By:!Geoffrey!Smith! Major!Research!Project!for!the!Ted!Rogers!School!of!Management s! MBA!in!the!Management!of!Technology!and!Innovation!Program!

Transcription

1 Measuring*the*Performance*of*Toronto s* Business'Incubators By:GeoffreySmith MajorResearchProjectfortheTedRogersSchoolofManagement s MBAintheManagementofTechnologyandInnovationProgram August19 th,2013 ResearchSupervisor:Dr.KimberlyBates, DirectorMBAintheManagementofTechnologyandInnovation SecondReader:Dr.DanMcGillivray, ExecutiveDirectorattheCentreforUrbanEnergy(CUE)

2 Table&of&Contents& List&of&Tables&and&Figures&...&2 ListofTables...2 ListofFigures...2 Executive&Summary&...&3 1.0.&Introduction&and&Background&...&4 1.1.Innovation EconomicProductivity BusinessIncubation TheResearchQuestion IncubatorDefinition IncubatorOrigins TypesofBusinessIncubators BusinessAccelerators &Methods&...& ListofTorontoBusinessIncubators PublishedBusinessIncubatorPerformanceMetrics &Analysis&...& AnalysisofBusinessIncubatorsinToronto AnalysisofPublishedBusinessIncubatorPerformanceMetrics &Recommendations&...& InsightsfromtheCharacteristicsofBusinessIncubationinToronto RecommendationsonthePublishedBusinessIncubatorPerformanceMetrics PreliminaryRecommendationsfortheiNCUE &Conclusions&...& &Self&Reflection&...&59 Appendices&...&63 References&...&67 1

3 List&of&Tables&and&Figures& List&of&Tables& TABLE1:DESCRIPTIONSOFTHEDIFFERENTTYPESOFINNOVATION...6 TABLE2:DIFFERENTINCUBATORDEFINITIONS...11 TABLE3:CHARACTERISTICSOFBUSINESSINCUBATORS...12 TABLE4:BUSINESSAFFILIATIONLABELUPDATE...15 TABLE5:INCUBATORSANDACCELERATORSFROMTHEPERSPECTIVEOFTHEIRMANAGERSANDUSERS...20 TABLE6:INCUBATORMODELANDINDUSTRYSECTOR...29 TABLE7:INCUBATIONMODELCOMPAREDTOHOSTORGANIZATIONTYPE...33 TABLE8:PROFITVS.NONNPROFITORGANIZATIONSCOMPAREDTOHOSTORGANIZATIONTYPE...33 TABLE9:CUMULATIVENUMBEROFBUSINESSINCUBATORSSTILLACTIVEBYINCUBATIONMODEL...36 TABLE10:MEASUREMENTCATEGORYDESCRIPTIONS...37 TABLE11:DIGITALMEDIAZONEPUBLICALLYAVAILABLEMETRICS...40 TABLE12:MARSDISCOVERYDISTRICTPUBLICALLYAVAILABLEMETRICS...43 TABLE13:INCUBESPUBLICALLYAVAILABLEMETRICS...44 TABLE14:ONLINETOOLSFORTRACKINGINCUBATORSANDACCELERATORS...51 List&of&Figures& FIGURE1:TORONTOINCUBATORINCUBATIONMODEL...27 FIGURE2:TORONTOINCUBATORINDUSTRYSECTORS...28 FIGURE3:TORONTOINCUBATORDEVELOPMENTSTAGEADMITTANCE...30 FIGURE4:TORONTOINCUBATORPROFITVS.NONNPROFITENTITIES...31 FIGURE5:TORONTOINCUBATORHOSTORGANIZATIONS...32 FIGURE6:TORONTOINCUBATORSACTIVETODAYBYDECADE:PRE1990N FIGURE7:TORONTOINCUBATORSACTIVETODAYBYYEAR:2005N

4 Executive&Summary& IncubatorsareincreasinglyseenasawayforCanadatotransitiontowardsaknowledgeN basedeconomycapableofsupportingmiddleclasslifestyles.butcantheyplaythatrole? Andhowcanwejudge?Thispaperprovidesacriticalassessmentofincubatorsin supportingtheemergenceofnew,knowledgensectorventures.thetransitionisaffecting Canada semploymentenvironment,eatingawayatthemiddleclass.businessincubationis beingusedtochannelinnovativeideasanddevelopnewcompanies.thecanadian government ssupportforbusinessincubationmaybejustified,butmoreresearchis necessarytodeterminetheperformancemetricsbusinessincubatorsmusttrack. Thisresearchpaperbeginsbyprovidingadetailedintroductiontoinnovation,its implicationsonthecanadianeconomy,whatbusinessincubationis,anditsdifferenttypes. Withinthesetypes,distinctionsaremadebetweenbusinessincubationandacceleration. TheanalysisfocusesonthebusinessincubationenvironmentinToronto,Ontario.Itfirst developsaprofileoftheincubationlandscape,andsecondanalyzesthepublicallyavailable performancemetricsofthreetorontobusinessincubators.findingthatthenumberof businessincubatorstorontoisgrowing,particularlyacceleratorsintheinformation CommunicationsTechnologysector.Thefewincubatorsthatarepublishingtheir performancemetricsmustdoabetterjobiftheyaretoimprovethetransparencyof incubatorperformance.toassisttheminkeepingtrack,eightkeymeasurementcategories areintroduced.attheendofthepapersomepracticalrecommendationsaremadetoan existingincubatorprogrambasedonthesekeymeasurementcategories. 3

