Benchmarking of Business Incubators Section

Incubator: Taguspark

1. Background and Regional Context

Portugal has around 20 business incubators (8 EU-recognised BICs, 5 other incubatorssupported by the Ministry of Employment of which 3 have incubator space, 4 incubatorsoperated by the National Association for Young Entrepreneurs, and 4 science park-basedincubators). Some are very small with only 5-6 rooms whereas others are much biggerwith 25-30 units.

Taguspark is the oldest and largest science park in Portugal. It was established in 1992 ona 360-hectare greenfield site in the municipality of Oeiras on the outskirts of Lisbon. Aninitial investment of euro 20 million was made by the Portuguese authorities through acompany in which 48% of the equity is held by private sector companies (the university,R&D institutes, banks and large companies such as Portugal Telecom. In total, there are16 public and private sector shareholders).

The science park has been developed in three main stages: to start with, the priority wasto attract a number of large company ‘anchor’ tenants (these companies – PortugalTelecom, the call centre and IT operations of a major bank (BCP) and others - are alsoshareholders and were offered a 50% discount on the future price of land as an incentiveto locate at Taguspark). During the second phase, the emphasis switched to attractingsmaller technology-based companies. At the same time, the park’s infrastructure wasdeveloped with a central building complex being built containing a restaurant, shops andwhat was planned to be a hotel, together with an improved access road. In the third phasebeginning in 1999, the business incubator started operations (in what was originallyintended to be the hotel). The final phase involves the relocation of Lisbon University’sInstitute of Engineering to Taguspark, a golf course and residential and hoteldevelopments. Some 5,000 people are now employed by the 190 or so companies locatedat Taguspark. Eventually this figure could increase to 15,000.

2. Incubator Operations

The Taguspark business incubator is located in what was originally planned to be a hoteland involves five ‘regimes’ – the ‘incubator of ideas’ (where would-be entrepreneurs aregiven desk space to develop their business plan), the ‘hotel of companies’, i.e. a room ofup to 20 m² for 2-3 people, and after a year or so, space in adjacent buildings wherecompanies can occupy two different types of units – innovation units (just office space)or technology units (a combination of office and workshop space) . Rental charges aregraduated beginning with a 3-month payment holiday in the ‘incubator of ideas’ and a30% discount on market rates after one year reducing to zero on a seven-year renewablecontract.

Benchmarking of Business Incubators Section

At present there are some 120 companies being assisted by the Taguspark incubator.These are active in a number of fields – ICT (the main activity), electronics, energy-related, biotech, etc. About 10% of the current intake are projects that originated in theuniversity (although most of the others have some link with academic institutions becausethe companies are run by graduates). The links with the university are expected to bestrengthened once the Institute of Engineering opens its offices at Taguspark later thisyear. A variety of methods are used to market the incubator – radio and other mediaadvertisements, participation in job shops run by the universities, a newsletter with a3,000 circulation, etc. Space in the science park as a whole was originally marketed bydrawing up a list of 2,500 companies from Dun & Bradstreet’s database. As a result of adirect marketing campaign, 30 companies applied for admission and four were givenspace. The incubator aims to achieve an overall occupancy rate of around 70%, therebyhaving the flexibility for existing tenants to take up more units as they expand. Atpresent, however, it is 100% occupied.

Business support services are provided by six of Taguspark’s own staff and CPIN(Centro Promotor de Inovação e Negócios), an EC-BIC. The BIC started operating fromits own premises in central Lisbon in 1992 but decided to move to Taguspark in 1999when the incubator was opened. CPIN has a total of seven personnel (five of who providethe professional services to companies). It is responsible for undertaking the initialappraisal of projects (see below), providing business planning advice, helpingentrepreneurs to assess their support needs and identifying appropriate sources ofassistance (where the assistance required cannot be provided by Taguspark itself). TheBIC is also in discussion with several of Lisbon’s universities over the development of anentrepreneurship training programme. Taguspark has also developed an on-line databaseof tenants (‘Competence Centre’) with a view to promoting service provision and otherpartnerships between companies. This database is also available externally and is nowattracting around 6,000 hits per month. A more recent initiative involves setting up anequity scheme for start-up companies (see below). One idea being considered is to takeequity in firms in return for the provision of support services (which are currently free ofcharge). Taguspark and CPIN are also investigating the possibility of introducing amentoring system. This will involve using executives from larger companies.

