Science parks and business incubation centres: An overview

Charles Monck

Charles Monck & Associates

13 June 2011

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Definition of Science Parks and Business Incubation Centres

Science Parks Business Incubation Centres

A Science Park is an organisation managed by specialised professionals, whose main aim is to increase the wealth of its community by promoting the culture of innovation and the competitiveness of its associated businesses and knowledge-based institutions. To enable these goals to be met, a Science Park:

Stimulates and manages the flow of knowledge and technology amongst universities, R&D institutions, companies and markets

It facilitates the creation and growth of innovation-based companies through incubation and spin-off processes

It provides other value-added services together with high quality space and facilities

Source: International Science Park Association

Business incubation is a unique and highly flexible combination of business development processes, infrastructure and people designed to nurture new and small businesses by helping them to survive and grow through the difficult and vulnerable early stages of development”

Source: UK Business Incubation

What are Science Parks and Business Incubation Centres?

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Wainova Directory of 433 Science Parks

Profile of World Science Parks

World Location of SPs% Age of Science Parks

Size of Firms % Origin of Firms %

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University of Warwick Science Park – founded in 1984

Example of a Successful Science Park

Location25 yr Phased Development

Results

Partners Staff and Funding

18 buildings – 38,000 sq m 4 incubators – 14,000 sq m Currently 130 tenants Total through Park > 250 firms

700 firms supported by Park

Coventry City (pop 300,000) 50 km from Birmingham

17 ha outer city location, adjacent to Warwick University (Bachelors 12,000 Masters/PhD 4,600, academic staff 1,700)

84-89 Buildings and client base 88-96 Business support

services 96-00 3 feeder incubation

centres 00- Development of technology

corridor and support of clusters

Founders: University of Warwick (37%) and Coventry City Council (47%) + 2 others (18%)

Project support from the Regional Development Agency

At outset 4 staff. Now 16 property and 16 business support

Turnover of Park £7m Profit before tax £400k Fixed assets £25m (loans £2m)

1 2 3

4 5

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Sources of demand and implications for the Science Park – the importance of entry criteria

Markets serviced by Science Parks and Incubation Centres

Sources of demand Implications for Science Park

1. Start ups• Spin outs from Universities and

research institutes (RIs)• Local entrepreneurs

• Incubation space and shared services• Pre-incubation support• Work with Commercialisation Offices in

University and research Institutes

2. Established technology based firms• Expansion of start ups• Relocation of local and regional firms

requiring more space and better environment

• Grow on space (for rent)• Brand and image of Science Park• Quality of working environment• Links with Universities and RIs• Science Park support services

3. Attraction of national and foreign investors•National companies needing to establish a new business unit•Foreign investors

• Serviced plots and larger premises• Strong Image and profile• Links with Invest in Columbia• Relevant incentives

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UKSPA analysis: distribution of occupants by sector

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UKSPA analysis: previous location of occupants

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UKSPA analysis -company size (number of employees)

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UKSPA analysis: occupants by size of premises (sq m)

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Science Parks are shaped by three key components + funding

PEOPLE Board and strategy Director and staff of SP Marketing and brand Tenant companies

PEOPLE Board and strategy Director and staff of SP Marketing and brand Tenant companies

PLACE Location and land Environment and design Terms of occupancy Sources of funding

PLACE Location and land Environment and design Terms of occupancy Sources of funding

PARTNERSHIPS Universities/research Government Suppliers and customers Financial sector

PARTNERSHIPS Universities/research Government Suppliers and customers Financial sector

FINANCIAL SUSTAINABILITY Investment for land & buildings Funding of incubator Income for operations Funding of business support

FINANCIAL SUSTAINABILITY Investment for land & buildings Funding of incubator Income for operations Funding of business support

Key drivers of success of Science Parks

People

PlacesPartnerships

Financial sustainability

Critical Success Factors in the Development of Science Parks

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The best science parks have dynamic Boards, a well connected Director, high calibre staff, tenant firms run by strongly motivated CEOs and a strong brand

