Implications
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Business Incubation Creates Economic and Social Impact
Business incubation's primary impacts are on the entrepreneurs they serve every day, and there is an extraordinary range of results across the Program. The variation reflects the diversity of grantee missions, sizes, age, structures and clients. The Assessment Report has a complete overview of data collected on client impact.
Economic Impact
Grantees help their clients to build businesses in a range of industries, although most clients work in technology sectors. Regardless of industry, however, grantees report that most clients use technology to compete. While most do not offer digital service or sales, they do use the Internet regularly to identify business opportunities, communicate with customers, conduct research and develop the skills and knowledge of their staff. Grantees throughout the network report they have improved the ICT capacity of their clients.
The use and value of ICT may go up as clients increasingly target export markets. Most clients focus on local markets; fewer than 20% of grantees have clients that earn more than half their revenues from export markets. But when clients do export, more than 75% facilitate those activities with technology.
Most grantees do not track the types of jobs their clients create, but those that do report a wide range. Most of these jobs rely on ICT tools: Almost half of grantees report that more than 50% of the jobs their clients have created are ICT-enabled.
Associations have the largest client reach - clients of ANPROTEC, the national incubator association in Brazil, have helped to create more than 5,500 sustainable new businesses and 28,000 jobs. But technoparks also have a large footprint. One client of the Viasphere Technopark in Armenia plans to create up to 1,000 new high-tech jobs in the technopark alone, and the Moroccan Information Technopark has assisted with the growth of more than 300 companies.
More traditional incubators also report significant economic impact. The University of Guadalajara has created more than 6000 new jobs, and TWBI in China reports more than 3300 staff employed by its clients, many in high-skilled graduate and post-graduate research and development initiatives. Many of these impacts are also being achieved in areas where unemployment is endemic. Clients of Incoval in Ecuador employ an average of 3 to 6 people directly (more indirectly), in an environment where grantees reported that 11% of the population is unemployed and an estimated 50% are "underemployed" in jobs that are below their skill level. About half of grantees estimate that their clients will create up to 100 new jobs in the next two years.
The individual successes of some clients suggest meaningful impact, as well, particularly given the portfolio theory behind traditional incubation where the success of a few, high-growth companies justifies the investment in many more. TeNet's client successes include Midas, which now employs over 700 people in India and Brazil to make state-of-the-art wireless, fiber and cable access systems. Yangling Business Incubation Center in China has cultivated similar successes. One of its graduates, Yangling Bodisen Co Ltd, a biotech company with more than 300 staff and annual sales of $US 5.6 MM, is now listed on the stock exchanges of Germany and Hong Kong. The successful incubation of high-growth firms is found in Latin America, as well. One client of the RMI incubator network in Brazil, The Biominas Foundation, has helped to create more than 30 successful biotech companies and is playing a significant role in that state of Minas Gerais' emergence as a biotech cluster.
The tangible economic impact of grantees is not limited to businesses and jobs, however - or even to clients. Many grantees are also impacting their broader community's knowledge and skills, which is explored further in Section 13. TWBI's small business training program has reached more than 20,000 women since its inception, and TREC-STEP has reached more than 15,000 people through training programs and partnership activities, in addition to launching more than 160 core entrepreneurs.
Grantees also indicate that their clients are contributing to the economy by paying a variety of regular taxes. More than half of grantees report that their clients' fiscal contribution represents between 10% and 30% of their business income, and over 20% report the percentage as higher than 30%. In Romania, for example, clients of the Business Incubator Centre Baia Mare paid more than $100,000 euros in 2005 taxes. Viasphere Technopark in Armenia is one of the country's major taxpayers, and two of its clients are among the top 30 nationally.
Social Impact
For the purposes of this analysis, we make an arbitrary distinction between primarily economic and primarily social impact. In truth, these impacts are highly intertwined. Economic impact across the Program has had powerful social implications, and most of the grantees' explicit social impact is being generated through economic means. We define social impact as the results of work of grantees that are engaged directly or indirectly with "social groups," defined as socially or economically marginalized segments of the population, and grantees that are focused on creating products and services with larger social value. Specific detail on the impact on particular social groups can be found in the Appendix 1 (Assessment, Section 9).
Work with social groups manifested differently across the Program. For some grantees, social groups are their direct clients. More than half of the entrepreneurs associated with Parquesoft, for example, were members of lower socio-economic classes when they became clients. The Tianjin Women's Business Incubator's focus on women has meant that the more than 3000 jobs its clients have created are being filled by women, many of whom were previously laid-off workers from restructured state-owned enterprises. With an explicit focus on poverty alleviation, ITCP in Brazil has also advised and trained members of close to 80 cooperatives who have created more than 1200 jobs in marginalized communities.
Other grantees are focused on reaching social groups through the extended value chains their clients build. TeNet in India has involved close to 2000 villages across all of its projects and activities, and the Kalahari Wild Silk project in Namibia has created 125 jobs sustaining a community. INEFOP in Angola is working with businesses that manufacture decorative household items out of recycled paper. These businesses have the potential to create jobs for women throughout the value chain, from those who collect used paper to those who manage the pulp, design, manufacturing and retail experience of the paper. Organizations such as the Uganda Industrial Research Institute (UIRI) are also focused on extended impact, developing rural businesses that affect people who were unemployed or earning marginal livings. Workers in these businesses learn more than the skills to do their immediate job. They also learn to modify machinery and business processes for local needs, use computers and work with ICT tools. This is leading to innovation in other areas such as fruit, rice and sugar processing.
Social impact can also be measured in the products and services that clients are developing. As we explored in the client focus section, the social value of clients' ideas are increasingly an entry criterion for incubator applicants, as we explored earlier in this section. Given their capacity for innovation and increased understanding of the needs of local customers, clients are often in a unique position to develop products and services that will have a particular impact on the quality of life in developing economies. Many also have social application in developed economies, as well. See Figure 1 for highlights of these products and services.
Summary
- Business incubation can have tangible economic impacts, including job creation, expansion of skills - particularly ICT skills - increased tax revenue, and the launch of high-growth businesses that can drive significant economic growth. Donors and policymakers can consider it an effective, measurable part of a national competitiveness strategy.
- Business incubation can have tangible social impacts, including job creation and expansion of skills among marginalized and low-income groups, and the creation of products and services with particular application in developing economies. Donors and policymakers can consider it an effective, measurable part of a national social impact strategy.
- Business incubation is relevant beyond technology sectors. Incubators' clients are building businesses and creating jobs in technology sectors, but also in a wide range of other sectors, using ICT to improve operations and increase differentiation across industries.
Recommendations
- Donors and policymakers should continue to invest in building a vibrant business incubation sector as a mechanism for fostering targeted social and economic outcomes and impacts. In particular, the sector should be used to facilitate the competitive use of technology across a wide range of industries. More specific recommendations on how to support business incubation can be found throughout the Report.
- Client leveraging of ICT - and the value of ICT support - may go up as entrepreneurs' increasingly target export markets. Most entrepreneurs are still focused on local markets, but among those that export, the vast majority of their market-facing activities are facilitated by technology. This suggests an opportunity to for donors and policymakers to link ICT support explicitly with export promotion activities.
- Given their capacity to innovate and increased understanding of the needs of local customers, entrepreneurs in developing economies are often in a unique position to develop products and services that will have a particular impact on quality of life in developing economies. infoDev and its network, with donor support, have a role in working with public and private sector partners to expand the potential markets for these entrepreneurs.
Business Incubation Fosters Change through a Range of Models
Service Models
Grantees have broadly interpreted business incubation's mandate to nurture high-growth SMEs. Some grantees work exclusively with clients in the ICT sector, while others focus on other sectors of the economy such as agriculture, leveraging ICT to improve the efficiency and effectiveness of their own organizations and those of their clients. Building on the legacy of the industry, almost all provide some sort of facility or infrastructure for clients. A complete overview of data collected on grantee organizations can be found in Appendix 1 (Assessment, Section 8).
Grantees tend to concentrate their technical support in business planning, pre-planning, and helping clients to network outside of the grantee organization, but include less tangible impacts such as mindset changes in describing the core services they provide. Grantees believe that the areas in which they assist most of their clients (>75%) include developing an entrepreneurial attitude, followed by developing a business plan, improving the business model and developing an idea or a concept. Although not described as formal activities in many grantee organizations, "mentoring" and "networking" featured prominently in the grantee descriptions of the value they create for clients. A number of grantees such as the Casablanca Technopark in Morocco are in various stages of adding these types of traditional incubation services to broader, infrastructure-based offerings. Viasphere in Armenia, has diversified its services recently, adding specialized incubation and technology transfer services to a relatively traditional technology park offering. Grantees are least likely to work with clients to secure financing, and help clients find and hire skilled and qualified staff.
More than 75% of grantees indicate that they work with clients to help them develop and refine an idea or improve the business model.
Several grantees also offer a variety of services to the broader community, beyond their core clients, as a way to identify potential entrepreneurs and businesses and foster a better understanding of the value of innovation and entrepreneurship generally. The case study excerpt for BusyInternet (Case Study Excerpt 3) illustrates this approach. Other grantees, such as technoparks, often work at the other end of the continuum, effectively commercializing research and helping growth businesses to identify and enter new markets. 29% of grantees indicate that they help up to 10% of their clients with these types of activities.