5 1.0.&Introduction&and&Background& ThisresearchpapercoversthetopicofbusinessincubationinCanada.Specifically,itlooks atthemetricsusedbybusinessincubatorsintorontotoindicatetheimpactstheyhaveon economicdevelopment,andthecompaniestheyincubate. Thispaper,hereonreferredtoasaMajorResearchProject(MRP),isthefinalcapstone projectforgraduationfromthemastersofbusinessadministration(mba)programatted RogersSchoolofManagement(RyersonUniversity).ThisparticularMBAisinthe program smanagementoftechnologyandinnovation(mti)stream. Aswellasarequirementforgraduation,thisMRPispartofasummerinternshipwiththe CentreforUrbanEnergy(CUE).Here,theresearcheristheManageroftheInnovation CentreforUrbanEnergy(iNCUE),abusinessincubatorandacceleratorfocusedon developingcompaniesintheenergysector. TheMRPisseparatedintothreeparts.Inpartone,thepaperdiscussestheimportanceof innovation,itsconnectiontobusinessincubators,ahistoryofbusinessincubation,and lastlypresentsdistinctionsbetweenthedifferenttypesofbusinessincubators,including businessaccelerators.inparttwoitpresentstwosetsofanalysis,thefirstfocusesonthe Torontoincubatorenvironment,thesecondontheperformancemetricsbeingusedby threedifferenttypesofincubators.finally,recommendationsandconclusionsare presentedinresponsetotheresearchfindings,includingrecommendationstotheincuefor practicalapplication. 4

6 1.1.&Innovation& Intoday srapidlychangingglobalenvironment,innovationhasbecomeanincreasingly importantfactorforeconomicsuccess.however,innovationcanhavedifferentmeaningsto differentpeople.inananalysisofover30innovationdefinitions,jeffdanceconcludedthat therearetwoessentialcomponents.thatitis(1) somethingfresh(new,original,or improved),and(2) thatcreatesvalue (Dance,2008). TheinternationallyrecognizeddefinitionforinnovationcomesfromtheOsloManual, producedbytheorganisationforeconomicdevelopmentandconoperation(oecd)and Eurostat.Itstatesthat: An$innovation$is$the$implementation$of$a$new$or$significantly$improved$ product$(good$or$service),$or$process,$a$new$marketing$method,$or$a$new$ organizational$method$in$business$practices,$workplace$organization$or$ external$relations $(OECD&Eurostat,2005).$$$ Despitethemyriadofinterpretations,ausefulperspectiveisthatinnovationismorethan justagoodidea,but anideathathasbeenmadetowork (Murgatroyd&Simpson,2012). Thesuccessofacountry seconomyistypicallyattributedtogrowingitsgrossdomestic Product(GDP).Bymakingnewideaswork,innovationcanbeusedtohelpgrowGDP. In1934,economistJosephSchumpeterexplainedthat radical innovationsresultinbig changesintheworld,and incremental innovationsareaprocessofcontinuouschange (Schumpeter,1961).Innovationssuchastheprintingpress,electricity,andInternetwould 5

7 beconsideredradical,whilecontinuousimprovementsinbusinessprocesseswouldbe consideredincremental. DifferenttypesofinnovationsidentifiedbySchumpeterinclude,developing/improvinga new/existingproduct,introducingnewprocesschangestoanindustry,creatinganew market,anewmeansforsourcingrawmaterials,orchangestothewayanindustryis organized(schumpeter,1961).theoecdlatersynthesizedschumpeter stypesintofour categories; productinnovation,processinnovation,organizationinnovation,andmarket innovation (OECD&Eurostat,2005),eachofthemcapableofpositivelyimpactinga nation seconomy.adescriptionofeachtypecanbefoundintable1. Table&1:&Descriptions&of&the&Different&Types&of&Innovation& Type& Product& Innovation& Process& Innovation& Organization& Innovation& Market& Innovation& Description& A$product(innovation(is$the$introduction$of$a$good$or$service$that$is$new$or$significantly$ improved$with$respect$to$its$characteristics$or$intended$uses.$this$includes$significant$ improvements$in$technical$specifications,$components$and$materials,$incorporated$software,$ user$friendliness$or$other$functional$characteristics $(OECD,$2005)$ A$process(innovation(is$the$implementation$of$a$new$or$significantly$improved$production$or$ delivery$method.$this$includes$significant$changes$in$techniques,$equipment$and/or$software $ (OECD,$2005)$ An$organisational(innovation(is$the$implementation$of$a$new$organisational$method$in$the$ firm s$business$practices,$workplace$organisation$or$external$relations $(OECD,$2005)$ A$marketing(innovation(is$the$implementation$of$a$new$marketing$method$involving$ significant$changes$in$product$design$or$packaging,$product$placement,$product$promotion$or$ pricing $(OECD,$2005)$ Source:$OSLO$Manual$(OECD,$2005)$ 1.2.&Economic&Productivity& TheCanadianeconomyandtheeconomiesofmanydevelopedcountriesaretransitioning towardswhatiswidelyreferredtoasthe knowledgenbasedeconomy.anexpression usedtodescribegreatereconomicdependenceonknowledge,information,andahighly 6

8 skilledworkforce(oecd&eurostat,2005).forbetterorforworse,thistrendhasledto lessdependenceonthemanufacturingsector. InCanada,thegrowthofservicerelatedemploymentisoutpacingthegrowthin manufacturingemployment(bernard,2009).manufacturingjobs,typicallyknownfor payingwellandtypicallyrequiringfewerskills,arebeingreplacedprimarilybylowpaying servicesectorjobs(maclachlan&sawada,1997).asaresultcanada smiddlenclassisin jeopardy,havingfewerwellpayingjobsavailableforunskilledworkers. Tworeports,onebytheIndependentPanelonFederalSupporttoResearchand Development,andtheotherbytheInstituteforCompetitivenessandProsperityhave identifiedthatinnovationisessentialforlongntermproductivitygrowth(independent PanelonFederalSupporttoResearchandDevelopment,2011;Institutefor CompetitivenessandProsperity,2011).Eachgoesontodemonstratethat,productivity growthisessentialforeconomicprosperity. IncomparisontotheUnitedStates(U.S.),Canadaisnotlivinguptoitsprosperitypotential. Canadianworkersareworkingmorehourspercapitaforlesseconomicproductivity(GDP perhourworked).canadiansareworking hardernotsmarter (Institutefor CompetitivenessandProsperity,2011).Furthermore,businessesareunderNinvestingin technology,businessresearchanddevelopment(r&d)islacking,developmentof patentableintellectualpropertytrailstheu.s.,andthequalityofourmanagementwhile 7

