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Science parks and business incubation centres: An overview
Charles Monck
Charles Monck & Associates
13 June 2011
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Definition of Science Parks and Business Incubation Centres
Science Parks Business Incubation Centres
A Science Park is an organisation managed by specialised professionals, whose main aim is to increase the wealth of its community by promoting the culture of innovation and the competitiveness of its associated businesses and knowledge-based institutions. To enable these goals to be met, a Science Park:
Stimulates and manages the flow of knowledge and technology amongst universities, R&D institutions, companies and markets
It facilitates the creation and growth of innovation-based companies through incubation and spin-off processes
It provides other value-added services together with high quality space and facilities
Source: International Science Park Association
Business incubation is a unique and highly flexible combination of business development processes, infrastructure and people designed to nurture new and small businesses by helping them to survive and grow through the difficult and vulnerable early stages of development”
Source: UK Business Incubation
What are Science Parks and Business Incubation Centres?
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Wainova Directory of 433 Science Parks
Profile of World Science Parks
World Location of SPs% Age of Science Parks
Size of Firms % Origin of Firms %
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University of Warwick Science Park – founded in 1984
Example of a Successful Science Park
Location25 yr Phased Development
Results
Partners Staff and Funding
18 buildings – 38,000 sq m 4 incubators – 14,000 sq m Currently 130 tenants Total through Park > 250 firms
700 firms supported by Park
Coventry City (pop 300,000) 50 km from Birmingham
17 ha outer city location, adjacent to Warwick University (Bachelors 12,000 Masters/PhD 4,600, academic staff 1,700)
84-89 Buildings and client base 88-96 Business support
services 96-00 3 feeder incubation
centres 00- Development of technology
corridor and support of clusters
Founders: University of Warwick (37%) and Coventry City Council (47%) + 2 others (18%)
Project support from the Regional Development Agency
At outset 4 staff. Now 16 property and 16 business support
Turnover of Park £7m Profit before tax £400k Fixed assets £25m (loans £2m)
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4 5
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Sources of demand and implications for the Science Park – the importance of entry criteria
Markets serviced by Science Parks and Incubation Centres
Sources of demand Implications for Science Park
1. Start ups• Spin outs from Universities and
research institutes (RIs)• Local entrepreneurs
• Incubation space and shared services• Pre-incubation support• Work with Commercialisation Offices in
University and research Institutes
2. Established technology based firms• Expansion of start ups• Relocation of local and regional firms
requiring more space and better environment
• Grow on space (for rent)• Brand and image of Science Park• Quality of working environment• Links with Universities and RIs• Science Park support services
3. Attraction of national and foreign investors•National companies needing to establish a new business unit•Foreign investors
• Serviced plots and larger premises• Strong Image and profile• Links with Invest in Columbia• Relevant incentives
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UKSPA analysis: distribution of occupants by sector
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UKSPA analysis: previous location of occupants
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UKSPA analysis -company size (number of employees)
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UKSPA analysis: occupants by size of premises (sq m)
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Science Parks are shaped by three key components + funding
PEOPLE Board and strategy Director and staff of SP Marketing and brand Tenant companies
PEOPLE Board and strategy Director and staff of SP Marketing and brand Tenant companies
PLACE Location and land Environment and design Terms of occupancy Sources of funding
PLACE Location and land Environment and design Terms of occupancy Sources of funding
PARTNERSHIPS Universities/research Government Suppliers and customers Financial sector
PARTNERSHIPS Universities/research Government Suppliers and customers Financial sector
FINANCIAL SUSTAINABILITY Investment for land & buildings Funding of incubator Income for operations Funding of business support
FINANCIAL SUSTAINABILITY Investment for land & buildings Funding of incubator Income for operations Funding of business support
Key drivers of success of Science Parks
People
PlacesPartnerships
Financial sustainability
Critical Success Factors in the Development of Science Parks
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The best science parks have dynamic Boards, a well connected Director, high calibre staff, tenant firms run by strongly motivated CEOs and a strong brand
1 People
ON SITE SUPPORT TEAM
STAFF IN TENANTS FIRMS