Service models are evolving quickly throughout the network, often adapting to current opportunities and unresolved challenges in the local business environment. Many grantees such as Yangling in China are experimenting with innovative financing instruments and other services to improve SME access to capital. Others such as UBICA in the Ukraine and Ingenio in Uruguay are moving into the knowledge asset space, becoming market and industry think tanks for clients and government. Some grantees are moving into new industry focus areas and confronting the difficulty of using one service model to serve distinct segments of entrepreneurs with very different needs. The entrance of Instituto Genesis - among Brazil's most successful high-tech incubators - into the social incubation space, for example, revealed the need for new resources, processes and service offerings to create value for new types of clients. The Genesis team has resolved this tension by creating parallel service models within the Genesis umbrella, complete with different staffs that provide different client services through different channels. High technology incubators focused on industries such as biotech can also have distinct operating challenges, including the need for more sophisticated infrastructure, human resources and client support. ARC in Bulgaria recently addressed this need by spinning off its IT Group offering programming and e-business services.
Virtual Incubation
Many grantees are now confronting the issue of scaling operations efficiently, and increasingly using the Internet to provide lower-cost services to a larger client base. This channel holds particular promise in countries such as Brazil and Vietnam where Internet penetration is increasing and geography is cited as a key barrier to client access to incubation services.
Almost all grantees now use the Internet to provide some "virtual incubation" services. These services are most likely to include information resources and web-based toolkits, as well as access to email and the Internet (see Error! Reference source not found.), but grantees are increasingly experimenting with more complex virtual and remote service offerings. Kharkov Technologies in the Ukraine, for example, offers distance learning, and The Semi-Virtual Incubator in Iran provides technology incubation services to remote villages through a partnership with another local incubator, the Yazd Technology Incubator and Science Park. ITCP in Brazil combines its web-based training programs with a broader remote incubation model that also uses radio and television to disseminate information in regions where literacy is a barrier to Internet usage.
Summary
- The incubation organizations in infoDev's portfolio operate a range of service models. There are no universal models of business incubation - there are a range of effective responses to nurturing high-growth enterprises, and incubators succeed by adapting to local barriers to innovation and entrepreneurship.
- Virtual and remote business incubation models can scale business incubation services by using outreach services and the Internet, for example, as lower-cost channels for a significantly larger client base. This channel holds particular promise in countries where Internet penetration is increasing and geography remains a significant barrier to accessing incubation services.
Recommendations
- Business incubation service models are not static - they evolve as responses to dynamic business environments are identified and refined. As organizations develop new service offerings, donors can encourage experimentation and connect organizations with customized resources to support these transitions, including sister organizations that can play a mentoring role.
- Donors should consider a deeper investment in understanding the drivers of success in particularly effective business incubation models and model components. These investments should be followed with pilot initiatives that seek to test the findings and replicate these models in a variety of environments.
- Some types of incubation models such as social incubation, rural incubation and ICT incubation face distinct operating challenges. As a result, they often require distinct services, processes and resources. infoDev and its network, with donor support, have a role in evolving these models effectively. Interventions might include creating more type-based or 'vertical' resources for incubator managers and strengthening type-based networks.
- Donors and policymakers should invest in studying virtual and remote business incubation models more closely to understand the drivers of their effectiveness and subsidize their expansion where appropriate.
Business Models
About a third of grantees earn - or expect to earn in the next two years - most of their revenue. Most earned revenues are linked to client fees, which are often subsidized rates for facilities, infrastructure and ICT training. The rest use a mix of funding sources, including government, development banks, foundations, universities, debt financing, and in rare cases, private investment. Many grantees acknowledged the value of more sustainable, flexible revenue streams for their organizations. Grantees in Thailand and Brazil, for example, emphasized the challenge of managing short-term project grants, each with unique requirements. These grants are often resource-intensive for grantees and can limit the organization's focus on short-term goals. Other managers cited the constraints to planning, strategy and organizational agility that reliance on outside funders imposed. In spite of these challenges, however, most grantees felt that public and donor support increased their impact, and did not feel that complete financial self-reliance was a realistic goal.
Grantees identified resource limitations as their primary operating risk. Grantees throughout the network are facing real financial risk, and a few such as JKUAT in Kenya have been forced to halt operations until further funding can be secured. Most are finding ways to mitigate this risk, however, and are taking several common approaches. Many grantee organizations are working towards diversifying their funding sources, and some are increasing their earned revenue by charging market (or closer-to-market) rates for facilities or by charging additional fees for select services. Parquesoft in Colombia, for example, negotiates sales on behalf of its entrepreneurs, collecting 10% of fee for the service, and Kharkov Technologies charges a membership fee to new virtual clients. Others are providing services to non-incubating clients such as training or consulting, or as in BusyInternet's case, running ancillary businesses such as an ISP, a bar and a restaurant. The Panama Technology Business Accelerator recently started to explore the sale of equity in client businesses, and others are considering taking their own equity stakes as well as profit-sharing incentives. These initiatives are in their very early stages.
Although financial sustainability was cited as the primary grantee operating risk, managers identified other risks to their business models, as well. These include substantial changes in the SME regulatory and political environment, risks grantees are managing by investing in both deeper and more diversified relationships with the public, private and donor sectors. Other grantees identified their own leadership succession as a risk, particularly in organizations where a dynamic, visionary founder was central to the organization's structure and culture. Incoval in Ecuador is responding to this challenge by trying to digitize as much institutional knowledge as possible in a centralized database. Grantees in smaller markets such as Sri Lanka also highlighted their dependence on global markets for the success of their clients and organizations, citing increased exposure to changes in the global marketplace.
Summary
- Financial sustainability is a real risk for business incubators in developing economies, most of which are not in a position to cover all operating costs with earned revenue or return on client investment in the short-term. Longer-term strategies such as equity investments in clients may have potential, but the investment horizon is long and may not meet the working capital needs of most incubators. Even though a number of grantees earn a significant portion of their revenue, in most cases sustainability is achievable only with the involvement of several donors.
- Given its scarcity, operating capital is particularly hard for managers to raise, inhibiting their ability to adapt and plan for the longer term.
- Sustainability is not just a financial challenge. Depending on the specific profile of the business environment, incubators are also managing significant political, strategic and market risks, as well, which require specific strategic responses.
Recommendations
- Donors and policymakers should continue to support organizations financially and consider additional investments in organizations' operating capital, as complements to project-based funding, which is resource-intensive to secure and manage, and can limit organizations to tactical, short-term planning horizons. Programs such as infoDev should explore serial funding relationships that evolve over time, which can help to strengthen grantee sustainability and facilitate more strategic planning.
- Donors should help to build the capacity of business incubators to leverage national and international donors and service providers. Donors and policymakers can help to identify and direct business incubation managers to funding sources and other types of support from the wide range of national and international service providers that are focused on fostering entrepreneurship and innovation in developing economies. Incubator managers are particularly interested in guidance on how to navigate the complexity of large funders.
Client Targeting
The number of total clients for a grantee organization ranges from none for grantees in the pre-planning stage to more than 3500. The majority of grantees - close to two-thirds - have served up to 100 clients since founding their organization and helped to start up to 100 new businesses.
The numbers vary widely, however, reflecting the challenges of launching new businesses, as well as the almost 40% of grantees who only have been in operation since 2001. While some grantees work with clients in the very early stages of developing an idea, others are in the later stages of building a business or strengthening a pre-existing business plan. Overall, clients are likely to be male, educated with a university degree or specialized training, and working on their first business, although many have more than two years of previous business experience. Most are not living below the local poverty line.
This bias towards some experience or momentum behind an existing concept is reflected in the client selection criteria. As CIDE managers in Peru explained, "past experience in the business sector can be very important...entrepreneurs tend to be most successful when they are working with ideas they have been considering for some time." As a result, the strength of a client's business model is considered very important across the network in evaluating applicants, followed by the type of product or service the client intends to provide, the size of the potential market, and the knowledge and experience of the client team. These criteria manifest in very different ways in the actual selection process, however, also a reflection of the client growth stage that grantees are targeting. 'Experience' in early stage incubators may mean some previous work experience in the target sector, whereas later stage incubators may want tangible evidence that the business is viable.
In Ghana, for example, incubation clients are expected to bring a two-year going concern to the process, including existing customers and a sustainable turnover. Grantees in the Ukraine, in contrast, stressed the feasibility of the business plan, with an emphasis on sources of potential financing. This preference is not always granted by the market, however. Grantees in Chile and Vietnam initially targeted higher skilled, more experienced clients, but found that younger entrepreneurs were more interested in the offering, for primarily cultural reasons.
Some grantees use criteria beyond traditional opportunity assessment. CAATEC in Costa Rica works to identify high-potential, early-stage entrepreneurs who have not necessarily been tested by the market. The selection process emphasizes innovation and begins with a highly-visible, open invitation for applications using mass media, followed by three competitive selection rounds that include three months of business plan support for 25 semi-finalists. The three finalists - who must also undergo psychological examination - are given US$2500 and one year of free services and rent. The CRC Incubator in Vietnam, the Ayala Foundation in the Philippines, and Agroinnova in Colombia all highlight social impact in the selection process. Agroinnova clarified that while clients must show potential for innovation and market demand, "the variable that carries the most weight is evidence that a client's operations will benefit local communities and promote rural, economic and social development." This emphasis on clients sharing grantee vision showed up across the network. TeNet in India, for example, includes "support for the vision of the incubator" among client selection criteria. Parquesoft also stresses that entrepreneurs must be willing to embrace a philosophy of "coopetencia," competition based on cooperation with their fellow entrepreneurs.