9 strongalsotrailstheu.s.(instituteforcompetitivenessandprosperity,2011).this presentscanadawithagreaterneedtogrowthecountry sinnovationprospects. In1979DavidBirchwasthefirsttodemonstratethesignificantlypositiveimpactsmall businesseshaveonjobcreationintheu.s.(neumark,wall,&zhang,2011).thoughbirch s workreceivedsomecriticismovertheyears,in2011neumarketal.(2011)revisitedthe subjectagainandarrivedatsimilarresults.inboththemanufacturingandservicesectors, smallbusinessesaremoreeffectiveatjobcreationthanlargerones(neumarketal.,2011). Safeguardingthecontinuedemergenceofsmallbusinessesisthusessentialforjob creation,andpotentiallyasasourceofjobsthatwillsupportmiddleclasslifestyles. 1.3.&Business&Incubation& Oneeconomictoolcapableofchannellinginnovationanddevelopingsmallbusinessesin Canadaisthroughbusinessincubation.Althoughresearchersandpractitionershaveyetto agreeonastandarddefinition(hamdani,2006;ratinho,harms,&groen,2013),business incubationgenerallymeansprovidingassistancetoyoungbusinessestohelpthemdevelop successfullyandsustainably.amorethoroughreviewofthisdefinitionisdiscussedin section1.5. Countriesaroundtheworldutilizebusinessincubatorsasameansforhelpingyoung businessesquicklybecomecontributingmembersoftheeconomy.infact,inthe2013 budgetthecanadiangovernmentearmarked$60milliontofundbusinessincubatorsin Canada(Braga,2013).Contributionsincludeoutputssuchas,jobcreation,accelerated 8

10 companygrowth,taxcollection,intellectualproperty(alnmubaraki,alnkaraghouli,& Busler,2010),andeverydaybusinesstransactions(purchaseofgoodsandservicesthrough businessoperations).thisnecessitateshavingreliableperformancemetricsthatcanbe usedtoindicatethebenefitsbusinessincubatorsprovide.theprimarymeasureofa successfulincubationprogramisthesustainedsuccessofthecompaniesbeingincubated. However,othermeasuresexistwhicharebasedonthegoalsandobjectivesofthe incubator.unfortunately,measuringtheeffectsbusinessincubatorshaveonboththe economy,andthecompaniesbeingincubatedcanbechallenging. 1.4.&The&Research&Question& ThisMRPproposestoassesstheperformancemetricspublishedbybusinessincubatorsin Toronto,Ontarioindicatingtheiroverallimpactonthecompaniesbeingincubatedandon theeconomy.furthermore,thisresearchexamineshowtheseperformancemetricscanbe usedtoindicatethesuccessofabusinessincubatorprogram.theresearchquestionis therefore: How$can$business$incubators$in$Toronto$measure$their$performance$based$on$ the$outputs$they$generate,$and$how$can$they$use$these$outputs$to$indicate$the$ success$of$an$incubator$program?$ 1.5.&Incubator&Definition& Aswaspreviouslymentioned,researchersandpractitionershaveyettoagreeona standarddefinitionforwhatconstitutesbusinessincubation.asratinhoetal.(2013) 9

11 demonstrated,definitionsputforwardbythenationalbusinessincubationassociation (NBIA),UnitedKingdomBusinessIncubation,UnitedNationDevelopmentProgramme, EuropeanCommission,andOECDalldiffer(Ratinhoetal.,2013).InCanada,theCanadian AssociationofBusinessIncubators(CABI),andStatisticsCanadaeachdefinebusiness incubationdifferently.table2replicatestheworkofratinhoetal.andgoesfurtherto includethecabiandstatisticscanadadefinitions. & 10