1 People

ON SITE SUPPORT TEAM

STAFF IN TENANTS FIRMS

STRATEGY and VISION STRENGTH OF BRAND

Strong Board committed to continuous improvement

Clear long term vision and defined objectives

Capacity to identify and overcome barriers to development

Identity of University and City Image, profile and reputation

Quality of local, national and international networks

Regular promotion of successes

Calibre, skills and personality of the Director

Able to understand and address the business needs of tenants

Capacity of team to create external networks

Quality housekeeping services

Success of tenant firms Creation of effective networks

CEOs and staff identify with aspirations of Park

Initial selection of tenant firms

Marketing and

Brand

Board and

Strategy

The Tenants

Director and Staff

of SP

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Linkages among stakeholders assist in commercialising research, growing profitable businesses and supporting clusters

zBUSINESS

DEVELOPMENT

Universities/Research

STRENGTHEN

Government

Suppliers and Customers

Financial Sector

Engineering & Materials

Technology Consultancy

Electronics, & IT

Business ServicesSTRENGTHEN

STRENGTHEN

STRENGTHEN

Bio Sciences

2 Partnerships

Partnerships: How Science Parks support cluster development

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Location, land and buildings to support the process of creativity, innovation and entrepreneurship through interactions

3 Place

TERMS OF OCCUPATION

SOURCES OF FUNDING

LOCATION AND LAND ENVIRONMENT AND DESIGN

Ease of access

Inner city, periphery or rural location

Proximity to University

Land area and ownership of land

Masterplan and landscaping Quality of buildings

Mix of incubation units, grow and large plots

Development ahead of uptake

Entry criteria (and restrictions)

Easy in easy out terms

Competitive rents

Access to common and shared services (cafés, meeting rooms, ICT services, security etc

Owner occupiers Property investor/developers

Role of publicly owned corporations adopting a long term view

Public sector grants due to impact of Science Parks on local economy

DesignLocation & Land

Sources of

Funding

Rent and Lease Terms

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Financial plan to create a financially sustainable operation with the capacity to grow over time

4 Financial Sustainability

Funding incubator and grow on space Funding for business and technology support

Investment – capital to cover the setting up and growth of the Science Park:

Operations – income from rents and service charges to cover:

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3

2

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Objectives: Secure tenants to cover operational costs Balance property and business objectivesBuild up balance sheet to fund capital programme

Land purchase and initial investment in roads, services and landscaping to create serviced plots

Initial investment in the first set of buildings

On going development

Overall direction, and control functions

Planning, project management On-going marketing Facilities and estate

management

Incubation building with common areas for shared services

Funding the growth of the incubation centre, grow-on space, and specialist facilities

Income to cover the cost of business support team

Funding for incubation and other specialist services

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Overall aim: Growth in the number and output of knowledge based firms

Impact of Science Parks and Business Incubation Centres

Start Ups Indigenous Firms Inward Investment

University/Research Institute

Occupants External Funders

Commercialisation of research

Collaborative research Retention of graduates in

area Utilisation of facilities New links, projects and

research opportunities for staff, and students

Additional research income Supporting local economy

Clustering benefits leading to: New product development Market growth Attraction and retention of

graduate staff Securing additional

investment Enhanced profile

Public Funds Additional GVA in region Additional jobs Leadership in innovation Increased R & D spend New products developed

Private Funds Return on capital Developers profit Long term rental growth Image of promotion

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1. Context; understanding the policy, economic, market, technological and institutional context of the Science Park

2. Vision and objectives of each of the partners and the Science Park as a whole

3. Market: understanding and validating the market for the Science Park and the characteristics of demand from spin outs/start ups, expansion of local firms and relocations from other parts of the country and abroad, competing locations and what would attract them to the Science Park. Determine specification of first buildings (sizes and type of facilities)

4. Investment plan for the site and premises based on outline masterplan and cost estimates for servicing the site and constructing premises + sources of funding

5. Operational plan for the Science Park – legal structure and governance, Science Park Director and staffing, marketing, entry criteria, rental terms, facilities management, provision of shared and business support services

6. Financial plan for the Science Park – cash flow, funding sources and risk analysis

7. Implementation Plan – what actions by whom and when

Market assessment and business planning for Science Park