Other clients focus on entrepreneurs more than their business models, reflecting the philosophy of grantees such as AccessNova that believe they are "incubating people, not businesses." This focus also reflects the widespread belief that true entrepreneurs have a distinct, almost mystical profile, one that can be uncovered and enabled but not created. As one grantee in Colombia explained, "there is a clear difference between a business person and an entrepreneur. Entrepreneurs can be taught business, but the reverse is not true." Illustrating these philosophies, CIDE in Peru requires all individuals on the client team to write an autobiographical statement, participate in simulated group activities and submit to a psychological evaluation. Many grantees also seem to have shifted over time to placing greater emphasis on individuals and teams than on their ideas. In the Ukraine, for example, Kharkov Technologies has recently redesigned their selection process from its original focus on assessing feasibility studies to selecting the entrepreneurs with the highest potential. Grantees such as the CRC in Vietnam and ISTT in Iran expand this focus on people by stressing the importance of the client team and its mix of diverse, balanced skills. The emphasis on teams also helps to mitigate inexperience when young entrepreneurs are involved.
Once they join the organization, grantees reported that more than 75% of their clients complete significant milestones, including selling a product or service, completing a business plan and developing a concept or idea. Other milestones such as securing seed or later-stage financing varied widely across the Program, with few trends, reflecting the range of grantee focus on client financing.
The vast majority of grantees have some type of graduation trajectory for clients, based on time or achievement (or failure to achieve). Many grantees have not been operational long enough to collect meaningful data on graduation, however, and the network collectively reported a wide range of graduation rates. Anecdotally, this range seems to reflect the fact that in most cases, grantees are still incubating the majority of their clients.
Among the 50% of grantees that formally track client success post-graduation, most indicated that more than 75% of graduated clients continue to operate up to three years after graduating.
Summary
- There is rich diversity within incubators' client selection process, a process that is evolving constantly based on managers' experiences. General trends include an increasing focus on later-stage entrepreneurs and an emphasis on applicants' individual experience and alignment with the incubator's organizational culture, in addition to the viability of their business plans. These trends may be leaving gaps in service provision for higher-risk, early-stage entrepreneurs.
- Current business incubation tracking methods emphasize job and business creation and often miss the broader impacts of many business incubation organizations. Some early-stage business incubators, for example, are focused on developing skills among future entrepreneurs, while others are generating 'ripple effects' on an entire value chain. The clients of some organizations are succeeding many years after leaving an incubation environment, while other organizations are having significant social impact or are influencing financial and government sectors. These impacts must be measured to be understood and increased.
Recommendations
- infoDev and its network, with donor support, is well positioned to identify and disseminate learning on effective forms of "pre-incubation" to attract potential entrepreneurs and businesses and on the selection of entrepreneurs and businesses with growth potential.
- Donors should consider investing in assisting the full range of incubation organizations with improved methods and approaches for capturing the full extent of their outcomes and impacts.
Business Incubation Develops Leaders in Innovation and Entrepreneurship
Leaders and Managers
The effectiveness of the most successful grantees can be linked directly to the skills, vision and commitment of their leaders and leadership teams. In organizations where managers were singled out for their exceptional capacity, they seem to embody a definition of leadership that emphasizes the success of other people. These individuals are not only building sustainable organizations, but are also using them to drive change in and beyond their local environments. In some cases, they are at the forefront of national and regional campaigns to promote innovation and entrepreneurship. A complete overview of data collected on grantee managers can be found in Appendix 1 (Assessment, Section 8).
This report cannot do justice to all of the people who fit into this category. They include R.M.P Jawahar of TREC-STEP, who is described by stakeholders as a "true teacher" and has created an environment where clients feel a familial commitment to the organization and each other. Many TREC-STEP incubatees consider themselves to be "Jawahar's children," and cite his mentorship as the primary explanation for their own success. Orlando Rincon of Parquesoft and G. Viswa Nathan of VIT-BI are also credited as the "inspirational, visionary" forces behind the creation of their organizations, an experience Rincon described as "the project of his life."
Like managers across the Program, these individuals are succeeding by leveraging a particular combination of experiences, skills and attitudes. When asked which attributes were most important in incubator staff members, grantees stressed experience starting and managing a business. The ITPF team in Nepal, for example, emphasized that the "manager is the key" and that a "business-oriented and entrepreneurial person is required." Entrepreneurial experience on the management team was particularly valued in state and university-run organizations such as the NCB ICT Incubator Centre in Mauritius whose cultures and operations are strongly influenced by public sector institutions. As one TREC-STEP client argued, "academics should not be managing an incubator...entrepreneurs are the right people."
Technical skills that both grantees and clients emphasized as critical were sales, marketing, business planning, proposal writing and finance, including the ability to work with outside investors. Financing skills were particularly valued in Morocco, Costa Rica and Kazakhstan. The ability to network effectively in the business, academic and government communities was also important to many clients and grantees such as the Tianjin team in China.
The value of specific skills varied with the mission of the organization, however. In organizations with social impact missions, such as the Social Incubator at the Genesis Institute in Brazil, experience with community change processes was emphasized, while organizations with more technical focus stressed the importance of technology skills, particularly in supporting existing clients and evaluating potential clients. A subset of attitudes also emerged as essential for incubator management. From Senegal to Iran to Sri Lanka, grantees and clients emphasized the value of managers being "empathetic, empowering, supportive," and demonstrating "commitment, drive, focus and passion." These attitudes were reflected in the client management philosophy of most grantees - more than 75% described themselves as "mentors or advisors" to their clients.
This unique mix of attributes is not easy for grantees to find - or cultivate - in their staff members, and often demands significant resources to maintain, particularly in competitive labor markets. Only 10% of grantees reported no challenges finding, training and retaining staff. A third cited scarcity as the main issue, and more than 30% said that limited resources kept them from making needed investments in staff capacity-building.
Staff turnover is a particular challenge for grantees in Brazil, China and Uzbekistan, where managers said they did not have the resources to keep the level of talent the incubation task required. As one stakeholder of the Metutech team in Turkey explained, the organization needs to "recruit managers with an entrepreneurial spirit, yet if someone had such a spirit, they'd run their own firm." Specific skills that grantees have difficulty providing include general management, entrepreneurship, business planning, finance, marketing, legal and public policy.
Summary
- A management team's leadership capacity - its ability to enable the success of other people - is a primary driver of incubators' success. This capacity is often built on a mix of particular manager attributes, including empathy, commitment, management skills and entrepreneurial experience.
- Incubation managers are building sustainable organizations and using them to drive change in and beyond their local environments. In some cases, they are also leading national and regional campaigns to promote innovation and entrepreneurship. Business incubation offers a structured mechanism for these impacts by identifying, developing and empowering the rare individuals that can become agents of broad social and economic change.
- The required skill set for successful incubator managers is hard to find, develop and retain, given that these skills are valued highly in the market and that the resources of business incubators are often constrained. This challenge is a particular barrier to the success of high-tech focused organizations such as biotech incubators, which require very sophisticated human resources to serve existing clients and evaluate potential clients.
Recommendations
- Program designers should place particular emphasis on recruiting and empowering strong leaders to drive innovation and entrepreneurship initiatives, including the management of business incubators. They should also recognize that business incubation can be a platform for broader leadership in promoting entrepreneurship, innovation and the success of the SME sector.
- Donors should consider investing more directly in leadership development of incubator managers, including capacity building for high potential individuals, global networking and knowledge-building opportunities, and disseminating effective strategies for recruiting and retaining talent in the incubation sector.
Business Incubation Aligns Stakeholders in the Public, Private and Not-for-Profit Sectors
Myriad stakeholders are invested in the economic and social impacts of business incubation. Entrepreneurs are the most obvious, and they bring their own networks of stakeholders to the challenge, including investors, customers and employees. But the list also includes policymakers working to strengthen the competitiveness of a region, local and international donors investing in poverty alleviation, and universities working to commercialize the innovations of students and faculty. It also includes the wider public - particularly small business owners - benefiting from the positive externalities of incubation activity, such as better laws, increased access to capital, and a stronger culture of entrepreneurialism and innovation. A complete overview of data collected on grantee stakeholders can be found in Appendix 1 (Assessment, Section 7).
Business incubation organizations that incorporate the interests and resources of these stakeholders into their activities are often put into the category of Public-Private Partnerships (PPPs), a description that more than half of grantees said applied to their organizations. These partnerships take an extraordinary variety of forms, from transactional relationships such as hands-off funding support to the active, daily collaboration that joint management of an organization requires. As a result, the impact of these partnerships also varies greatly. The lens used in this analysis puts the incubator at the center of the web of relationships and examines the benefits and challenges of building relationships across sectors.
Grantees invest significant effort in developing their own network of stakeholder relationships and supporting their clients to do the same. Grantees indicated that they use networks of stakeholders at the local, regional, national and international levels, including those offered through infoDev, to accomplish a variety of goals from marketing their organizations, learning and exchanging knowledge and identifying potential clients. Grantees indicated that networking was among the top services that its clients used the most. The only services that were more likely to be used were those that are traditionally part of a core incubation offering such as facilities and infrastructure provision and business planning services. Grantees also indicated that networking services (defined as assisting clients to build relationships outside of the incubation organization) were most often provided for free, and 40% of grantees reported that they help more than 75% of their clients in this regard.
Founders, Governors and Other Stakeholders
Reflecting the range of interested parties, incubator founders represent the public, private, NGO, financial and academic communities. The private sector is the most likely platform to use to launch an incubator, followed closely by the public and then academic sectors. Private sector founders include individual entrepreneurs such as Mark Davies of BusyInternet and corporate managers such as the Chevron team in Angola who believe they are investing in the long-term health of communities, countries and markets. Public sector founders include government leaders representing the economic interests of regions and countries, often both driving and acting on changes in national economic strategy. For the most part, the motivation for involvement across sectors is long-term social and economic impact. Few founders seem to see the effort as a short-term, profit-making endeavor.