12 Table&2:&Different&Incubator&Definitions& National&Business&Incubation&Association:Businessincubationisabusinesssupportprocessthat acceleratesthesuccessfuldevelopmentofstartnupandfledglingcompaniesbyprovidingentrepreneurswith anarrayoftargetedresourcesandservices.theseservicesareusuallydevelopedororchestratedby incubatormanagementandofferedbothinthebusinessincubatorandthroughitsnetworkofcontacts.a businessincubator smaingoalistoproducesuccessfulfirmsthatwillleavetheprogramfinanciallyviable andfreestanding.theseincubatorgraduateshavethepotentialtocreatejobs,revitalizeneighbourhoods, commercializenewtechnologies,andstrengthenlocalandnationaleconomies(ratinhoetal.,2013). United&Kingdom&Business&Incubation:BusinessIncubationisauniqueandhighlyflexiblecombinationof businessdevelopmentprocesses,infrastructureandpeople,designedtonurtureandgrownewandsmall businessesbysupportingthemthroughtheearlystagesofdevelopmentandchange(ratinhoetal.,2013). United&Nation&Development&Programme:&(...)incubatorsexisttosupportthetransformationofselected, earlynstagebusinesswithhighpotential,intoselfnsufficient,growing,andprofitableenterprises.byreducing therisksduringtheearlyperiodofbusinessformation,theincubatorisintendedtocontributetoeconomic growththroughsustainingenterprisesthatotherwisefailduetoalackofadequatesupport;creatingpresent andfuturejobs,andothersocioneconomicbenefits(ratinhoetal.,2013). European&Commision:Abusinessincubatorisanorganisationthatacceleratesandsystematisestheprocess ofcreatingsuccessfulenterprisesbyprovidingthemwithacomprehensiveandintegratedrangeofsupport, including:incubatorspace,businesssupportservices,andclusteringandnetworkingopportunities. Byprovidingtheirclientswithservicesona'oneNstopNshop basisandenablingoverheadstobereducedby sharingcosts,businessincubatorssignificantlyimprovethesurvivalandgrowthprospectsofnewstartups. Asuccessfulbusinessincubatorwillgenerateasteadyflowofnewbusinesseswithaboveaveragejoband wealthcreationpotential.differencesinstakeholderobjectivesforincubators,admissionandexitcriteria,the knowledgeintensityofprojects,andthepreciseconfigurationoffacilitiesandservices,willdistinguishone typeofbusinessincubatorfromanother(ratinhoetal.,2013). Organisation&for&Economic&CoHoperation&and&Development:Technologyincubatorsareaspecifictypeof businessincubator:propertynbasedventureswhichprovidearangeofservicestoentrepreneursand startups,includingphysicalinfrastructure(officespace,laboratories),managementsupport(business planning,training,marketing),technicalsupport(researchers,databases),accesstofinancing(venture capitalfunds,businessangelnetworks),legalassistance(licensing,intellectualproperty)andnetworking (withotherincubatorsandgovernmentservices)(ratinhoetal.,2013). Canadian&Association&for&Business&Incubation:&BusinessIncubationinvolvesdynamicbusinessstrategies tohelpbuildupstrong,viable,companiesfromanideaanddetermination.sincestartingupasmallbusiness canbesuchachallengeformost,abusinessincubatorisoftennecessarytohelpnurtureyoungcompanies thosefirstfewmonthsoryearsuntiltheyhaveestablishedthemselvesfirmlyinthecommunity.thenew entrepreneurcanlooktotheincubatorforhandsnonmanagementassistance,education,information, technicalandvitalbusinesssupportservices,networkingresources,financialadviceaswellasadviceon wheretogotoseekfinancialassistance(cabi,2011).& Statistics&Canada:Ingeneral,abusinessincubator$isabusinessunitthatspecializesinprovidingspace, services,adviceandsupportdesignedtoassistnewandgrowingbusinessestobecomeestablishedand profitable(joseph,bordt,&hamdani,2006). Source:$Business$Incubators:$How$do$they$Help$Their$Tenants?$(Ratinho$et$al.,$2013),$CABI:$Business$Incubation$ (CABI,$2011),$&$Characteristics$of$Business$Incubation$in$Canada$(Joseph$et$al.,$2006)$ Despitesomeambiguity,severalsimilarthemesemerge.Notablyabusinessincubator supportsbusinessesintheirearlydevelopmentalstages,helpsthembecomesuccessfuland sustainableentities,andoffersvariousbeneficialopportunities.opportunitiesrangeinsize 11

13 andscopeandincludethingssuchasofficespace,businessmentoring/advice,educational opportunities,accesstofinancialcapital,andaccesstosocialcapital.alsoapparentfrom thesedefinitionsisthattherearedifferenttypesofbusinessincubatorswithdifferentgoals andobjectives.section1.7discussesthesedifferentincubatortypesinmoredetail. InMerrifield s1987papernew$business$incubators,$someofthevariousbeneficial opportunitiesbusinessincubatorsprovidetotheirclientsareexplainedinmoredetail (Merrifield,1987).ThesecharacteristicsarereplicatedinTable3. Table&3:&Characteristics&of&Business&Incubators& Theyprovidesecure,affordable,flexible,wellNequippedphysicalspaceinwhichtheentrepreneurcan work(oftennightandday). Theyprovidereadilyaccessiblesupportservices(receptionist,clerical,dataprocessing,copying, legal,accounting,machineshop,conference,fastfoodandothercapabilities). Theyprovideprofessionalbusinessmanagementandtechnicalconsulting,togetherwithaccessto seedandworkingcapital,stateandfederalgrants,loanfinancing,venturecapitalandr&dlimited Partnership(RDLP)funding,publicandprivatestockofferings,andstateequityfinancing. Theyoftenareassociatedwithauniversitythatcanprovideadditionalaccesstohighlyspecialized analytical,computingandtestfacilitiesinanarrayofdisciplines. Theycreateaninteractivecommunityofentrepreneurs;academicandbusinessintereststhat stimulateandencouragethesometimesfragileincubationprocess. Theyoftenoperateasacommunicationsbridgewiththecommunity,andestablishedenterprises thatseekawindowonemergingtechnologiesandmayprovidegrowthcapitalforequity participation. Source:$New$Business$Incubators$(Merrifield,$1987)$ 1.6.&Incubator&Origins& ThomasEdison s inventionfactory establishedinthelate19 th centurymaybethefirst evidenceofwhatetzkowitzreferstoasa prototype incubator(etzkowitz,2002).edison andhis inventionfactory wereresponsibleforthecommercializationofnumerous innovativeideas.however,edisonandhisteamofscientistsandengineersfocusedsolely oncommercializinginternalprojects,nottheprojectsofexternalcompanies. 12

14 Creditforthefirstbusinessincubator,asitisrecognizedtoday,isgiventotheBatavia IndustrialCentrepurchasedin1959bytheMancusofamily(CharlesMancuso&SonInc.), locatedinbatavia,newyork(alnmubarakietal.,2010).whenthe850,000squarefoot facilityshutdownin1956theunemploymentrateintheregiongrewtomorethan20% (NBIA,2009).WhentheMancusofamilypurchasedthefacility,theintentionwasto improveemploymentconditionsbyfindingonelargetenantcapableofcreatingjobs(nbia, 2009).Joseph(Joe)Mancuso,atthetimeahardwarestoreowner,wasgiventhetaskof fillingthebuilding.whenhewasunabletoleasetheentirefacilitytoonetenant,hedecided torentspacetomultiplebusinesseswiththehopethathecouldachieveanoccupancyrate thatwouldgenerateprofitfromtheinvestment(hanadi,et.al.,2010).inordertoattract sufficienttenants,notonlydidheofferbusinessestheopportunitytoshareoffice resources,butalsoassistedwithraisingcapital,andofferedbusinessadvice(nbia,2009). Thuscreatingthefirstbusinessincubatorasweseeittoday.Infact,thecoiningofterm businessincubator hasbeencreditedtojoemancuso.amongthebuilding stenantswasa chickencompany,andchickenswouldfillthebuilding.joewouldjokinglyrefertothe buildingasanincubatorandthenamestuck(nbia,2009). 1.7.&Types&of&Business&Incubators& Thearrayofdefinitionsforbusinessincubatorsdemonstratesthattheyhavemanyfaces.In late2004,statisticscanadainpartnershipwithindustrycanadaandcabibeganasurvey ofbusinessincubators(sbi)incanada(josephetal.,2006).theresultsofthesurvey, releasedin2006wereintendedasabenchmarkingtoolforfutureresearch(josephetal., 13

