Health Start-Ups! – What Makes a Great Startup Incubator?

June 18, 2013
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The Jump evolution

A successful university business incubator has lots of engaged mentors, is run like a startup and generates buzz and benefits for its local business community.

Those are some of the high-level findings of new venture out of Sweden that’s trying to create an objective way to evaluate business incubators across the world.

The Jump evolution

A successful university business incubator has lots of engaged mentors, is run like a startup and generates buzz and benefits for its local business community.

Those are some of the high-level findings of new venture out of Sweden that’s trying to create an objective way to evaluate business incubators across the world.

The team behind the University Business Incubator Index set out to find the top university incubators in the world, discover what makes them successful, and learn where others are falling short. Over the past year, they collected data on 150 university incubators in the U.S., Europe, Asia and Australia. They interviewed incubator managers, entrepreneurs and investors and came up with about 60 independent indicators of success. Then they scored each incubator, adjusting scores for those in the most favorable and unfavorable locations.

“Top university incubator must create value for the ecosystem, must create value for clients and must have strong post-incubation performance,” co-founder Dhruv Bhatli said of the team’s findings. In more specific terms, it must help companies create jobs, retain local talent and generate revenue, providing a long-term benefits to the local business community. It also must provide access to opportunities for funding and mentors who can help entrepreneurs develop core skills.

The university incubator that’s done that best, according to UBI Index, is Rice Alliance for Technology and Entrepreneurship, which it ranked the overall top university incubator.

Then there were top performers for specific industries: Sid Martin Biotechnology Incubator for biotech, UB Technology Incubator at University of Buffalo for life sciences and NDRC Launchpad at Dublin City University for IT.

What are these incubators doing right? Bhatli shed a few insights based on the research:

  • Engaged business mentors – How many mentors, and who they were, played a huge role in success of incubators. “Incubators with coaches who had more business knowledge tended to perform better than those with an academic background,” Bhatli said.
  • They’re run like startups – Incubators have to be continuously flexible and – this is important – continue to grow. “Public funding is not the primary source of funding at top-list incubators,” Bhatli said, noting that about half of the funds at top incubators came from private sources or were self-generated.
  • Good PR – A lack of branding/awareness was one of the key constraints of the worst performing incubators, Bhatli said.

The UBI Index looked only at university-related programs because that’s where the incubation trend really started, Bhatli said. And despite the popularity of new models like Tech Stars and Y Combinator, universities are still where the most global activity continues to happen.

But UBI Index, which began as a master’s thesis project for Joel Eriksson Enquist at Chalmers University of Technology, plans to dig much deeper into incubation metrics as it scales up. “We hope that next year we will have a much bigger sample and to be able to extrapolate more generalizable conclusions,” Bhatli said.

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