Download Prof. Daniel Shefer and Dr

TECHNION – ISRAEL INSTITUTE OF TECHNOLOGY
THE SAMUEL NEAMAN INSTITUTE FOR ADVANCED STUDIES IN
SCIENCE AND TECHNOLOGY
PROJECT IFISE
An Evaluation of the Israeli Technological Incubator Program
and Its Projects
Final Report
Prof. Daniel Shefer
Dr. Amnon Frenkel
February 2002
The Israeli Technological Incubator Program
The technological incubator is a complementary program
The incubator gives a chance to projects that are unable to attract
commercial investors in the initial stages of development.
Its functions are:
•
Assistance in determining the technological and marketing applicability of
the idea and drawing up an R&D plan;
•
Assistance in obtaining the financial resources needed to carry out the
project;
•
•
•
Assistance in forming and organizing an R&D team;
•
Assistance in raising capital and preparing for marketing.
Professional and administrative counseling, guidance, and supervision;
Secretarial and administrative services, maintenance, procurements,
accounting, and legal advice;
The Project contribute:
• Nationally - as a tool for filtering and developing valuable and
original ideas and providing seed-capital.
• Locally - as a means of local economic development through
inducing the development of new firms in a specific location.
Governmental Funding and Selection Criteria
The Office of the Chief Scientist of the Ministry of Industry
and Trade gives:
To each incubator $175,000 per annum
Each project granted up to $150,000 per year, for a maximum of two
years (Level of the given grant is up to 85% of the approved budget
of the project).
The principal criteria for project selection are:
(1) product-oriented
(2) primarily export-oriented
(3) based on R&D
(4) feasible with the available resources.
Objectives of the Study
1. To describe the High-Tech incubator as a filter of new
technological ideas that subsequently
technology-based companies.
become
new
2. To Identify the type of investors who are willing to participate
in funding a project during and after the incubation period.
3. To analyze the geographical distribution of the incubators and
to examine their contribution to local economic development.
4. To examine the viability of the Israeli Technological Incubator
program as a vehicle for the development of the high-tech
industry and as a paradigm for European countries,
particularly Italy.
Data Source
•
The data were collected by means of two well-constructed
questionnaires.
•
Managers of 21 of the 24 existing incubators were personally
interviewed and samples of 109 projects were examined
between May and September 2001.
•
The incubators and the projects within them, were divided into
sub-groups:
by
geographic
location
(Metropolitan,
Intermediate, and Peripheral), type of incubator (general and
specialized), and type of sponsorship.
•
The projects were also classified by major field of activity.
Project-Selection Process in 21 Incubators, by Location
(previous 3 years)
Total Average of Total
Filtering process (per average
incubator)
Number of inquiries
Number of proposals submitted
Incubator manager’s selection
Expert committee’s selection
Chief Scientist’s is approval
Projects admitted into program
Number of incubators
Number
,
,
,
%
%
%
%
%
%
%
Central area
Number %
%
%
%
%
%
%
Location
Intermediate Peripheral zone
Number % Number %
%
%
%
%
%
%
%
%
%
%
%
%
Project-Selection Process in 21 Incubators, by Incubator Type
(previous 3 years)
Total
Filtering process (per
Number %
average incubator)
Number of inquiries
%
Number of proposals submitted
%
Incubator manager’s selection
%
Expert committee’s selection
%
Chief Scientist’s is approval
%
Projects admitted into program
%
Number of incubators
Type
General
Specialized
Number
% Number %
%
%
%
%
%
%
%
%
%
%
%
%
Project-Selection Process in 21 Incubators
(previous 3 years)
Projects admitted into program
%
%
Chief Scientist’s is approval
Expert committee’s selection
%
Incubator manager’s selection
%
%
Number of proposals submitted
Number of inquiries
%
,
,
,
,
,
,
,
,
Distribution of all Projects in the 21 Incubators, by Field and
Location (percentage of total number of projects in the field)
Field
Drugs
Medical equipment
Chemicals and raw materials
Mechanical engineering
Hardware, communication, and
electronic components
Optical and precision equipment
Biotechnology
Energy and ecology
Software
Total (N= )
Average number of projects per
incubator
Metropolitan region
Number
%
. %
. %
. %
. %
.
.
.
.
.
.
.
Location
Intermediate region Peripherial region
Number
%
Number
%
. %
. %
. %
. %
. %
. %
. %
. %
%
%
%
%
%
%
. %
. %
. %
. %
. %
. %
.
