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Development of Investment Ready Company Infrastructure in Canmore

A study of Business Incubators

Study Summary

The possibility of creating a business in incubator in Canmore, Alberta was being assessed in early 2000. As a context for this work the present study was undertaken to learn what current best practice was and the possible form the incubator might take.

Canmore is a community of about 11,000 permanent residents in an area whose main business is tourism. Canmore is located within 1 hour's drive of Calgary, a city of some 750,000 people, which has an economy dominated by energy companies, but with a considerable mixture of technology based businesses.

The study of business incubators was undertaken using data gathered from a number of sources: some data was obtained by direct contact with incubator managers who provided an immediate context for the not for profit incubator operation. Some contact with entrepreneurs was used to supplement the author's own experiences in this field, both assisting entrepreneurs and in initiating startup companies.

The bulk of the study's material was obtained from research carried out over the Internet. Most business incubators have websites and from these a good deal of information can be gleaned. The National Business Incubator Association acts as an industry forum, in North America and has published a number of useful surveys drawn from its membership. Other studies have been carried out by universities and other educational institutes both as academic research and as practical investigations of how to make business incubators associated with their institutions more effective. The third tier of studies investigated was based on international bodies, the UN and OECD, who have been advocating the use of business incubators to achieve economic development in eastern Europe following the collapse of the communist regimes and in under-developed countries.

The study also overviews key business success factors and the criteria employed by venture capital companies for making an investment in a startup business.

This is analyzed to determine the key elements of the business incubator model. It is recognized that the nature of business incubators is changing. Whereas two years ago of 500 incubators in North America all but a handful were not for profit, a new wave of incubators, some funded by venture capital companies, has been created, all operating in the for profit mode.

A proposal for a model business incubator which could be located in Canmore, taking into account the special requirements of the community is presented. This model addresses the key elements which are required to make a business successful and to make it achieve that success as rapidly as possible.

A series of appendices provide some useful background information on technology management tools, on investment funds, and on terms of reference for incubators drawn from a number of sources.

The study provides both a general perspective and a very specific view of what appears to be a potential success formula for any size of community. One intention of the study was to define what potential business plan would look like and to view this as a distinct business opportunity. One of the appendices identifies what the next steps would be in taking this plan towards realization.

Partial list of contents

1. Introduction and Context
2. Survey of existing practice
2.1.1 Startup business perspective
2.1.2 Economic development perspective
2.1.3 Investor perspective
2.2 Incubator survey
2.2.1 Focus
2.2.2 Services
2.2.2.1 Funding related
2.2.2.2 Technology and R&D related
2.2.2.3 Operations and Physical
2.2.2.4 Administration
2.2.2.5 Marketing
2.2.2.6 Intelligence
2.2.2.7 Promotion
2.2.2.8 Training and Mentoring
2.2.2.9 Commercialization
2.2.2.10 Staffing
2.2.2.11 Services offered by Business Incubators
2.2.3 Management
2.2.3.1 Finances
2.2.3.2 Client agreements
2.2.3.3 Selection process
2.2.3.4 Reporting
2.2.3.5 Critical Success Factors
2.2.3.6 Boards, Ownership and Mission
2.2.3.7 Management Skills and Experience
2.2.3.8 Numbers of clients
2.2.4 Results and Outcomes
2.2.5 Choosing an incubator
2.2.6 Entrepreneur expectations
3. The goal "Successful companies"
3.1 Success predictors
3.2 Risk factors
4. VC requirements
5. Incubator model
5.1 How the incubator helps to influence success
5.2 How the incubator acts as an accelerator
5.3 How the incubator helps to influence investors
5.4 How the incubator serves as an attractor
5.5 Incubator positioning
5.6 Strengths and Weaknesses of Business Incubators
6. The Canmore Incubator Model
6.1 Goals
6.2 Assumptions
6.3 Special Canmore factors
6.4 Canmore Business Incubator (CBI)
Appendix I: Risk analysis
Appendix II: Technology management tools
Appendix III: Potential linkages
Appendix IV: CBI Performance measures and financial model overview
Appendix V: Funding and Investment Alternatives
Appendix VI: Action plan
Appendix VII Policy Guidelines And Recommendation On Business Incubators
Appendix VIII Emerging Issues For Research In Business Incubation Systems
Appendix IX: Guidelines for Incubator Boards
Appendix X: Business plan outline requirements