15 2006).Inadditiontoprovidingvaluableinformationonthebusinessincubationindustry incanada,thesurveyseparatedbusinessincubatorsintoaffiliationtypes.theseinclude: incorporatednotnfornprofitfirm,incorporatedprivatefornprofitfirm,partofa governmentaldepartmentoragency,partofauniversityorcollege,partofalarger incorporatedprivateorfornprofitfirm,andother(josephetal.,2006). Apointofcontentionamongstresearchersiswhethertoincludevirtualincubatorsintheir analysis.virtualincubatorsdonothostcompaniesinaphysicalofficespaceorlab,instead offeringsupportandmentoringservicesfromadistance(josephetal.,2006).whilethis typeofincubationmaybeconvenientforsomecompanies,overalltheymissoutonmany ofthebenefitsaphysicalfacilityprovides.forexample,beinginthesamebuildingmakes iteasierto maintainarelationship,allowingformanybrief,importantdiscussions throughouttheday,withouthavingtomakeanappointmenteverytimethereisaquestion (Hamdani,2006).Italsoallowsstartupstobuildsocialcapitalbyconnectingwithother entrepreneursandbuildingvisitors(hamdani,2006),nottomentionthefinancialbenefits ofsharingbuildingamenitiessuchasinternet,telephone,andprinting.classifyingvirtual incubatorswithbusinessincubatorspresentsaproblembecauseanybusinessthat providesbusinessassistanceservicescanalsobeconsideredanincubator (Hackett& Dilts,2004). TheconceptofaBusinessIncubationServiceProvider(BISP)wasintroducedinaseparate survey,calledthesurveyofelectroniccommerceandtechnology(sect)(hamdani, Bordt,&Joseph,2008).Asdefinedinthesurvey,aBISP includesallfirmsthatprovided 14

16 anybusinessincubationservice,i.e.servicethathelpsnewbusinessesgetstartedand grow,regardlessofwhetheritwasitsprincipalactivityorasmallpartofthebusiness (Hamdanietal.,2008).BISPsfurtherexpandthepotentialscopeofbusinessincubationin Canada.TheSECTsurveyidentifiedjustover33,000BISPs(includingbusiness incubators),andexpectsthatevenmoreexistincanada(hamdanietal.,2008).thesbi surveybycomparisonidentifiedonly83businessincubators(hamdanietal.,2008). Morerecently,in2012TheEvidenceNetwork(TEN)providedanupdatetotheCanadian businessincubationdata(dalziel,2012),withsomecomparisonstoresultsfromthesbi.in thisstudy,businessaffiliationtypeswerelabelled keypartners,andthetypeswere changedto:autonomous,government,university,andother(dalziel,2012).inthis iterationthe incorporatednotnfornprofitfirm,and incorporatedprivatefornprofitfirm became autonomous,and partofalargerincorporatedprivateorforprofitfirm was mergedintothe other category.forclaritypurposesthischangeisillustratedintable4. Table&4:&Business&Affiliation&Label&Update& TENs&Altered&Business&Affiliation&Labels& Statistics&Canada&Business&Affiliation&Labels& Autonomous IncorporatednotNforNprofitfirm IncorporatedprivateforNprofitfirm Government Partofagovernmentaldepartmentoragency University Partofauniversityorcollege Other PartofalargerincorporatedprivateorforNprofitfirm Other Source:$A$Study$of$Business$Incubators$and$Business$Accelerators$in$Canada$(Dalziel,$2012),$&$Characteristics$of$ Business$Incubation$in$Canada$(Joseph$et$al.,$2006)$ PerhapsoneofthebestassessmentscomesfromGirmaldiandGrandiwhoidentifyfour distinctbusinessincubatortypes.businessinnovationcentres(bics),universitybusiness incubators(ubis),corporateprivateincubators(cpis),andindependentprivateincubators 15

17 (IPIs)(Grimaldi&Grandi,2005).BICsandUBIsaredescribedaspublicincubators,while CPIsandIPIsaredescribedasprivateincubators. BICsarepubliclyownednotNforNprofitentities,establishedtoenhanceeconomicand technologicdevelopment.oftenestablishedbygovernment,theyofferincubationnrelated businessservicessuchasofficespace,advisoryservices,accesstofinancing,etc.typically, fundingfortheiroperationscomesfromfeeschargedfortheservicestheyprovide,and/or governmentawards,funds,grants,etc.(grimaldi&grandi,2005). UBIsdifferslightlyfromBICsinthattheyoperateoutofuniversitiesandexistprimarilyfor researchandeducation.theirgoalsaretocommercializenewtechnologies,research patentableideas,educatestudents,andtransfertechnologytoindustry(grimaldi& Grandi,2005).WhileUBIsmaynotoperateonanexplicitforNprofitbasis,thereisaneed forthemtosecurepublicfunding,orgeneratesomereturnfromtheinvestment.asa result,ubissharesomesimilarcharacteristicswithprivatebusinessincubators(grimaldi &Grandi,2005).ItshouldbenotedthatwithinCanadathemajorityofcollegesand universitiesarepublic,withveryfewprivateinstitutions. PrivateincubatorsdifferfrompublicincubatorsbyoperatingexplicitlyonaforNprofitbasis. Theyrealizeareturnoninvestmentinavarietyofways,someofwhichincludecharging servicefees,andtakingapercentageofrevenues(grimaldi&grandi,2005).acommon arrangementistotakeanequitystakeintheincubatedcompany,withtheintended purposeofaligningtheincubator sinterestswithhelpingthecompanybecomesuccessful. 16