.
.
.
.
.
.
.
%
%
%
%
%
%
Distribution of Projects in the 21 Incubators, by Incubator Type
General type Specialized type
Number % Number %
Field
Drugs
. %
. %
Medical equipment
. %
. %
Chemicals and raw
. %
. %
Mechanical engineering
. %
. %
Hardware,
communication, and
. %
. %
Optical and precision
equipment
. %
. %
Biotechnology
. %
. %
Energy and ecology
. %
. %
Software
. %
. %
Total (N= )
%
%
Distribution of all Projects in 21 Incubators, by Sponsorship
(percentage of total number of projects in field)
With Sponsor Without Sponsor
Field
Number %
Number
%
Drugs
. %
. %
Medical equipment
. %
. %
Chemicals and raw materials
. %
. %
Mechanical engineering
. %
. %
Hardware, communication,
and electronic components
. %
. %
Optical and precision
equipment
. %
. %
Biotechnology
. %
. %
Energy and ecology
. %
. %
Software
. %
. %
Total (N= )
. %
. %
Distribution of all Projects in the 21 Incubators, by Field
Software
Hardware, communication, and
electronic components
Optical and precision equipment
Drugs
Energy and ecology
Mechanical engineering
. %
. %
. %
. %
. %
. %
Biotechnology
. %
Chemicals and raw materials
. %
Medical equipment
N=208
. %
Sources of Funding of Incubators
Sources of funding
Chief Scientist’s Office
Total
Budget
In $
,
Overhead payment by projects
Income received from rental
,
Royalties, sales of shares and dividends
Sponsors
Local authorities
Total budget
,
,
,
Average
Budget per
Incubator
Percentage
(in $)
. %
,
. %
. %
. %
. %
. %
. %
,
,
,
,
,
,
Sources of Funding of Incubators
Sponsors
%
Royalties, sales
of shares and
dividends
%
Local
authorities
%
Incom e
received from
rental
%
Chief
Scientist’s
Office
%
Overhead
paym ent by
projects
%
Average Source of Funding of Incubators, by
Location
Sources of funding
Total budget per average
incubator (in $)
Government funding (%)
Other sources of funding (%)
Number of incubators
Total
$
,
Location of incubators
Metropolitan Intermediate Peripheral
region
region
region
$
,
$
,
$
,
. %
. %
. %
. %
. %
. %
. %
. %
Average Source of Funding of Incubators
%
%
%
%
%
%
%
%
%
%
%
%
Central area
% if government funding
Intermediate
zone
Peripheral zone
% of funding derived from other sources
Projects that Secured Significant Complementary Funding,
by Field
Field
Drugs
Medical equipment
Chemicals and raw materials
Mechanical engineering
Hardware, communication, and
electronic components
Optical and precision
Biotechnology
Energy and ecology
Software
Total number of projects
Percentage
Number of Total
. %
. %
. %
. %
.
.
.
.
.
.
%
%
%
%
%
%
Major Sources of Complementary Funding
Source of funding
The incubator itself
Sponsor
External investors
Investors / companies from the same field
The entrepreneur (or family sources)
Venture capital
Percentage
Number of Total
. %
. %
. %
. %
. %
. %
Major Sources of Complementary Funding
Venture capital
Sponsor
The incubator itself
The entrepreneur (or family sources)
External investors
Investors / companies from the same field
.
%
.
%
.
%
.
%
.
%
.
%
Projects that “Graduated” and Projects that “Dropped
Out”,by Field (previous 3 years)
Field
Drugs
Medical equipment
Chemicals and raw materials
Mechanical engineering
Hardware, communication,
and electronic components
Optical and precision
equipment
Biotechnology
Energy and ecology
Software
Total number of projects
Total
Number
%
. %
. %
Projects
Graduating
Number
%
. %
. %
Projects
Dropped Out
Number
%
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
.
.
.
.
.
. %
. %
. %
. %
. %
%
%
%
%
%
Projects that “Graduated”, by Location
(previous 3 years)
Field
Drugs
Medical equipment
Chemicals and raw materials
Mechanical engineering
Hardware, communication, and
electronic components
Optical and precision equipment
Biotechnology
Energy and ecology
Software
Total number of projects
Percent from total graduated
projects
Metropolitan
Intermediate
region
region
Peripheral region
Number
%
Number
%
Number
%
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
Graduating Projects that Succeeded and Did Not
Succeed in Securing Financial Support, by Field
All Incubators
Field
Drugs
Medical equipment
Chemicals and raw materials
Number
%
. %
. %
. %
Secured Financial
Did Not Secure
Support
Financial Support
Percentage
Percentage
Number of Total Number of Total
. %
. %
. %
. %
. %
. %
Mechanical engineering
Hardware, communication, and
electronic components
. %
. %
. %
. %
. %
. %
Optical and precision equipment
Biotechnology
Energy and ecology
Software
Total number of projects
. %
. %
. %
. %
. %
.
