  1. In what ways do the incubators provide incentives?

     
  2. Does the coaching offered by the various types of incubators reflect the needs of the target market?

     
  3. Would the enterprises created have been started up without their assistance?

     
  4. Are different results achieved by incubated enterprises in different economic sectors?

     
  5. Are the results achieved by the incubators funded by the Agency in line with its PAA?

Evaluation of Inno-centre:

  1. How does Inno-centre's business model compare with the other incubators'?

     
  2. How do the results achieved by Inno-centre, as a world-class incubator, compare with comparable incubators?

Trends in incubation:

  1. What are the emerging trends in the incubation industry, in terms of both supply and demand for incubation services and incubation practices?

     
  2. How have incubators adjusted to the increasing scarcity of risk capital?

This document sets out the results and conclusions from that study. It is organized as follows.

  • Chapter 2 describes the methodology used to carry out the study.

     
  • Chapter 3 describes the business models of incubators inside and outside Quebec.

     
  • Chapter 4 describes incubators' performance based on a number of quantitative indicators of the results achieved by incubators and their client firms.

     
  • Chapter 5 provides a comparative analysis of the characteristics of the incubators' business models and performance, to identify significant components of technology incubation.

     
  • Chapter 6 provides the answers to the evaluation questions that were not addressed in the preceding chapters.

     
  • Chapter 7 sets out the principal findings and recommendations arising out of the study.