18 Whetherornotthisactuallyworksremainstobeseen.Someincubatorsmaybemore focusedingettingareturnoninvestmentmorequickly.theincubatorcanrealizeareturn bysellingtheirequitystakeoncethecompanybecomessuccessful,orifthecompanyis acquired,examplescouldincludeanexistingcorporationoraventurecapitalistfund (Grimaldi&Grandi,2005). ThetwotypesofprivateincubatorsidentifiedbyGrimaldiandGrandi(2005)areCPIsand IPIs.CPIsareownedandestablishedbylargecompaniesasameansforinvestingin innovation.dependingonthecompany sobjectives,theymaysupportcompanyprojects, employeeideas,orexternalstartnupcompanies(grimaldi&grandi,2005).cpishavebeen growinginpopularitywithcompanieslikepaypal,google,linkedin,andmicrosofteach startingtheirownbusinessincubatorsinrecentyears(lapowsky,2012). ManyoftheCPIincubatortypesfitthedescriptionofaBISP,sinceaBISPisconsideredany companythatprovidesbusinessincubationservices(hamdanietal.,2008).thesect surveyidentifiedthreedifferenttypes, divisionsofcompaniesdedicatedtoproviding businessincubationservicestonewbusinesses;businessdevelopmentunitsofcompanies whichidentifynewandpromisingnewventuresandnurturethem;andfinally,whatare knownas internalstartups (Hamdanietal.,2008). Anothertermusedtodescribedcorporateincubationis skunkworks.referringtoa researchteamthatisdisconnectedfromthehostfirmandgiventhefreedomtoinnovate unencumberedbybureaucracy(colbert,2009).however,askunkworksprojectwill 17

19 rarelyresultinaseparatebusinessunit,andtheintentionisthattheteamandthe innovationwillreturntothehostcompanyuponcompletion(colbert,2009). IPIsaresetuponaforNprofitbasisandofferthestandardarrayofbusinesssupport servicesinexchangeforfees,orequityinthebusiness.theydifferentiatethemselvesfrom otherincubatorsthroughtheirparticularsetofexpertise,networkofcontacts,andtrack recordforhelpingstartupssucceed.theycanbesetupbyanindividual,orgroupof individuals(manyincludeacorporatepartner)andinvesttheirownmoneyinnew companies(grimaldi&grandi,2005).manyventurecapitalistfirmswouldbeinvolved withipisawaitingapromisinginvestmentopportunity(caley&kula,2013).ipis commonlynarrowtheirindustryfocustotechnologystartupsworkingintheinternet software(etzkowitz,2002),andmobileapplicationsectors.ipisandtheirassociationwith what sknownasthebusinessaccelerationmodelarediscussedfurtherinsection1.8. Thisdiscussionsurroundingthedifferenttypesofbusinessincubationshouldbe consideredwithcare.incubatoroperationsarenothomogeneous,ultimatelytheymay choosetooperateunderwhichevercharacteristicstheydeemappropriate.thediscussion merelyattemptstoidentifysomecharacteristicsassociatedwithdifferentincubatortypes. Whatshouldbeemphasizedisthatbusinessincubatorscomeinavarietyofdifferent formats.furthermore,theseformatshavedifferentgoalsandobjectives.thesameistrue ofincubatorswithinthesametype;thegoalsandobjectivesofubisforexamplearegoing todifferbetweenuniversities,andevenuniversitydepartments. 18

20 1.8.&Business&Accelerators& Newcompaniesreadytolaunchabusinessideamayneedadditionalcapitalorspecific mentoringsupport,tohelpthebusinessadvancetothenextlevelmorequickly.thisstage ofbusinessdevelopmentisreferredtoasaccelerationandhasledtotheemergenceofnew businessincubationmodelknownasthe'businessaccelerator'.somebusinessincubators includeaccelerationsupport;othersdonot,insteadencouragingtheircompaniesto graduateandmoveonwhenthetimeisright(i.e.whentheyhavebecomeprofitable,are capableofthrivingontheirown,receivedexternalinvestment,ortheideahasbeen developedtoapointwheretheincubatorisnolongernecessary). Businessincubatorsandacceleratorsmaychoosetotakeageneralistapproachoran industrysectorapproach.whilethisgeneralist(mixednuse)approachisthemostcommon, there$is$a$growing$trend$toward$incubation$in$specific$industry$sectors.$hence,$most$ incubators$and$accelerators$in$north$america$focus$on$ict$[information$communications$ Technology],$software,$mobile$applications,$wireless$technology,$and$related$areas.$A$few$ target$the$bioscience/life$science$areas.$other$sectors$include$healthcare$technology,$medical$ devices,$and$ cleantech $(Isabelle,$2013).MostacceleratorprogramsfitintotheIPI incubatortype,andexchangeinvestmentcapitalandsupportforequityinthecompany (Grimaldi&Grandi,2005).However,otherbusinessincubatortypesmayalsohave acceleratorcharacteristics. SincemostacceleratorsoperateonaforNprofitbasis,theiroverallpurposeistogeneratea returnontheirinvestment.asaresultmanyofthemarefocusedonindustrysectorsthat 19