.
.
.
.
. %
. %
. %
. %
. %
%
%
%
%
%
Graduating Projects that Succeeded and Did Not
Succeed in Securing Financial Support, by Field
Mechanical engineering
Optical and precision equipment
Hardware, communication, and
electronic components
Medical equipment
Chemicals and raw materials
Energy and ecology
Software
Biotechnology
Drugs
%
Secured Financial Support
%
%
%
%
%
Did Not Secure Financial Support
%
Graduating Projects that Secured Financial
Support, by Financial Source
Source of support
Investments companies
Chief scientist’s Office
Strategic partner
Venture capital
R&D grants
Self financing from sales
Additional investments
(“angels”)
Percentage
Number
of Total
. %
. %
. %
. %
. %
. %
. %
Graduating Projects that Secured Financial
Support, by Financial Source
Strategic
partner
%
Additional
Self financing
investment
from sales
(“angels”)
%
%
Chief
scientist’s
Office
%
R&D grants
%
Investment
companies
%
Venture capital
%
Managers’ level of satisfaction
Variable
Std.
Score Deviation
Available suitable space
Legal counseling
IPR protection
Management support
Strategic counseling
Market information
Connections with suppliers
Access to inputs
International collaborators
Professional network
Networking
of plants
Sources
of technological
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information
Networking with strategic partners
Financial support
Marketing
Financial sources
Access to labor pool
Advanced studies and re-training
Number of incubators
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Managers’ Level of Satisfaction, by Location
Variable
Management support
International collaborators
Access to inputs
Legal counseling
Available suitable space
IPR protection
Strategic counseling
Financial support
Networking of plants
Networking of strategic partners
Market information
Professional network
Financial sources
Access to labor pool
Sources of technological information
Marketing
Connections with suppliers
Advanced studies and re-training
Total number of managers
Metropolitan region
Rank Score S.D.
.
.
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Intermediate region
Rank Score S.D.
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Peripheral region
Rank Score S.D.
.
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.
Barriers and Obstacles to the Operation of an
Incubator
Barrier
Limited funding
Deficiency in management knowledge
Low salary
Deficiency in marketing knowledge
Cumbersome management
Inadequate available space
Limited access to professional labor
Level of
Score Std.Deviation Importance*
.
.
%
.
.
%
.
.
%
.
.
%
.
.
%
.
.
%
.
.
%
* Level of importance=% of incubators reporting the specific factor as being
important or detrimental.
Description Project Initiators
Distribution of Project Initiators, by Sex
Female
%
N-176
Male
%
Description Project Initiators
Project Initiators, by Level of Educational
Nonacademic
%
Ph.D.
%
N-176
Practical
engineers
%
Bachelor’s
degree
%
Master’s
degree
%
Project Initiators, by Previous Place of Work
Former work
Student
Academic/research institute
Industry R&D dept.
Industry (manufactore or
marketing dept.)
Medical
Army
Student
Unemployed
Other projects
Total
Number Percentag
%
%
%
%
%
%
%
%
%
%
Distribution of Initiators, by Project Field
and Previous Place of Work
Field
All Incubators Industry R&D Academic/Research
Others
Number % Number % Number
%
Number %
.
.
.
.
Drugs
Medical equipment
Chemicals and raw materials
Mechanical engineering
Hardware, communication,
and electronic components
Optical and precision
equipment
.
.
Total
.
.
.
.
.
.
. %
. %
. %
. %
.
.
. %
.
. %
. %
. %
. %
%
.
.
.
Biotechnology
Energy and ecology
Software
.
.
.
.
.
.
.
.
.
Preferred Location of Project After Graduation
Peripheral
region
%
Renting within
the incubator
%
Metropolitan
region
%
Near a university
%
Near the
incubator
%
Preferred Location of Project After
Graduation, by Region
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Metropolitan
Intermediate
Peripheral
Within the current region
Metropolitan region
Peripheral region
Near a university
Reasons for Choosing a Specific Incubator
Reasons
Close to place of residence
Acquaintance with the
incubator manager
Area with a good potential
Prestige of the incubator
Fast acceptance
Close to university
Expertise
Identical projects in incubator
Team
Financial conditions
Similar projects successfully
graduated from the incubator
Former incubator employee
University collaboration
Incubator initiated
Salary
Near former place of work
Number of projects
Score
.
