Business Incubation

Mohammad Jahangir Alam, PhD

Professor
Department of Agribusiness and Marketing
Bangladesh Agricultural University
Mymensingh-2202

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What is Business Incubation?
✓ It is a public and/or private, entrepreneurial, economic & social
development process designed to nurture businesses from idea generation
to start-up companies and, through a comprehensive business support
program, help them establish and accelerate their growth and success.
✓ Generally, the incubation concept aims at achieving some fundamental
objectives which include to create new jobs and businesses, foster a
climate of entrepreneurship, commercialize technology, diversify, and
accelerate growth of industry and local economies.

The objective of business incubation is achieved through business

incubators.
The business incubator is a physical space or facility that accommodates a
business incubation process.

Business incubation is a unique institutional arrangement that is primarily

concerned with developing entrepreneurial culture in a community.
Incubators are usually a partnership or collaboration between
one more pro-business organization.
These organizations can be:
✓ Economic development organizations
✓ Government entities
✓ Local colleges and universities
✓ For-profit ventures
✓ Trade associations
• Business incubators provide intensive, hands-on support and
services to nurture young firms, helping them to survive and grow
during the start-up period when they are most vulnerable.
• The services include
• Shared office services
• Access to equipment
• Flexible leases and expandable space
• Help with business planning
• Raising finance
• Professional services (accounting, IP etc.)
• Marketing support
• Mentoring
• Access to networks

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✓ For example: Unnoty (www.unnoty.org)- which is altogether an incubator in
agribusiness sector of Bangladesh.
✓ It’s an initiative of Light Castle Partners, which aims to shift the focus away
from the capital- into the semi-urban & rural regions where there is an acute
scarcity for infrastructural support for small & medium businesses (SMBs).
✓ Working with USAID, Light Castle Partners Ltd is employing standard
accelerator models and curricula in the Unnoty platform- with the exception
that it focuses on the agriculture sector.
✓ Ultimate beneficiaries will be the farmers, who’ll be equipped with education
on how to improve their businesses.
Importance of Business Incubation
✓ There is no dearth of start-ups that work on a brilliant idea with a
huge scope of scaling. However, these companies have little
knowledge about management, and therefore, burn cash rapidly.
✓ Business incubators help the start-ups to manage finances and ensure
proper utilization of the money.
✓ Managing a business at a very local level play a significant role in
making the foundation strong and scale it. Business incubators
essentially perform the same function.
✓ There are various business incubators that target businesses that
want to establish themselves formally in the market.
✓ Such businesses with great growth potential might require various
types of support such as planning, training and development,
research support and so on.
Incubation Process

Exit

1-3 years Incubation period

CONSULTING, EDUCATION, etc.

Selection and finance decisions

Finance negotiations

Evaluation

Business planning
Incubation Process (contd.)

• Expert services and education for business development

• Office and lab space
• Office services (telephonist, copying etc.)
• Networking: connections to financiers, universities,
consultants etc.
• Financial support
Expert Services and Education
• Business plan development and evaluation
• Advising
• Counselling by incubation team
• During incubation period
• Strategy, marketing, finance
• Other consultants
• Services are often subsidised
• Education
• Short entrepreneurship course
• Business plan competition
• Short seminars
Aims of Sponsors
• Create jobs
• Revitalize neighbourhoods
• Commercialize critical new technologies
• Strengthen local and national economies
• Address development issues
• Make money from portfolio companies
• Specific – to address:
• Outdated technology used by many SMMEs
• Poor (or non existent) technology support to SMMEs
• Very low entry rates of SMMEs into the productive “value added” sectors
• High failure rates amongst start up SMMEs
• Poor access to facilities for the testing and promotion of innovative ideas

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Choosing an Incubator
• What sector are you in?
• Where is it located?
• What are you looking for – office space, advice, tools, the
atmosphere???
• What are the terms? Office space will probably be “sold” on flexibility
rather than price etc.
• Speak to other tenants and “graduates”
• Who is the management – what are their credentials?
• Are they linked to financial institutions
• What are the programmes, how do you graduate?

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