RESEARCH PINPOINTS UNEXPECTED TRENDS
In formulating its rankings and scorecards, UBI Index also uncovered some noteworthy data about incubators. Among the 300 benchmarked institutions, four-out-of-five were non-profits, with less than a third offering seed money to startups. Among the incubated startups, two-thirds were only in the idea or early development phase, with the majority in ICT and non-specialized fields. Among the 300 incubators benchmarked, 37% were based in Europe, followed by North America (23%), South America (22%), Asia and Oceania (13%), and 5% Africa (5%).
UBI Index’s research also revealed that funding doesn’t necessarily equate with success. On average, incubators in top 300 spend $1190 to create a new job. However, the top incubators average $780, over $400 less per job. That point was reinforced by another finding: Average investment at top incubators is just $970,000, a third of the $2.5 million investment at average performing incubators. In other words, the best incubators require less capital to achieve a higher return. However, top 25 school-managed incubators were more likely to provide seed funding (40% vs. 31%).
Even more, the top incubators are driving the biggest growth. Pulling the top 30 incubators from the school-managed and school-affiliated ranks, UBI Index found that these programs accounted for $19.7 billion dollars in sales, 55,337 new jobs, and 279 IPOs over the past five years. In other words, the top 10% of incubators were driving roughly 82% of sales and 55% of new jobs.
In interviews with incubator managers, UBI Index also identified four key ingredients to success: Recruiting high potential startups; providing a wide array of services; emphasizing coaching and mentoring; and delivering a wide network of potential clients, partners, and investors.
THE FUTURE REMAINS BRIGHT FOR INCUBATORS
So what’s in store for incubators in the coming years? Bhatli foresees three trends emerging. For starters, he is already witnessing universities worldwide becoming more involved in incubation. “In 3-4 years, you’ll see the teaching universities doing more with entrepreneurship because they are beginning to realize the importance and potential they have with all the research and infrastructure. They are becoming more engaged. They will each have their own incubator or work with another.”
Bhatli also anticipates greater zeal among corporations to support incubators. “Corporate and industry realize that they can rely more on innovators for innovation than to do it themselves. It’s going to be so much more organized and larger in the next couple years.”
Finally, Bhatli expects the world to embrace incubators. “I see the drive in emerging economies when it come to incubation – India, China, Brazil. And there’s great vibrance in Chile. These countries realize [that] this is their great opportunity and that entrepreneurship is what will help them grow exponentially. They are putting a lot of effort into it.”
DON’T MISS: ENTREPRENEURSHIP GETS A BIG BOOST AT COLUMBIA
To see the rankings of the top school-run and school-affiliated incubators, click on the next page.