Std.
Deviation
.
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Project Initiators’ Reasons for Choosing an
Incubator, by Location
Metropolitan region
Reasons
Close to place of residence
Area with a good potential
Prestige of the incubator
Close to university
Acquaintance with the
incubator manager
Fast acceptance
Number of projects
Rank Score
Location
Intermediate region
Peripheral region
S.D. Rank Score S.D. Rank
Score
S.D.
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Spearman’s rho:
Between metropolitan & intermediate region rs= 0.790, sig.=0.000
Between metropolitan & peripheral region rs= 0.615, sig.=0.011
Between peripheral & intermediate region rs= 0.713, sig.=0.00
Project Initiators’ Reasons for Choosing an
Incubator, by Type and Fields of Activity
• The importance of proximity to place of residence
•
emerge as the major reason for selecting the
particular incubator, in general type as well as in
specialized type of incubator, and in all fields of
activity.
For drugs project, similar projects within the
incubator are also important
•
Initiators of medical equipment project value highly
acquaintance with the incubator’s mangers
•
Initiators of energy and ecology projects put
premium on fast admission to the incubator
•
High importance attached by the biotechnology,
drugs and medical equipment projects to the
proximity to the university.
Projects’ Source of Funding
Sources of funding
Total budget per project in US $
Chief Scientist’s Office
Incubatorcapital
/ sponsor
Venture
/ investment
company
"Angels"
Strategic partner
Initiator / family
Sales
Research / international funds
Number of incubators
Total
,
.
.
.
.
.
.
.
.
%
%
%
%
%
%
%
%
Projects’ Source of Funding
Source of Funding
Total budget per project in US$
Chief Scientist’s Office (%)
Incubator / Sponsor
Venture capital / investment
company
"Angels"
Strategic partner
Initiator / family
Sales
Research / international funds
Number of projects
Metropolitan
region
,
. %
. %
Intermediate
region
,
. %
. %
Peripheral
region
,
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
. %
.
.
.
.
.
. %
. %
. %
The highest share of venture capital in a project’s average
budget in metropolitan regions (11.2%), and the lowest is in
peripheral regions (3.1%), can be associated with the degree of
risk to the investment in each region
%
%
%
%
%
Projects’ Source of Funding, by Location
Metropolitan Intermediate Peripheral
Source of Funding
region
region
region
Total budget per project in US$
,
,
,
Chief Scientist’s Office (%)
. %
. %
. %
Other sources of funding (%)
. %
. %
. %
Number of projects
%
%
%
%
%
%
Metropolitan
region
Intermediate
region
Chief Scientist’s Office (%)
Peripheral
region
Other sources of funding (%)
Projects’ Source of Funding, by Incubator Type
Source of Funding
Total budget per project in US$
Chief Scientist’s Office (%)
Other sources of funding (%)
Number of projects
General
Type
,
. %
. %
Specialized
Type
,
. %
. %
%
%
%
%
%
%
General Type
Chief Scientist’s Office (%)
Specialized Type
Other sources of funding (%)
Projects’ Source of Funding
by Field of Activities
• Projects in mechanical engineering, drugs, and
biotechnology received a high share (77.4%, 73.2%,
and 73.2% ,respectively), of their budgets from the
OCS.
• Medical equipment and energy and ecology – both
received a high share (30.3%) of their budgets from
strategic partner
Project Initiators’ Level of Satisfaction with
Incubator Support System
Subjects
Available suitable space
Legal counseling
IPR Protection
Management support
Financial support
Strategic counseling
Access to labor pool
Financial sources
Connections with suppliers
Networking with strategic partners
Networking of plants
Professional network
Access to inputs
Market information
International collaborators
Marketing
Source of technological information
Advanced studies and re-training
Number of projects
Mean
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S.D.
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Project Initiators’ Levels of Satisfaction with
Incubator Support, by Location
Subject
Available suitable space
Legal counseling
Access to inputs
IPR Protection
Financial support
Management support
Number of projects
Location
Metropolitan region Intermediate region Peripheral region
Rank Score S. D. Rank Score S. D. Rank Score S. D.