Because the Taguspark incubator only started operating in 1999, no business has yetprogressed through the entire incubation process. Some firms have, however, movedfrom the ‘hotel’ to either the innovation or technology units, and others have moved fromthese units to their own premises at Taguspark.

3. Good Practice Examples

Taguspark demonstrates a number of good practices:

Entrepreneur Skills Assessment – CPIN (the EC-BIC located at Taguspark) hasdeveloped a methodology for assessing entrepreneur skills. This consists of four

Benchmarking of Business Incubators Section

dimensions or ‘enhancers/inhibitators’ – individual competencies, project characteristics,the project team, technology/market. Considerable emphasis is placed on assessingindividual skills along side project characteristics rather than separately from one another.The methodology was developed after three year’s of research into the characteristics ofstart-ups that participated in IAPMEI’s ‘contest of ideas’ scheme. It is hoped that whenfurther developed, the methodology might be used by investors to identify projects.

Equity scheme – Under this, Taguspark will invest up to €50,000 in the share capitalstart-up companies with a limit of 25% of the equity. The intention is that after two years,companies can buy back the equity or sell it to another investor (Taguspark will helpidentify alternative investors). The target is to achieve a 25% pa return on the investment.Unlike some other schemes, Taguspark will not become involved in the management ofcompanies.

Virtual Science Park – Together with science parks from three other countries (Germany,Finland and Greece), Taguspark is involved in developing a ‘virtual science park’. Underthis scheme, start-up companies will be offered a range of on-line business supportpackages. These include a self-appraisal system, a business planning module, atechnology assessment tool, and guidance on identifying appropriate sources of finance,marketing and other aspects of setting up a business (there are a total of eight packages).The system includes an interactive element: for example, draft business plans can be e-mailed to an adviser provided by one of the science parks to b reviewed. There is also anon-line help manual and telephone support. The system, once fully developed, will alsoinclude direct links with a number of financial institutions (e.g. venture capital firms) andbusiness support organisations which will help entrepreneurs market their ideas andsupport organisations, including the four science parks themselves, to identify potentialclients.

Each partner is developing a different aspect of the system and paying 50% of the costswith the remainder being covered by a grant from the EU’s Fifth R&D FrameworkProgramme. The main components are in English with a front-page in other EUlanguages and the intention is to market the system throughout the EU. A pilot is about tobeing with 10 companies in each of the countries where partners are located testing thesystem.

4. Views on Key Issues

A number of factors were identified in a paper written by Taguspark’s director1 as beingcritical to the successful operation of business incubator/science park:

1 Taguspark’s Development: Key Success Factors and Lessons Learned’, Vasco Valera and Luis Maltez,paper presented to IASP World Conference in Bilbao, Spain, 10 June 2001.

Benchmarking of Business Incubators Section

� Location – the location of Taguspark near Lisbon on a greenfield site and close tothe motorway network around the capital makes it attractive to companies.

� Role of local authorities – the mayor of Oeiras played a key role in thedevelopment of Taguspark by lobbying for it to be located in the municipality inthe first place and in subsequently ensuing that infrastructure (e.g. the accessroad) was developed. An integrated plan was developed by the local authoritycovering all aspects of the development of Taguspark and the surrounding area.

� Institutional model – the combination of public and private sector partners is alsoseen as key successes factor in the development of Taguspark. The decision tooffer companies a 50% discount on the cost of land was important in securing theinitial anchor tenants. Another crucial factor was the fact that shareholders had aclear view of how the science park should be developed and accepted that therewould only be a long-term return.

� Image – considerable emphasis has been placed by the Taguspark management ondeveloping the image of the science park as a prestigious location. As part of thisstrategy, the selective nature of the park’s admission criteria is stressed.

The success of Taguspark is contrasted with that of a similar initiative in Oporto, which isstill at a relatively early stage of development. In Oporto, a decision was taken to developa science park on three separate sites and to give the public authorities a much morecentral role than with Taguspark. These and other factors are seen as explaining why theOporto initiative has made only slow progress.

5. List of Interviews

Name Position

Vasco Valera Director, Taguspark

Carlos Freire Manager, Taguspark (incubator)

Helena Duarte Director, IAPMEI

Pedro Borges Dealmeida Director General, CPIN

Paulo Duarte Mobiscriptum

Management team Webmajic

Management team Webecedario