STRATEGY and VISION STRENGTH OF BRAND
Strong Board committed to continuous improvement
Clear long term vision and defined objectives
Capacity to identify and overcome barriers to development
Identity of University and City Image, profile and reputation
Quality of local, national and international networks
Regular promotion of successes
Calibre, skills and personality of the Director
Able to understand and address the business needs of tenants
Capacity of team to create external networks
Quality housekeeping services
Success of tenant firms Creation of effective networks
CEOs and staff identify with aspirations of Park
Initial selection of tenant firms
Marketing and
Brand
Board and
Strategy
The Tenants
Director and Staff
of SP
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Linkages among stakeholders assist in commercialising research, growing profitable businesses and supporting clusters
zBUSINESS
DEVELOPMENT
Universities/Research
STRENGTHEN
Government
Suppliers and Customers
Financial Sector
Engineering & Materials
Technology Consultancy
Electronics, & IT
Business ServicesSTRENGTHEN
STRENGTHEN
STRENGTHEN
Bio Sciences
2 Partnerships
Partnerships: How Science Parks support cluster development
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Location, land and buildings to support the process of creativity, innovation and entrepreneurship through interactions
3 Place
TERMS OF OCCUPATION
SOURCES OF FUNDING
LOCATION AND LAND ENVIRONMENT AND DESIGN
Ease of access
Inner city, periphery or rural location
Proximity to University
Land area and ownership of land
Masterplan and landscaping Quality of buildings
Mix of incubation units, grow and large plots
Development ahead of uptake
Entry criteria (and restrictions)
Easy in easy out terms
Competitive rents
Access to common and shared services (cafés, meeting rooms, ICT services, security etc
Owner occupiers Property investor/developers
Role of publicly owned corporations adopting a long term view
Public sector grants due to impact of Science Parks on local economy
DesignLocation & Land
Sources of
Funding
Rent and Lease Terms
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Financial plan to create a financially sustainable operation with the capacity to grow over time
4 Financial Sustainability
Funding incubator and grow on space Funding for business and technology support
Investment – capital to cover the setting up and growth of the Science Park:
Operations – income from rents and service charges to cover:
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Objectives: Secure tenants to cover operational costs Balance property and business objectivesBuild up balance sheet to fund capital programme
Land purchase and initial investment in roads, services and landscaping to create serviced plots
Initial investment in the first set of buildings
On going development
Overall direction, and control functions
Planning, project management On-going marketing Facilities and estate
management
Incubation building with common areas for shared services
Funding the growth of the incubation centre, grow-on space, and specialist facilities
Income to cover the cost of business support team
Funding for incubation and other specialist services
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Overall aim: Growth in the number and output of knowledge based firms
Impact of Science Parks and Business Incubation Centres
Start Ups Indigenous Firms Inward Investment
University/Research Institute
Occupants External Funders
Commercialisation of research
Collaborative research Retention of graduates in
area Utilisation of facilities New links, projects and
research opportunities for staff, and students
Additional research income Supporting local economy
Clustering benefits leading to: New product development Market growth Attraction and retention of
graduate staff Securing additional
investment Enhanced profile
Public Funds Additional GVA in region Additional jobs Leadership in innovation Increased R & D spend New products developed
Private Funds Return on capital Developers profit Long term rental growth Image of promotion
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1. Context; understanding the policy, economic, market, technological and institutional context of the Science Park
2. Vision and objectives of each of the partners and the Science Park as a whole
3. Market: understanding and validating the market for the Science Park and the characteristics of demand from spin outs/start ups, expansion of local firms and relocations from other parts of the country and abroad, competing locations and what would attract them to the Science Park. Determine specification of first buildings (sizes and type of facilities)
4. Investment plan for the site and premises based on outline masterplan and cost estimates for servicing the site and constructing premises + sources of funding
5. Operational plan for the Science Park – legal structure and governance, Science Park Director and staffing, marketing, entry criteria, rental terms, facilities management, provision of shared and business support services
6. Financial plan for the Science Park – cash flow, funding sources and risk analysis
7. Implementation Plan – what actions by whom and when
Market assessment and business planning for Science Park