Trends in university business incubators

Following the publication of the University Business Incubator (UBI) Index in July, Global University Venturing sat down with Dhruv Bhatli, co-founder of UBI Index, and Paolo Borella, director of Aalto University’s incubator AppCampus, to discuss insights into the incubator space, the relationship between the two organisations, and best practice.

What are the activities of UBI Index and AppCampus?

Bhatli: UBI Index is thought leader in performance benchmark of business incubators globally. We strive to improve university incubators globally and make them more efficient. The motto we live by is: “If you can measure it, you can improve it.” Our annual ranking 2014 – the largest and most global on university incubators – assesses 800 incubators in 67 countries and benchmarks 300 to identify top 25 incubators in the world. As the largest free and fair ranking process of university incubators it attracts participant incubators associated with majority of top universities in the world, such as Stanford, Columbia, Oxford, University of California Berkeley, Pennsylvania, New York and Cornell, among others.

Our methodology has improved on top research in incubation measurement and has been built in conjunction with and support of numerous industry experts. We invite external advisers and have our research advisory board that ensures quality at each step. Some of the eminent minds on our research advisory board include Kjell Hakan Narfelt, chief strategist of Swedish Innovation Agency Vinnova, Jonathan Bradford of Techstars London and F6S, and others.

We use a comprehensive framework that measures incubators on more than 65 performance indicators. The three performance areas we measure for each participant incubator is the value for ecosystem – the economic impact generated by the incubator – value for clients – the quality of network and services provided to client companies – and attractiveness of the incubator – post-incubation performance of client companies.

Borella: AppCampus is a three-year seed acceleration programme from Aalto University to help develop the Windows Phone (WP) ecosystem across the world. We do that helping developers and entrepreneurs worldwide to deliver innovative WP apps, providing grants, education and go-to-market support. In a little more than two years we have received almost 4,300 submissions, selected 350 cases in our portfolio for €10m ($13m), and our teams have published 180 apps.

This €21m programme was born from the common interest between Aalto, Microsoft and Nokia to accelerate the evolution of the WP ecosystem, leveraging the Finnish education system that is one of the best in the world, and the availability of an incredible wealth of competence in mobile and gaming that is available in Finland and makes it a global hub.

Discussions for such a programme started in 2011 and in early 2012 the contract between Aalto, Microsoft and Nokia was signed, with Aalto taking the responsibility to run the programme. Activities were kicked off right away, setting up a steering board with representatives from the three parties, and Aalto hired the management team and allocating space within the campus to host the programme.

What is the relationship between UBI Index and AppCampus?

Bhatli: As a reference in business incubation, our global benchmark attracts incubators from around the world. We are on a constant lookout for incubators with interesting business models, best practices and unique solutions. In this pursuit, App Campus is one of the participants that were assessed and accepted to our global benchmark. For a young incubation programme I think they have an interesting programme that is well managed. This relationship also has a personal aspect to it, given that Paolo and I have collaborated in the past on similar research projects.

Borella: AppCampus is a fast-paced, three-year effort and since the very beginning we focused on being able to evolve and improve the programme quickly in a changing environment. We faced the unusual situation of focusing on a very narrow topic – Windows Phone – but a broad geographic coverage – the whole world – and to meet our goals we could not just replicate next-door incubators. UBI Index gave us the opportunity to be assessed in an independent and reliable way, and give visibility to a rich set of best practices from which to pick ideas for improving our perations.

The UBI Index-AppCampus relationship grew deeper thanks to my interest in digging further into best practices, suggest ideas on how to improve UBI Index products, and ultimately help validate the framework.

What are some of the trends in the university incubator space?

Bhatli: I see incubators having an ever-important role in the entrepreneurship discourse in the future. In this regard, I see huge potential at universities and an emerging synergy of talent, research and infrastructure at universities and their commercialisation through avenues such as incubators and accelerators. Every university in the world will run an incubation programme of some sort in the future. The other trend I notice is redrawing of focus areas at different types of incubator. As competition increases, average incubators will tend to find their core areas of strength – for example, the research specialisation of the university where the incubator is based – and focus on them, while the established and popular ones will leverage their brand to expand through diversification in sectors or through increased geographic reach.

Borella: Incubators and accelerators are really becoming mainstream, an accepted way to grow teams and develop ideas all over the world, stimulating innovation and wealth creation. I expect a further growth of the number of incubators and accelerators, and I see this industry slowly approaching maturity phase and expect few gorillas will dominate, some will federate to maximise opportunities and impact, and others will prefer to specialise in specific niches in order to excel. I also expect the initial prevalence of information and communications technology incubators will be balanced with a growth of activities in other segments, like manufacturing and health. Finally, I am envisioning further integration between incubation and higher education, with incubation efforts becoming an integral part of innovation curricula.

What are some of the best practices in running and managing a successful university incubator?

Bhatli: We notice that incubator managers that understand three basics fare better then others. Those three basics are, understanding the realities of your ecosystem, finding a self-sustainable business model aligned with those realities, and benchmarking and monitoring performance constantly to alter your offering. Many incubators make the error of planning a programme to replicate Silicon Valley when in fact they do not have the same set of features that facilitated the rise of the valley.

The best practice is to identify the strength and weaknesses of the ecosystem where the incubator wants to be established, and to base planning on the local assessment. The second common error is to place excessive reliance on subsidy or public money. Although this might be needed for some incubators due to special circumstances, this is massively reducing incubators’ capacity to operate leanly and entrepreneurially. If incubators are to help startups to be efficient, they will need to walk the talk in their operations. The third error is not benchmarking or benchmark often enough. Learning is highly accelerated when it is possible to identify shortcomings. The same applies to university incubators. The best way to catalyse their prog
ress is to identify best practices in other incubators that are performing better. In this regard, the incubators can participate in quality benchmarks such as UBI Index.

Borella: One of our best decisions at the very beginning was to assemble a multicultural team to cope with the demands of teams applying from more than 100 countries. Our staff come from six countries in four continents and this way we can really understand the context and diversity aspects.

I am also proud of the go-to-market support AppCampus can provide our teams after they have completed our acceleration programme and launched their apps in the marketplace. I think it complements really well the strong alumni network and it really helps to grow the teams and boost confidence to achieve impressive results in a short time.

What does the future hold for UBI Index and AppCampus?

Bhatli: UBI Index is expanding rapidly and receiving overwhelming support from the incubation community, governments and universities. With a nearly three times higher number of participants from 67 countries in this year’s edition, the UBI Index global benchmark will become a standard in the incubation industry, which will provide reliable knowledge to make university incubators become more efficient and competitive.

Borella: We will definitely use the UBI Index report for internal sharing of the achievement reach to date, and of course to support external communication. AppCampus never stops and we will leverage the UBI assessment of our activities to prioritise development efforts, hack some of the best practices from other successful incubators to accelerate the development process, and deliver further improvements as quickly as possible to deliver more value to our stakeholders and teams.