21 haveashortertimentonmarkethorizon,suchasict(informationcommunications Technologies)(Isabelle,2013).Thesetypesofacceleratorsareknownmorecommonlyas startupaccelerators. Althoughtheterms businessincubator and businessaccelerator areoftenused interchangeably,therearesomeimportantdifferences(bosma&stam,2012;caley&kula, 2013;Miller&Bound,2011).AsurveyconductedbyIsabelleaskedthemanagersandusers ofbusinessincubatorsandacceleratorstodifferentiatebetweenthetwo(isabelle,2013). Table5replicatestheIsabelle ssummaryofthefindings. Table&5:&Incubators&and&Accelerators&from&the&Perspective&of&their&Managers&and&Users& Incubator& Accelerator& ForearlyNstagestartups Fornextstage,forhighgrowthfirms LongNtermProcess ShortNtermprocess Sectorswithlongertimetomarket Sectorswithshortertimetomarket Aninstitution Aprogramwithinaninstitution Buildingsustainablefirms ShortNtermhorizon,cohortbased Morefocusedoneconomicdevelopment MorefocusedongrowthandROI GenerallynotNforNprofit GenerallyforNprofit Olderestablishments Newerestablishmentsorprograms Source:$Key$Factors$Affecting$a$Technology$Entrepreneur s$choice$of$incubator$or$accelerator$(isabelle,$2013)$ Aswithbusinessincubation,aclearconsensusonthedefinitionhasyettobedetermined (Caley&Kula,2013).Nesta(formerly,NationalEndowmentforScienceTechnologyandthe Arts)publishedareportthatattemptstodefineacceleratorprograms(Miller&Bound, 2011).Amongthecharacteristicsembracedbyanacceleratorprogramare:(1)ahighly competitiveapplicationprocess,(2)prenseedinvestment,normallyinexchangeforequity, (3)preferenceforateamoffoundersoverindividuals,(4)supportservicesareprovided foralimitedperiodoftime(3n4months),and(5)applicantsareacceptedwithacohortof 20

22 companies(miller&bound,2011).areportproducedbymarstakesthisdefinitionastep furtheraddingthreemorecharacteristics;(6)someacceleratorsmayoffera DemoDay, wherecompaniespresenttheirbusinesstoinvestorsandotherkeyplayers,(7)officespace withofficeserviceslikeinternetaccess,and(8)accesstoothertechnologyand professionalservices(caley&kula,2013). Whileitcanbearguedthatanacceleratorprogramisaformofbusinessincubation, accelerationhasemergedasan innovationmodeldistinctfromincubation (Caley&Kula, 2013).Regardlessoftheparticulardifferencesbetweenthetwo,itfurtherdemonstrates themanydifferentformsofbusinessincubation.eachformhasitsownsetofgoalsand objectives,whichmeanstheyhavetheirownwaysofmeasuringperformance.whilesome ofthepublishedoutputsarelikelytobeuniversalacrossallincubatortypes(jobcreation, firmsgraduated,successrates,revenuesearnedetc.),otherswillvarydependingontheir relevancetothattypeofincubation. & 21

23 2.0.&Methods& Therearetwoseparateresearchapproachescarriedoutinthispaper.Thefirstidentifies thenumberofbusinessincubatorsintorontoandclassifiesthemaccordingtokey characteristics.thepurposeofthisapproachistoprovideasnapshotoftoronto s businessincubatorenvironmenttoday,aswellastosetsomeregionalcontextforthe reader.thesecondconsidersthepublishedperformancemetricsfromthreebusiness incubatorswithdifferingcharacteristics.thepurposeofthisapproachistoidentifysome ofthemetricscurrentlybeingusedbydifferentincubatortypes. 2.1.&List&of&Toronto&Business&Incubators& InordertoassessthenumberofbusinessincubatorsinTorontoandtheircharacteristics,a tablewascompiled(appendix1).thistabledrawsheavilyfromtwosources,seeding Success:$Canada s$startup$accelerators$(caley&kula,2013)$completedbymarsanda$ Study$of$Business$Incubators$and$Business$Accelerators$in$Canada$(Dalziel,2012)$completed bytheevidencenetwork.eachpaperdevelopedseparatetablesthatlistedthenumberof businessincubatorsincanadaandtheircorrespondingcharacteristics(thetablecompiled bymarsfocusedsolelyonincubatorswithacceleratorcharacteristics). Whileinfluencedheavilybythesetwopapers,thetabledevelopedhereisdifferent.First, thistableisfocusedonbusinessincubatorsintoronto.therefore,allincubatorswith addressesoutsideoftorontoproperwereremoved.second,thistableexcludesincubators thatdonotofferaphysicalspace.these virtualincubators areconsideredbeyondthe scopeofthisanalysis;theyarenottrueincubatorsbutrather,ashackett&diltsassert, 22

24 interventionprograms (Hackett&Dilts,2004).Third,becausethetablescamefrom separatesources,duplicatedincubatorshadtoberemoved.fourth,differencesbetween thetableshadtobereconciled,andgapsininformationfilled(differentcharacteristics used,missingdata,etc.).thistaskwascompletedbyexaminingeachincubator swebsite, andconductingageneralwebsearch.lastly,someofthedatafoundinthetableswas inconsistentwithwhattheresearchuncovered.changesweremadeintheappropriate circumstances,suchasanincubatorthatwascodedasnotofferingofficespace,whenin factitdoes.somecharacteristicslendthemselvestointerpretationfromtheresearcher andothersmayinterpretthemdifferently. Withacompleteddatatabletheanalysiscouldbegin.ThedatawasinputintoanExcel spreadsheetcontainingatotalof20distinctbusinessincubatorsintorontoofferingoffice space.therewere6differentcharacteristicsanalyzedinthetable.theyincludedthe(1) Model(Incubator,Accelerator,orBoth),(2)IndustrySector(ICT,CleanTechnology, Healthcare,Multiple,orOther),(3)ClientStageofDevelopment(AllFirms,StartupsOnly, orhighgrowthfirms),(4)profitversusnonnprofit,(5)hostorganization(intermediary, Autonomous,UniversityorCollege,orGovernment),and(6)FoundingYear. Foreachcharacteristicthedatawascountedusingthe =COUNTIF functioninexcel, identifyingthenumberofresponsesforeachoftheavailableoptions.forthepurposeof comparingdifferentvariables(characteristics)the =SUMPRODUCT functionwasused. TheformulasusedforbothfunctionscanbefoundinAppendix2.Chartsandtableswere thencreatedtoillustratethefindings.duetothesmallsamplesizethesefindingsshould 23