Once the organization is launched, partners are engaged across sectors in a range of capacities, often formally represented on grantee Boards of Directors.
There are some general trends in each sector's role. Public sector and academic partners regularly offer facilities for free or subsidized rate such as in Mongolia, whereas in cases such as Jordan, policymakers provide key strategic, financial and human resource support, as well as access to leaders and decision makers. The local and international donor community also often participates, primarily by offering targeted funding, knowledge and training resources. The UNDP has delivered technical assistance in Angola and China, for example, and USAID has provided funding and training in the Ukraine. The City of Knowledge Foundation in Panama is an exception to the narrow role that donors typically play, covering all grantee costs, including salaries, in addition to physical space and access to Panama's business leaders. infoDev's role in this network of funders and partners is discussed in Part II of this report.
Stakeholder Relationships: Benefits and Challenges
A cross-section of stakeholders create value for grantees in various ways, including formal guidance through membership on their boards of directors. Across the initiative the Board platform was typically used to provide strategic advice to grantees, and less so for operational guidance, including fundraising. All sectors were fairly active on boards, with the exception of development agencies and private investors. Outside of board membership, all stakeholders offered mentorship or advice to some degree. Academic partners were more likely to offer training and other capacity-building support, and private investors were most likely to not be involved at all in grantee partnerships.
Grantees in the Ukraine and Rwanda stressed the value of subsidized infrastructure that public sector partnerships created, in particular, and grantees worldwide leveraged cross-sector partnerships to access expertise and training resources for their clients. Agroinnova in Colombia relies on its wide network of stakeholders to provide most of the key technical support to clients, acting more like a service broker than service provider. Academic partners such as the University of Chile and Hanoi University of Technology also often strengthen grantees' credibility and brand, particularly of ICT-focused incubators. In countries such as Rwanda and Brazil, they also create key entrepreneurial pipeline value by performing pre-incubation identification, training, and selection roles.
Stakeholders from the financial community seem to play a particularly valuable role in grantee networks. Grantees such as the NCB ICT Incubator in Mauritius report the active participation of development bank board members, and grantee clients in countries such as Costa Rica report that grantee networks facilitate access to seed capital and other types of financing. A non-profit organization focused on early-stage entrepreneurs, the CRC Incubator has had particular success partnering with later stage investors to create a technology incubation value chain in Vietnam. FPT Technology Development, Vietnam's leading private ICT incubator, and IDG Ventures, a local VC firm, are both helping to finance the CRC as part of an explicit investment in their own future deal flow.
Strong, cross-sector partnerships also help grantees to influence the business environment and manage key operating risks, such as changes in the regulatory environment. Grantees throughout the Program leveraged formal and informal public sector partnerships to influence policymakers, and many grantees are playing an active role in guiding a national incubation strategy. Grantee engagement with partners can also strengthen organizations' sustainability. ANPROTEC's active collaboration with SEBRAE, the Brazilian government's powerful small business agency, has helped to secure funding for many members of ANPROTEC's national incubator network.
Recognizing the value of these types of stakeholder relationships, many grantees stressed stronger cross-sector collaboration as a future goal of the organization. Others expressed regret at the weakness of current links, particularly relationships with the financial community. When asked what changes they would make if they were to start again, grantees in Mexico, Rwanda and Peru would include more representation from financiers and investors among their founders. Grantees in Morocco and Jordan would specifically include venture capitalists among founding partners to improve the incubator's ability was to take equity positions in client businesses. Depending on the original founding sector, other grantees suggested more private sector, academic and public sector involvement generally.
Stakeholder relationships were not without their challenges. Grantees collaborating actively across sectors stressed the operational and cultural tension of managing partners with differing goals, expectations and experiences. The most common frustration related to coordination difficulties, including "excessive" reporting, but grantees also reported breakdowns in communication and trust, and confusion about respective partners' roles and responsibilities. The distinct perspectives of profit-oriented partners and non-profit or public sector oriented partners - particularly with respect to risk tolerance - were also challenging for some grantees. In one case, this tension manifested as disagreement over whether it was appropriate to charge entrepreneurs for services. Other grantees feared dependence on partners who might "abandon" them after the organization's viability was tied heavily to their support. The Ayala Foundation in the Philippines actively works to develop mutually beneficial stakeholder relationships by hosting regular "Kapihan" or coffee talks that bring stakeholders together informally to build trust and shared vision. In spite of these challenges, however, the benefits of cross-sector stakeholder relationships outweighed the costs for most grantees.
Summary
- Strong cross-sector partnerships - or PPPs - can create important value for incubators by filling gaps in the organization's service model, mitigating operational risk and creating a platform for influencing the broader business environment. Partners from the financial community may be particularly valuable in helping organizations to address unmet client demand for financing skills and increased access to financing. These types of partnerships can also help to create stronger incubation value chains that link organizations targeting early-stage entrepreneurs to firms focused on later-stage investments. These value chains benefit all participating stakeholders by creating a pipeline of high-potential entrepreneurs and by increasing entrepreneurs' access to the appropriate tools, including growth capital, at the appropriate stage of growth.
- Many grantees are succeeding in using PPPs to advance the interests of entrepreneurs and influence the direction of government, financial, business, academic and NGO sectors. Some are collaborating closely with policymakers, in particular, as they work design and execute economic growth strategies that are linked to increased innovation and entrepreneurship.
Recommendations
- infoDev and its network, with donor support, is well positioned to identify and disseminate learning on effective forms of stakeholder involvement in incubation organizations, including formal PPP models and more informal roles relating to influence and advocacy. The learning could help to support founding partners, for example, who may be new to the task of running organizations with multiple, cross-sector stakeholders. Support in selecting, managing and leveraging diverse boards of directors could have particular impact.
Business Incubation Helps to Reduce Barriers to Innovation and Entrepreneurship in the Broader Business Environment
Grantees are incubating businesses in an extraordinary range of environments, from transitioning economies with a rich history of fostering innovation and entrepreneurship, to those that are challenged by a lack of basic infrastructure and uncertain political contexts. Brazil, for example, is working to leverage a dynamic and successful business incubation industry, while Angola is rebuilding its SME sector after 30 years of war along with other essential capacities in the country. A complete overview of data collected on grantee business environments can be found in Appendix 1 (Assessment, Section 6).
Each business environment hosts its own unique mix of sources and gaps in entrepreneurial capital, and these distinctions are reflected in the activities that grantees undertake to support local entrepreneurs. Despite this diversity, the analysis uncovered useful trends in the challenges facing entrepreneurs in developing economies and in grantees' response to these challenges. The patterns reveal opportunities for practitioners, policymakers and donors to develop effective strategies for fostering innovation and entrepreneurship.
Infrastructure
Grantees indicate that they have access to physical infrastructure, but gaps exist. In some cases there are significant gaps in basic infrastructure. For example, several grantees in Africa described electricity as being unreliable. And while ICT infrastructure may exist, its availability and affordability is still a challenge for almost half of grantees. More than 40% of grantees said that their clients were held back by the limited supply or high cost of ICT infrastructure, and in many cases the regulatory environment was not optimized to reduce these barriers.
The grantees' responses were broken down into regions. The samples are small and cannot be conclusive evidence of regional capital resources and gaps, but offer a general indication of grantees' perspectives. Grantees from Africa report the most significant gaps in physical infrastructure, and grantees in Latin American and the Caribbean (LAC) indicate that in some cases the availability or cost of some forms of physical infrastructure are a challenge. Grantees in South Asia (SA) and Middle East and North Africa (MENA) for the most part report that ICT infrastructure is available and accessible. Grantees from other regions, notably Africa, LAC and Europe and Central Asia (ECA) report gaps in this regard.
More than 75% of grantees are helping their clients to address the gaps in ICT infrastructure by providing ICT access at a subsidized rate or for free, and clients describe it as an important part of the value proposition. This access is often - but not always - part of a larger infrastructure offering, including the provision of affordable facilities. Grantees are also customizing their ICT offerings to the needs of entrepreneurs in a particular environment, from basic Internet access to sophisticated knowledge management tools. In cases where there are gaps between entrepreneurs' access to ICT infrastructure and ability to use it, they are combining infrastructure with targeted ICT knowledge initiatives. In many cases, infoDev has strengthened these services by helping grantees' to design, build and promote the use of ICT infrastructure, often through expanded ICT training initiatives (see Section Part II).
While grantees felt that ICT infrastructure and services were essential tools in their toolkits offered to clients, they were rarely cited as the most important. In general, informed access to ICT was seen as necessary, but not sufficient for the difficult task of business incubation. Even BusyInternet in Ghana, which on the surface appears to base its value proposition on the provision of ICT resources, describes its primary impact as the "people connectivity" that happens within the organization's walls. It has become, consistent with the vision of its founders, "a place to go where you can find like-minded people, conversations and appropriate resources." The value proposition here includes but is not limited to ICT, and is intended to attract and enable entrepreneurs in pursuit of a larger mission, the development of entrepreneurial and innovative people and businesses.
The study also revealed that most grantees and their clients now have at least basic ICT access and knowledge - many, thanks to infoDev - and some are in environments where national policy has had a significant role in increasing ICT access for the general population. Government leaders in countries such as Tunisia and Mauritius, for example, have made the build-out of ICT infrastructure a national priority in recent years. Vietnam was a late adopter of the Internet, but its recent commitment to ICT has increased Internet usage by 4900% between 2000 and 2005, placing its Internet penetration at 11.9% by June, 2006, compared to the Asian average of 10.4%. Although the analysis identified environments such as Kazakhstan and Sri Lanka where the need for ICT support is still high, policymakers are significant enablers of ICT as a tool and driver of competitive entrepreneurship and innovation.