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Spearman’s rho:
Between metropolitan & intermediate region rs= 0.636, sig.=0.005
Between metropolitan & peripheral region rs= 0.665, sig.=0.003
Between peripheral & intermediate region rs= 0.880, sig.=0.000
The Main Factors Affecting the Initiation
of a Project
Factors
Financial support
Financial sources
Marketing
International collaborators
Networking with strategic partners
Number of projects
Std.
Score Deviation
.
.
.
.
.
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.
.
.
Lowest score were given to connection with suppliers, available
suitable space and access to imputes.
Comparison of Incubator Managers
and Project Initiators
Factors and Barriers to and Support of an Incubator’s Operation
Barriers and limitations / Subjects of
support
Barriers Factors
Level of
Listed by
Satisfaction of
Incubator
Project Initiators
Manager
Std.
Std.
Score Deviation Score Deviation
Limited funding / Financial support
.
.
.
.
Deficiency in management Knowledge/
Management support
Deficiency in marketing knowledge
/Marketing
Inadequate space/ Available suitable space
.
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Limited access to professional labor /
Professional network
.
.
.
.
Level of Satisfaction from Elements of the
Technological Incubator Program
•
The ranking of the score given by incubator mangers
and project initiators to their level of satisfaction from
each of the 18 factors yielded a very similar rank order.
•
The factors that received the highest scores were in
descending order: available suitable space, legal
counseling, IPR protection, management support, and
strategic counseling.
•
In overall, incubator management expressed a slightly
higher level of satisfaction than did project initiators,
Nevertheless, the rank order of the factors given by
each group is very similar.
•
In metropolitan and intermediate regions, incubator
mangers gave a much higher score to international
collaboration, than did project initiators.
Project Initiators’ Level of Satisfaction from
Services Provided Versus Level of Importance
Attached to These Services
Subject
Available suitable space
Legal counseling
IPR Protection
Management support
Financial support
Strategic counseling
Access to labor pool
Financial sources
Connections with suppliers
Networking with strategic partners
Networking of plants
Professional network
Access to inputs
Market information
International collaborators
Marketing
Source of technological information
Advanced studies and re-training
Number of projects
Level of Satisfaction
Score
S.D.
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Level of Importance
Score
S.D.
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Level of Satisfaction versus Level of
Importance Attached to Incubator Services,
by Location
• Project initiators gave the highest scores of
importance in both relative and absolute terms, to
financial support, financial sources, and marketing,
regardless of location
•
On the other hand, project initiators gave the highest
scores level-of-satisfaction to available suitable space,
in all the three regions
•
Legal counseling received high level of satisfaction in
metropolitan and peripheral regions, but not in the
intermediate region
•
Management support received a high level of
satisfaction in the intermediate and peripheral regions.
Level of Satisfaction versus Level of
Importance Attached to Incubator Services,
by Incubator Type
•
•
There is very little difference in the level of satisfaction
with the program by project initiators of both general
type and specialized type.
Also there is very little difference in the level of
importance attached to the various factors by project
initiators of both general type and specialized type.
• However, there exist a significant difference between
the level of importance and the level of satisfaction
•
Project initiators gave available suitable space,
management support and ipr protection high scores,
of satisfaction,
•
However, they gave high scores of importance to
financial support, financial sources, marketing, and
networking of strategic partners.
Conclusions and Recommendations
•
The incubator program seems to fulfill its purposes. The
most successful projects were those belonging to the
following fields of activity: biotechnology, drugs, and
software.
•
Public support might be required to increase peripheral
incubators rate of success.
•
It is conceivable that public support for projects and
incubators should be field-specific and location-specific,
respectively.
•
Large number of projects located in peripheral regions
are very likely to remain operating in this regions upon
graduation.
•
There is positive trend toward the specialization of the
incubator. Although, specialized incubators did not show
a greater rate of success.
•
The level of satisfaction of incubator managers from the
program is only moderately high.
•
Incubator managers complain primarily about a
deficiency in financial support and a lack of
management knowledge.
•
The incubator requires an improvement in their
performance.
•
The program should concentrate on selected factors
that the incubator mangers ranked as very important.
•
To improve the rate of success, both incubator mangers
and project initiators suggest improving financial
sources and support, as well as management
knowledge and support.
•
The leadership and capabilities of the incubator
manager are extremely important to the success of the
incubator and the projects within it.
•
Incubators should provide a platform for promoters and
entrepreneurs with new ideas.
•
Innovators from academia and R&D departments
desperately need the support of the incubator’s
manager and its professional staff.