Summary
- Access to physical infrastructure remains a challenge in many grantee business environments. While some are challenged by gaps in the most basic forms of infrastructure such as electricity, the most prevalent gaps are likely to be in ICT infrastructure, particularly in entrepreneurs' ability to pay for these resources. infoDev and its donors are helping to address gaps in ICT access and in the skills to use ICT as an instrument of incubation and competitiveness.
- Grantees are facilitating entrepreneurs' access to ICT infrastructure and building capacity by providing appropriate ICT tools, offering customized training to fill the gaps between entrepreneurs' ICT access and ability, and helping entrepreneurs to apply ICT to develop competitive products and services for local and global markets.
- Donors and policymakers who are interested in expanding ICT access and capacity should consider business incubators to be effective partners in diffusing ICT as a tool for innovation and entrepreneurship.
Recommendations
- ICT infrastructure and skills are necessary, if not sufficient enablers of entrepreneurship and innovation. As this study has illustrated, their absence is limiting the competitiveness of SMEs in some emerging business environments, and donors and policymakers should continue to facilitate ICT-enabled growth in areas where there is particular need. Without simultaneous investments in other environmental changes, however, donors and policymakers risk minimizing their impact. They should consider complementing these investments with investments in other softer assets, as well (knowledge, culture, institutional reform), and/or should partner more closely with other service providers in the SME development arena.
Financial Capital
Financial capital emerged as the primary physical capital challenge for entrepreneurs worldwide. For the most part, grantees did not stress their clients' lack of preparation for outside financing as central to the problem. Many did, however, reveal this challenge by including the preparation of grantees to work with banks, investors and other outside financing mechanisms as part of their service offerings. Managers for the CDIMM Foundation in Romania were among the few grantees to speak directly to this issue. As they explained, "today, money is available, but it lacks talented and professional people with good ideas to make use of this money. Our role is to change the mentality." Most grantees, however, stressed the supply side challenges of appropriate financing mechanisms for SMEs in developing economies.
More than 80% of grantees indicate that their clients are limited either because they cannot afford banking products or services or because SME-appropriate offerings do not exist in their local business environment. This gap exists in all regions.
In China, for example, grantees describe state banks' perception of SME loans as "small, expensive to administer and high risk" and stress the need for new tools for assessing creditworthiness. To compensate for this perception of risk, annual interest rates can be as high as 25% in countries such as Uganda. This challenge is often compounded by collateral requirements that are too high for many knowledge-based companies, particularly in the services and ICT sector. In Mauritius, for example, an innovative range of mechanisms exists to fund SMEs in the ICT sector, but clients of the National Computer Board ICT Incubator Center report that the collateral requirements make these funds difficult to access.
In most cases this financing gap is not being filled by the other public and private mechanisms. Despite the promise of angel investors and venture capital (VC) in many developing economies, for example, their impact on entrepreneurs in infoDev's network has been minimal. Grantees indicate that risk capital is very difficult for their clients to secure, and that the vast majority end up bootstrapping to fund start-up costs, with help from friends and family. Even in more developed economies such as Romania where investors have demonstrated greater comfort, CDIMM managers described the VC community as "only ready to invest if the ROI is higher than 30%," a threshold that few of their clients could meet. They described client enterprises as "too young and too difficult to scale" to be an attractive VC investment, and yet too big for microfinance institutions.
The feeling that entrepreneurs were 'stuck in the middle' between the types of small enterprises that microfinance institutions serve and the deals that banks and private investors find attractive was cited by many grantees. In most cases, governments are not correcting this market failure. Although some public mechanisms exist to address this need, in cases such as Peru, supply is limited or bureaucracy is significant. In Turkey, for example, the process to access innovative publicly-funded instruments for ICT start-ups is considered "long and burdensome." Chile has responded to this challenge by making seed capital very accessible for young entrepreneurs through CORFO, the government's industrial support agency. Funding for the next stage of development, however - the critical SME jump from small to medium - is in short supply.
In contrast with infrastructure challenges, however, grantees are not systematically addressing the gaps in SME financing. Despite the high demand for support and the centrality of the challenge for many entrepreneurs, only 50% of grantees formally work to increase their grantees' access to capital from either the public or private sectors.
Client interviews revealed frustration with the absence of financial support, and the recognition that most incubation organizations are not designed to serve this need. Those that do offer a range of products and services, from seed funding and credit guarantees to direct equity investments, such as the Al Akhawayn University Incubator in Morocco. Others actively fundraise on behalf of their clients for public support, particularly to facilitate technology transfer activities as is the case for some grantees in ECA. In other cases the support is aimed at facilitating access. Many grantees such as the ARC in Bulgaria work to facilitate a dialogue with investors and banks, brokering introductions, or coaching clients on pitching investors.
Many grantees are also expanding their realm of influence beyond their clients to include the larger environment for SME financing. CIE-TEC in Cost Rica is collaborating with a local bank to establish a financing fund for SMEs, and AccessNova in Chile responded to the gap in middle-stage financing for Chilean entrepreneurs by creating the country's first network of angel investors. The National Council of Negro Women (NCNW) in Senegal is another example of broader influence on the local business environment. The NCNW is now investigating the provision of finance facilities with the central government and the establishment of a guarantee fund using the incubation process as security. The TIC Incubator in Bolivia is also working to influence the broader environment for entrepreneurs, as an advisor to USAID in its launch of a SME financing program.
Summary
- Despite ongoing investment in correcting the market failure for SME financing in developing economies, grantees report tremendous barriers to fairly-priced capital.
- There is anecdotal evidence that clients are often unprepared for outside financing. In these cases, business incubation organizations can be effective in both teaching clients how to bootstrap operations and in helping clients to develop the skills to work with banks, investors and other public and private financing mechanisms.
Recommendations
- In their current form, most business incubation organizations are not well designed to address the financing gap for entrepreneurs directly. There are notable exceptions, however, and some organizations are effectively brokering relationships between clients and investors, as well as influencing the local business environment by advising the public and private investment community. infoDev, in particular, can play a role in capturing and disseminating learning on solutions to entrepreneurs' financing needs across its network.
- Donors and policymakers should continue to invest in disseminating, developing and piloting innovative SME financing instruments that are customized to the realities of a range of global business environments. Recommendations on innovative ways to facilitate SME equity and debt financing are explored further in Scaling Up Innovation and Entrepreneurship in Developing Economies: The Role of Private Sector Finance, a study recently commissioned by infoDev.
- infoDev and its network, with donor support, have a role in providing policymakers with knowledge and advisory services on effective approaches to increasing SME financing. The visibility of these efforts can also highlight the impact of addressing the financing gaps on fostering vibrant technology sectors. International donors should consider how to more effectively work with infoDev and policymakers to capture learning in this regard and actively diffuse it among relevant stakeholders from the public, private and academic sectors.
Institutional Capital
Few grantees seem to operate in a business environment where there is a cohesive regulatory, legal and policy framework for supporting ECT-enabled entrepreneurs. A key weakness is incentives for entrepreneurial activity and innovation. Policies that offer strong incentives for research and development and new businesses are rare - it describes the environments of less than 20% of grantees-and suggests a lost opportunity to increase the supply of potential commercialization opportunities. In cases such as Uzbekistan, tax incentives for start-ups are simply missing from the environment, and in others such as the Ukraine, these types of incentives are politically uncertain, easily removed after a change in government.
The missing incentives include intellectual property laws that facilitate the commercialization of ideas. Countries where the laws themselves were cited as particular barriers include Thailand and Iran, whereas other grantees highlighted lack of knowledge of intellectual property (IP) laws or the cumbersome process and high cost of securing a patent. In rural Colombia, for example, a few Agroinnova clients mentioned that they were holding back some of their more innovative ideas because they were "worried about people beyond the local community stealing them."
The bureaucratic challenges of starting a business were also cited as a key challenge. Half of grantees thought that laws and regulations governing the launch of new businesses could be improved to facilitate greater entrepreneurial activity. Several grantees indicated that the length and cost of registering a business was a significant challenge. In Angola, for example, grantees said that it realistically takes 145 days to register a business. In some cases grantees cited a lack of basic information on how to register a business as the main issue.
The legal 'insurance' for entrepreneurial activity also continues to be a burden in most environments, particularly the laws governing bankruptcy. Less than twenty percent of grantees indicated that bankruptcy laws are facilitating entrepreneurial activity. Inflexible human resource (HR) laws designed to protect workers are also creating a significant burden for some entrepreneurs, particularly in Latin America. In Uruguay, for example, HR laws require significant assurances (and expenses) before expanding the payroll, and there are no short-term labor options. Uruguayan workers sometimes go as far as setting up shell companies to sell their services to their employer in exchange for greater flexibility.
There are isolated exceptions to this trend, examples of environments where governments are providing cohesive policy, regulatory and legal frameworks that support the SME sector. In Tunisia, for example, recent legislation that protects knowledge-based SMEs includes the Telecommunications Code, the Electronic Business and Signature Law, and the Personal Data Protection Law. The Indian government has also focused on the Small Scale Industrial (SSI) sector as a driver of future growth and innovation. As the website of the Indian state of Tamil Nadu explains, the government recognizes the role of legal protection in realizing that vision: "SI units need to set up Research and Development activities and obtain ISO certification resulting in registration of IP rights."
The grantees' responses were broken down into regions. The samples are small and cannot be conclusive evidence of regional capital resources and gaps, but rather a general indication of grantees' perspectives.
For the most part, grantees in all regions indicate that improvements can be made in the provision of all types of institutional capital. Grantees in LAC are most likely to indicate an absence of particular types of institutional capital such as trade laws, a tax system which re-distributes wealth and incentives for new businesses. In a few instances grantees indicate that a type of institutional capital is available and accessible. This includes trade laws in SA and MENA, and business start up and registration regulations in ECA.
Many grantees are working to improve the regulatory environment for SMEs - not only for their own clients, but also for the broader community of SMEs. More than 50% of grantees work formally to improve some aspect of the regulatory environment, and many more work informally.
ARC in Bulgaria, for example, actively participates on committees and in working groups to advise policymakers, and is currently involved in drafting the National Innovation Strategy and Regional Innovation Strategy for the South Central Region. CIDE in Peru has formed an association of 11 businesses (PERUINCUBA) to draft and guide public policy on SMEs, a traditionally public sector role that the government has now abdicated to the Association. Several other grantees, including Yangling and Tianjin in China, ANPROTEC and RMI in Brazil, and TREC-STEP in India, report that they are regularly consulted by government on issues affecting the local business environment, particularly with respect to developing the SME sector. In a few cases, this influence on policy has been extended to grantees' clients. In Namibia, the CEO of Autogas, an incubator client, was recently summoned to meet the Minister of Energy to discuss the roll out of gas powered vehicles.
The strongest examples of outcomes and impacts on institutional capital include ISTT in Iran, which has had a direct influence on the country's strategy, now focused on knowledge-based development. In some cases, grantees have also directly strengthened public sector institutions by increasing tax revenue. In Uganda, the success of the Uganda Industrial Research Institute's clients has generated a ripple effect up and down the supply chain that is seen by local authorities as expanding the tax base. In Armenia, Viaspshere's clients are among the major taxpayers in the country.
Summary
- Few grantees seem to operate in a policy environment that is optimized for the success of technology entrepreneurs. Grantees are helping clients to navigate some of these challenges, typically by providing information resources. More important, however, many grantees are acting as effective advocates for change in the local business environment.
- The persistent lack of a strong regulatory environment for ICT-enabled entrepreneurs suggests an unmet need among policymakers for information on optimizing policy to promote innovation and entrepreneurship, including business incubation and SME-related policies.
Recommendations
- infoDev and donors should consider ways to strengthen knowledge and advisory services that can guide policymakers on providing regulatory, legal and policy support to emerging technology entrepreneurs. The visibility of these efforts can help to highlight the significant impact that improving the regulatory framework can have on fostering vibrant technology sectors.
- Efforts to improve the regulatory environment for ICT-enabled entrepreneurs should not only capture the policy innovation that is occurring in many developing economies, but also diffuse it through accessible policy tools that may include the development of a generic framework for supporting the sector. This framework should contain leading-edge thinking on issues such as start-up and registration incentives, intellectual property protection for ICT companies, and flexible HR laws that accommodate the particular needs of small businesses.
Knowledge Capital
Access to knowledge capital - public and private R&D, market research and industry practices - is an additional barrier to innovation and entrepreneurship in many grantee environments. Almost 40% of grantees felt that the local supply of leading-edge market, technology and industry information was limited, while a similar fraction felt that entrepreneurs' access was limited by the high cost of this data.
Limited access to market research was highlighted as a particular barrier in some environments, including Indonesia, Ghana and Iran. This reflects the reality that the vast majority of professional service offerings in grantees' local markets, including market research, are targeted at large, corporate clients. In less developed economies such as Namibia, the lack of local knowledge resources for basic functions such as marketing was also a concern. There was a general interest across the network in greater access to practical knowledge about markets and marketing, in addition to academic marketing theory, which sometimes has limited application to SMEs in developing economies.
Very few grantees felt that these resources were missing entirely from the environment; most felt they were simply difficult to access. This dynamic also captures the concern of grantees in some environments that knowledge assets such as leading-edge R&D are still being locked up in universities where the cultures and processes around commercialization are underdeveloped. This was a particular concern in Latin America. In Brazil and Chile, for example, grantees report the persistence of a commercialization gap for technology developed in the academic sector.
The grantees' responses were broken down into regions. The samples are small and cannot be conclusive evidence of regional capital resources and gaps, but rather a general indication of grantees' perspectives.
Grantees indicate significant gaps primarily in the availability of types of knowledge capital across all regions. In some cases the cost of this knowledge capital is the barrier as is the case with market and consumer research in ECA and Africa, and industry standard business processes and procedures in Africa. In a few cases grantees indicated that a type of knowledge capital may not exist.
The majority of grantees are helping their clients to increase access to knowledge, usually by brokering access to external knowledge assets in the environment.
In many cases, this means building stronger links between entrepreneurs and universities. The Genesis Institute in Brazil, for example, was founded with a mission to "transfer knowledge from the University to Society," and it has succeeded in promoting a stronger culture and structure for entrepreneurialism for students and faculty of the Catholic University of Rio. The Telecommunications and Computer Networking Group (TeNet) in India - a coalition of fourteen faculties from IIT-Madras - was also founded to facilitate the commercialization of academic research, and now has over 200 full-time researchers, engineers and other technical staff. Some grantees such as the Vellore Institute of Technology Business Incubator (VIT-BI) in India are also investing in their own market learning and R&D resources as part of their core service offerings, and others are working to increase knowledge assets in the larger business environment, as well. The Innovation Network of Minas Gerais (RMI) in Brazil, for example, has worked with the state research organization to shift its focus from pure research to the commercialization of research.
Summary
- Gaps in knowledge assets - from R&D to market research - remain prominent in many grantee business environments, challenging incubation organizations to effectively leverage research and insights into markets for successful commercialization. The lack of availability of knowledge capital is the most prevalent challenge, although the cost of some types of knowledge capital is also a significant barrier, particularly in the case of market and consumer research.
Recommendations
- infoDev and its network, with donor support, have a role in providing academic institutions, private sector researchers and policymakers with knowledge and advisory services on improving access to R&D and other forms of knowledge capital. The visibility of these efforts can highlight the opportunities associated with commercialization and technology transfer and the role of technology sectors in achieving economic and social impacts.
- infoDev and its network, with donor support, have a role in addressing the need for greater access to practical knowledge about markets, consumers and marketing relevant to ICT-enabled entrepreneurs in developing economies. Donors should consider investing in developing and diffusing practical marketing knowledge resources that are suited to the needs of local entrepreneurs.
- International donors should consider how to work with infoDev and policymakers to engage in a deeper exploration of the drivers of success (and failure) in business incubation organizations with strong links to universities and academic institutions. These types of organizations may have an increasingly important role in promoting growth in a knowledge-based economy, according to the "triple helix" theory of development. As the potential link between the Academy and the market - between the generation of ideas and the commercialization of those ideas - these types of business incubation organizations can be vitally important to national economic strategy and an improved and broader understanding of how to make them work in developing economies is needed..
- Policymakers who are linking economic strategies to knowledge-based competition should consider deepening partnerships with business incubation organizations, particularly those linked to public or private research bodies as a way to develop effective mechanisms for transferring technologies to local and global markets. Policymakers may also be in a position to facilitate knowledge-sharing across sectors by creating stronger incentives for commercialization and R&D.
Human Capital
Business incubators tend to be enablers of the most skilled and ambitious segments of the local population. Reflecting this trend, a supply of entrepreneurs, business leaders and a skilled workforce exists in more than 90% of grantee environments. 43% of grantees indicated that they can easily access a skilled and educated workforce, and none indicated that this resource did not exist in their local business environment. 26% said they could easily access a workforce with business experience, and only 4% of grantees indicating that a workforce with business experience did not exist in their local business environment.
However, sufficient supply of some types of human capital - particularly business leaders and mentors - was cited as a challenge for many grantees. Some grantees such as the CRC Incubator in Vietnam and BusyInternet in Ghana stressed that while local entrepreneurs were often well educated, there was still a need for more hands-on experience in the private sector, particularly among recent graduates. The CRC mitigates this risk, at least in part, by asking inexperienced entrepreneurs to work in teams.
Human capital was a particular issue among grantees focused on social impact. In the Brazilian slums where ITCP is working to strengthen cooperative businesses, for example, the primary barriers confronting new entrepreneurs are low levels of education, management skills and formal entrepreneurial experience. Relatively limited ICT skills among these populations are also a significant hurdle to entering and competing in the Brazilian marketplace, described by ITCP as the "digital exclusion" of the population. The Tianjin Women's Business Incubator in China, which is focused on addressing female unemployment in the wake of massive restructuring of China's state-owned enterprises, is also focused on basic capacity-building to prepare women to re-enter the workforce as entrepreneurs.
The grantees' responses were broken down into regions. The samples are small and cannot be conclusive evidence of regional capital resources and gaps, but offer a general indication of grantees' perspectives.
In EAP, SA, Africa all grantees reported that business leaders and mentors are in limited supply. In ECA business leaders were either in limited supply or did not exist. LAC and MENA also reported challenges with respect to the availability of business leaders and mentors but to a slightly lesser degree. Grantees in EAP, MENA, and Africa also reported a limited supply of entrepreneurs. SA and MENA reported easy access to a skilled and educated workforce with Africa indicating the greatest challenge among regions in this regard.
Strengthening human capital plays a central role in most grantees' activities. A majority formally or informally work to address human capital gaps in their local business environments and few do not do anything in this regard. Close to 70% are involved in some form of training with their clients, in topics that range from basic accounting to sophisticated ICT tools.
TREC-STEP in India has reached more than 15,000 people with its training programs, for example, and among the SODBI Business Incubator's primary goals is "the long-term sustainability of its training and consulting centre," which lies at the core of the SODBI team's service model and impact. These types of services are expensive, however, particularly in environments where training resources are scarce. In response to this challenge, UBICA in the Ukraine operates a network of training centers with experts rotating between incubators in order to generate synergy, increase quality and lower costs. ITCP in Brazil is similarly working to overcome the cost barriers to serving its target market by digitizing capacity-building.
Some grantees are extending these activities beyond their own clients. Instituto Genesis in Brazil, for example, has worked with its partner university to develop a curriculum on entrepreneurship, and students from all majors can now minor in entrepreneurial studies. Several grantees also offer "pre-incubation programs" - often in partnership with local universities - to help develop the country's pipeline of future entrepreneurs. The Vice Director of the CRC Incubator in Vietnam, for example, started the Dynamic Students Club at the Hanoi University of Technology to develop basic skills and promote entrepreneurial attitudes. Several grantees reported cultural challenges where the value of an entrepreneurial career is not recognized and educated graduates are encouraged to enter professions or seek careers with multi-national corporations. Some grantees are also now becoming a resource for the general public. The IT@AB Network in Namibia, for example, is using their websites to offer training resources on registering new businesses.
Summary
- Grantees, who tend to target well trained segments of the local population, report that they have access to a skilled and educated workforce, but a number of grantees are significantly challenged by the limited supply of this workforce. This is particularly true for organizations with social impact missions who work with individuals outside the formal economy.
- A significant number of grantees report that business leaders and mentors are in limited supply in their business environments. This gap can have significant repercussions for developing leaders of incubation organizations and ICT-enabled SMEs, and in some regions, challenge the sector as a whole.
- A majority of grantees work informally or formally to improve human capital in their local business environments through capacity-building and mentoring services that often impact entrepreneurs beyond their core client base. In some environments, business incubation organizations offer "pre-incubation" services aimed at the broader community in order to identify potential entrepreneurs and cultivate a pipeline of future businesses. These programs help to address challenges associated with the supply of entrepreneurs.
Recommendations
- infoDev and its network, with donor support, can identify successful approaches to developing business leaders, mentors and entrepreneurs in developing economies and share this knowledge with other partners, including policymakers, university and academic institutions, and the private sector.
- Donors and policymakers should continue to support pre-incubation activities as integral to developing the SME sector in developing economies. These activities may include investing in applied learning such as internship programs that pair pre-incubation training with hands-on exposure to managing a business.
Cultural Capital
Whether inside organizations or national boundaries, culture either gives people the "psychological safety" to take risks and experiment or it withholds it. The absence of this permission, of a strong culture of entrepreneurialism and innovation, is perhaps the most widely cited barrier to knowledge-led growth worldwide. Grantees in the Program were not exceptions to this trend. Most identified the contrast between entrepreneurship and local values as a key challenge for their clients, and many cited culture as their most significant barrier to success. Indeed, a local culture that embraces risk-taking, diversity of thought and action, and interpersonal trust - attributes that are correlated with high levels of innovation and entrepreneurship - was rare among grantees. A little over 15% said that their environments definitively tolerated failure, and less than a third said that social tolerance was prevalent.
For the most part, in all regions, grantees indicate that types of cultural capital are in short supply. In SA, ECA Africa and LAC, grantees indicated that risk tolerance in particular was a challenge and in fact may not exist. Similarly, in ECA, MENA, and Africa, there was a shortage of formal and informal networks for generating and developing ideas.
Grantees spoke passionately about the need for change. They also recognized the difficulties of changing mindsets, often institutionalized in local laws, policies and educational curricula. In many regions, professions are still valued much more highly than entrepreneurial careers, particularly in Latin America and many European, Central Asian and South Asian environments. As one Uruguayan entrepreneur joked, "this is a country where a cashier is more important than an entrepreneur." Managers at Concept Nursery in Sri Lanka believe that a significant risk to their operations is the active discouragement entrepreneurs face, which manifests most often as well-intentioned Sri Lankan parents urging their children to get "real jobs." Grantees in Uzbekistan and Kazakhstan are confronting the additional challenge of cultural legacies where entrepreneurialism was once seen as criminal. A grantee in Morocco explained the challenge this way: "One Dirham per day is worth more than 10,000 Dirhams on an unsure basis." This has led to a low incidence of entrepreneurial role models in many environments, a challenge highlighted among grantees in Senegal, Ghana and Iran.
Managers at AccessNova in Chile regretted the "death of ambition" that non-entrepreneurial cultural values could engender, noting that most young people still chose the security of corporate environments and dreamed of "one day having a job, not a company." Even in environments which are considered to have an entrepreneurial culture such as Vietnam, there is evidence of cultural challenges. According to interviews with a range of incubation stakeholders, low levels of interpersonal trust and limited team skills are legacies of Vietnam's centrally planned economy, in which people held on to rather than shared information. A traditional culture of seniority is another barrier to team-building, making it difficult for young entrepreneurs to employ peers and older colleagues. These challenges are compounded by the high cost of failure, where bankruptcy is associated with "going to goal and cheating."
In response to these challenges, grantees seem to be influencing the cultures around - and in some cases beyond - their client community. Almost 50% describe themselves as working formally to promote tolerance for risk and failure, and another third are working on these issues informally. More than 70% are working to institutionalize role models by creating access entrepreneurial networks.
Many incubation environments become oases of cultural safety for entrepreneurs, places where individuals are encouraged to dwell in possibility despite the trade-off in financial and social security. Clients of Agroinnova in Colombia cited the enthusiasm and support of staff and fellow incubates as the incubator's most important contribution to their new ventures, and SODBI's clients thought the organization was succeeding, in large part, because managers "have faith in you and your ideas." Ingenio's clients in Uruguay also emphasized the "psychological value" of having their dreams taken seriously, and TREC-STEP graduates explained that the grantee "helped us to overcome our biggest barrier - our mindset."
Many grantees are particularly concerned with improving the public profile of entrepreneurs, and several report that they publicize client success stories in order to develop awareness of the benefits of entrepreneurship and incubation, including grantees in Mexico, Angola, Rwanda, and Mauritius. Others such as the Ankara Cyberpark Incubator create high-profile business plan competitions to generate interest among potential entrepreneurs and stimulate a national dialogue on innovation. In Ecuador, for example, the winners list on the local stock markets. Other grantees undertake direct public relations campaigns. In Vietnam the CRC Incubator plays an active role in "Entrepreneurship," a weekly VTV3 television program and national competition. Grantees in Colombia, Chile and Panama have invested in direct public relations campaigns, also using television and other high-profile media to promote business incubation, entrepreneurship and innovation as important drivers of economic growth. The Kharkov Business Incubator, for example, regularly collaborates with the hit local television series "New Technologies" to cultivate interest in entrepreneurship.
Many grantees have themselves become role models, often proving that incubation can work in a particular environment and inspiring the creation of similar organizations. In Tunisia, for example, the success of the Elgazala incubator, the country's first experiment with business incubation, has led to the creation of 17 similar organizations since the organization launched, with more being planned. TREC-STEP has become an active mentor of two innovative incubators, including one at the Periyari Maniammai College of Technology for Women, which is working to enable young female entrepreneurs. The first of its kind in the world, this incubator is positioned to influence the national and arguably global culture of entrepreneurship for women by challenging significant cultural barriers with its mission and focus.
There is clear, if anecdotal, evidence of the cultural influence of these activities. Among policymakers in some ECA countries, for example, promotion of SMEs is now seen as a strategy for addressing economic transition as countries prepare to compete in global markets. Armenia is a leading illustration. In a country where many large enterprises are monopolies, stakeholders indicated that the incubator and the technology park have helped to introduce new climate of democratic entrepreneurship where growth is based on innovation and skills. Stakeholders in the Ukraine credit incubators with stemming "the brain drain" by providing local scientists with support, and with revitalizing communities such as Slavotich, which was founded as a new home for Chernobyl refugees. Other grantees report notable local increases in interest in entrepreneurship and a corresponding jump in demand for their incubation services. CAATEC in Costa Rica, for example, expects to receive 100 applications in its next round of client selection even though only three will be selected. And when asked what they thought their biggest impact had been, the management team at Access Nova in Chile did not hesitate to say "stimulating young people's interest in starting businesses."
Summary
- The absence of a culture of entrepreneurship - of pro-innovation attitudes such as tolerance for risk and social diversity - was a major challenge in most grantees' business environments.
- Business incubation can be very effective at creating that culture internally for clients, and with their stock of potential entrepreneurial role models, many business incubators are also well-positioned to influence the broader culture by using their networks of relationships and both mass and targeted media platforms.
Recommendations
- Recognizing that meaningful culture change will require systematic investment in changing attitudes and beliefs, policymakers can begin by learning from what has worked in different environments and building stronger incentives for entrepreneurship and innovation into existing laws, policies and regulations.
- Donors should consider supporting activities that build on and promote the cultural attributes that are correlated with innovation, particularly the diffusion of local success stories that embody those attributes. These investments may include multi-media formats (print media, television, radio) that celebrate entrepreneurial risk-taking and reward and high-profile forums for exploring the value of entrepreneurship and innovation.
infoDev's Impact on ICT-Enabled Entrepreneurship and Innovation
In addition to deepening our understanding of how business incubation can impact developing economies, a central goal of this analysis was to understand infoDev's role in facilitating that impact. The study found that infoDev has generally succeeded in helping grantees and their clients to leverage ICT more effectively, while facilitating a range of experiments in strengthening business incubation worldwide, enabling an exchange of ideas and acting as a high-profile catalyst for change. The findings strengthened the Program's central hypothesis that business incubation can be a mechanism for helping entrepreneurs to leverage ICT to foster innovation and entrepreneurship, and ultimately, socioeconomic impact. It also found that more can be done in infoDev's case to increase the effectiveness and efficiency of supporting this mechanism.
A summary of the study's assessment observations can be found in Section 6, with particular emphasis on the initiative's relevance, effectiveness, efficiency, sustainability and performance. The full assessment can be found in Appendix 1. This section explores some of the key issues the study raised regarding infoDev's impact and challenges.
Filling a Service Gap
Grantees interviewed were grateful for infoDev's support and highly invested in how to strengthen the organization. Above all, they felt that infoDev's focus on promoting entrepreneurship and innovation in developing economies occupied a vital space in the institutional landscape. 48% of grantees surveyed strongly agreed that they could not undertake their proposed activities without their infoDev grant and 37% agreed with the statement.
Where similar organizations exist, grantees indicate that these organizations are targeting different markets with different business models.
This data suggests that infoDev is helping grantees to fill a gap in service provision in grantee business environments, an observation confirmed frequently in interviews. As management of the NCB incubator in Mauritius described, "our efforts would simply not be possible without the support of the World Bank and infoDev." In cases such as Vietnam, infoDev enabled experimentation with new environments and business models. As Pham Min Tuan, Vice Director of the CRC Incubator explained, "there had been a lot of talk about incubation in Universities but no implementation until infoDev funding, which enabled the first to start."
Developing ICT Capacity
Improved use of ICT in the business incubation process was the guiding theme of infoDev's investments, and this theme was interpreted widely across the network. Grantees are for the most part ICT-enabled, with 88% reporting that more than 75% of their staff has access to the Internet.
Grantees indicated that wireless and ADSL were the most prevalent forms of Internet connections, and none reported that they did not have an Internet connection.
Grantees used their funding most often to provide ICT infrastructure, and to help clients and staff leverage ICT in the pre-planning and planning stages and in building relationships outside the organization. These areas align with the most frequently provided services overall, suggesting that most grantees used the grant to improve core service areas. Many used the funding to invest in new levels of service provision within core areas. Some grantees such as Casablanca Technopark in Morocco used the grant to move into the business incubation space for the first time.
Even within these areas, there was substantial diversity in the use of funds. Many organizations used their grants to provide computers and improve Internet access, while others strengthened the ICT skills of managers, clients and members. Grantees in Armenia, Uganda and China, among others, used ICT applications to improve internal management processes for themselves and their clients. Others created websites, portals and e-Learning tools to provide research and reference material, provide access to email and the Internet, publish business opportunities, and provide toolkits. In some cases, grantees used infoDev funding to help clients integrate ICT into products and services. In Armenia, for example, a client used a software solution to control operations of a solar panel product. A few also used their grants to create quality control processes and tools. With the help of infoDev's investment, Parquesoft reduced the number of errors in the average product from 15,743 to 4,600.
Given that just over 40% of grantees indicated that in their local business environment the availability of and access to ICT infrastructure is a challenge, infoDev's role in helping grantees to develop ICT capacity is relevant.
Investments in Learning and Networks
Efforts to diffuse knowledge about business incubation, innovation and entrepreneurship in developing countries complemented infoDev's core grant-making program. These efforts were channeled primarily into regional and global conferences, the coaching of regional coordinators, and investments in centralized knowledge resources, including i-Disc, a web-based toolkit for incubator managers. Grantees seemed to value the regional workshops most, followed by the global conferences, as opportunities to learn from fellow practitioners and industry experts.
Efforts to build regional networks were an additional part of the Program. Although many of these networks are in their early stages of growth, more than half of grantees agree that they have benefited from participating in them. Most grantees valued networks as a structure for exchanging relevant learning and experiences, but others also saw them as a mechanism for facilitating access to new markets and advocating for regional interests. Grantees were less enthusiastic about infoDev as a role model organization or as a source of customized support. Almost a third of grantees only somewhat agreed that they had benefited from the advice and feedback from infoDev staff, and most grantees did not value their exposure to infoDev's operations. I-Disc received mixed reviews, although many grantees have had very limited exposure to it. Grantees in the Ukraine, China and Brazil reported that iDisc was a valuable learning tool, while others felt it was not useful in their situation.
This gap between knowledge supply and demand can be explained, at least in part, by the complexity of meeting the learning needs of such a diverse group of organizations facing varied and complex challenges. The nature of these challenges was evident during the on-site interviews when grantees were asked about the risks they face. Their responses included resource limitations, disincentives or limitations in the regulatory environment, instability in the political environment, challenges navigating the granting environment, challenges engaging private sector partners, the need to educate stakeholders and partners, leadership succession, facilities' costs and deal flow. They noted that incubation was one approach to mitigating some of these risks.
Grantees' tremendous desire for knowledge was clear from the on-site interviews and many suggested that infoDev was ideally positioned to become a more active knowledge broker in the areas of business incubation, entrepreneurship and innovation, especially given its diverse portfolio of grantees and the opportunities this provides to learn about how others faced with developing country challenges are approaching incubation. Many felt the organization should do more, in particular, to capture and share learning from the experiences of grantees across the network. Grantees in Costa Rica and Uruguay, for example, suggested infoDev continue to invest in shared resources, such as collecting and disseminating best practices. Others, however, stressed decentralized learning, such as international exchanges between grantees, including on-site study visits.
Grantees indicate that infoDev's activities which have facilitated learning and disseminated knowledge are valuable, and indicate that they see this as an area in which infoDev can continue to evolve.
Catalytic Effects
infoDev indirectly helped many grantees to build stronger relationships with stakeholders - including donors and investors - by strengthening their credibility. Almost 90% of grantees reported that they attribute their infoDev grant to infoDev and the World Bank.
More than 70% of grantees agreed or strongly agreed that the infoDev grant helped them to leverage funding from other sources.
There are myriad examples of this dynamic, including the CRC Incubator, which credits its association with infoDev for securing a competitive contract worth more than US$1 million in cash and kind from USAID, Microsoft, Qualcomm and Electricity of Vietnam.
Overall, most grantees indicated that their granting relationship with infoDev gives them credibility with government and policy makers (over 89% agree or strongly agree), the business community (over 80% agree or strongly agree), and NGOs and civil society organizations (over 72% agree or strongly agree). Further, grantees indicated that their granting relationship with infoDev helped them to attract clients and also provided credibility with their clients. Association with infoDev and the World Bank is clearly valuable to grantees, assisting them to raise funds from other sources and use this influence to their benefit.
Barriers to Operational Effectiveness
As 'soldiers on the front lines' of creating change in their own environments, grantees expressed their eagerness for partners who share their high levels of commitment, urgency and ambition. infoDev partially met this expectation. The most prevalent criticisms of infoDev's grant-making activities, which came from across the network, were operational. Grantees expressed frustration with infoDev's response time, processes, communications and staff turnover. Several grantees noted long delays in receiving their grants, which in some cases caused hardship. Others noted that changes in staff had undermined communications, and that generally infoDev could improve the value and frequency of communication with grantees. Fewer than 50% of grantees agreed or strongly agreed that they had benefited from the advice and feedback provided by infoDev staff. infoDev has begun to address this need by building a team of regional facilitators.
Some grantees advocated that infoDev place a stronger focus on capturing and disseminating knowledge on business incubation, particularly insight into the drivers of success at the organizational level. Others stressed investment in reducing barriers to SME success in local business environments, particularly increased access to financing and regulatory reform, as well as promoting stronger cultures of innovation and entrepreneurship. Many wanted to partner with an "incubator of incubators" that could offer customized, hands-on mentoring, while also staying on the leading-edge of knowledge creation and diffusion. With additional investment in people, processes and infrastructure, infoDev could grow into this role. As one grantee suggested, "if not infoDev, then who?" Specific recommendations on how to increase infoDev's impact going forward can be found in the Recommendations section, and throughout the Final Report.
Summary
- Without infoDev's granting support, a majority of grantees could not undertake their proposed activities.
- infoDev has effectively facilitated ICT capacity, including infrastructure and skills, among grantees. Further, grantees are engaged in a variety of ICT activities and services, including providing ICT training, developing virtual service models, improving the efficiency of client businesses, and helping to create innovative ICT products and services.
- Association with infoDev and the World Bank has helped many incubators to build stronger relationships with stakeholders - including other donors and investors - by leveraging funds and strengthening grantee and client credibility. This type of signaling value is particularly meaningful to start-up organizations, and is an important aspect of the value associated with infoDev's financial support.
Recommendations
- infoDev has facilitated access to some critical knowledge assets, including practitioners and experts, but there is tremendous unmet need among business incubation managers for more insight into entrepreneurship, innovation and business incubation in a developing country context. infoDev, in particular, is well-positioned to invest in capturing and sharing learning from the experiences of grantees and others across the network, including good practices studies and international exchanges between grantees.
- infoDev has begun to invest in regional networks as an effective structure for exchanging ideas and experiences. These efforts should continue and in some cases be expanded to include wider stakeholder participation. Networks should also be explored as mechanisms for facilitating access to new markets and advocating for regional interests.
- Some incubation organizations would benefit from an incubator of incubators model optimized for hands-on support of highly diverse organizations in a wide range of environments. infoDev's diverse portfolio positions it well to evolve into this role, but it will require a significant investment in the organization's capacity to execute on it effectively.
Next: Recommendations