25 notbeconsideredstatisticallysignificant,butvaluedfortheirdepictionofthecurrent Torontoincubatorlandscape. 2.2.&Published&Business&Incubator&Performance&Metrics& FromthelistofTorontobusinessincubatorswithofficespace,threewerechosenfora deeperinvestigationintotheperformancemetricstheyusetoindicateimpact.two decisioncriteriawereusedtoselecttheseincubators.(1)theyneededtomakesomeof theirperformancemetricinformationavailablethroughpublicallyaccessiblesources.(2) Theyneededtoberepresentativeofdifferentbusinessincubationmodels(i.e.atraditional incubator,anaccelerator,orbothmodels). Inordertohelpidentifypossibleperformancemetrics,atablewasdeveloped.Thistable providesagoodindicatorofthepossibleperformancemetricsincubatorscantrack.the tableincludesmetricsthatcanbeusedtodeterminetheincubatorsperformanceinthings suchastheattractivenessoftheprogram,statusoftheincubatedcompanies,indicatorsof economicandcommunitydevelopment,financialindicators,abilitytocommercialize innovation,engagementwiththeexternalcommunity,supportservicesavailabletothe companies,andcompanysatisfactionwiththeprogram. ThethreecompaniesselectedincludetheDigitalMediaZone(DMZ)basedoutofRyerson University,theMaRSDiscoveryDistrict,andINcubesanindependentlyownedforNprofit businessincubator.dataonthesecompaniescomesfromsecondarysourcesandwas madeavailablethroughpublicchannels.examplesofthesourcesused,includethe 24

26 incubator swebsite,newsarticles,magazinearticles,andannualreports.oncecollected, thedatawasusedtocreateperformancemetricprofilesforeachoftheincubators.it shouldbenotedthatincubatorsarelikelytotrackmorethantheperformancemetrics listed;howeverthesewerenotmadepublic. & 25

27 3.0.&Analysis& Thefollowinganalysisconsistsoftwoparts.Thefirstfocusesonthreebusinessincubator models(incubator,accelerator,andboth)thatprovideofficespaceintoronto.thesecond focusesonthreedifferentbusinessincubatorsandtheperformancemetricstheymake public. 3.1.&Analysis&of&Business&Incubators&in&Toronto& Forthepurposesofthisanalysisonlybusinessincubatorswithaddressesspecificallyin Toronto,andthatofferofficespacetoclientsareconsidered.20businessincubators meetingtheserequirementswereidentified.thepossibilitythataneligibleincubatorwas overlookedexists,howeverthislistisbasedonathoroughinvestigation.business incubationisanevolutionaryprocessandanincubator scharacteristicscanchangeover time(bruneel,ratinho,clarysse,&groen,2012).indeed,assection3.1.6indicates,new incubatorshavebeenopeningupmoreofteninrecentyears. ThesectionsbelowdiscusssixcharacteristicsforTorontoincubatorsModel,Industry Sector,ClientStageofDevelopment,ProfitversusNonNProfit,HostOrganization,and FoundingYear.Eachcharacteristicisdiscussedinmoredetailinthesectionsthatfollow $Model$ Modelreferstotheincubationmodelbeingutilizedbytheincubator.Specifically,whether theincubatorprovidestheservicesofanincubator,anaccelerator,orboth.inthiscasean Incubatorreferstothetraditionalincubationmodel.Theanalysisrevealsthattwelve(12) 26

28 (60%)oftheincubatorsinTorontoareAccelerators,six(30%)areIncubators,andthe remainingtwo(10%)offerbothtypesofservice.theseresultsareillustratedinfigure1. TheAcceleratormodelisclearlythedominantofthethree,insection3.1.6acomparisonis madebetweentheyeartheincubatorwasfoundedandtheincubationmodeltodetermine ifthereisarelationshipbetweenthem.theresultsshowthatnewerincubatorsaremore likelytobeaccelerators. Figure&1:&Toronto&Incubator&Incubation&Model& Model& Accelerator Incubator Both $Industry$Sector$ Industrysectorreferstotheindustryfocusoftheincubator:ICT,General,Cleantech(clean technology),healthcare,multiple,andother.ictincludessuchindustriesassoftware, web,andmobiletechnologies.generalmeansthattheincubatordoesnotservejustone industry,focusingongeneralbusinessdevelopment.cleantechincludesenvironmentally friendlytechnologiessuchasrenewableenergy,recycling,transportation,etc.healthcare 27

29 includesanyincubatorfocusedonhealthrelatedtechnologiessuchasbiomedical technologyandlifesciences.multiplemeansthattheincubatorisfocusedonmorethan onesector.lastly,theothercategoryisreservedforanysectoroutsidethepreviously identifiedoptionsoranincubatorthatfocusesonmultiplesectors. TheanalysisrevealsthattheICTandGeneralsectorsarethemostpopularforbusiness incubators,consistingof40%and25%respectively.cleantechandhealthcareeachtrail with5%each.10%arefocusedinmorethanonesector.lastly,15%oftorontoincubators areinanothersectoraltogether.adeeperinvestigationrevealsthatofthethreeother incubatorsonefocusesonsocialinnovation,oneonfood,andoneonfashion. Figure&2:&Toronto&Incubator&Industry&Sectors& Industry&Sector& ICT General Cleantech Healthcare Multiple Other Theseresultsarenotunexpectedandareconsistentwithpreviousstudies.ICTisthe preferredindustrysectorbecausecompaniesinthissectorcanbebroughttomarket 28

30 quickly(isabelle,2013).cleantechandhealthcarewhilevaluablesectors;donothavethe samequickntonmarketappeal(isabelle,2013).usingourdatatocomparetheindustry sectorstothetypeofincubationmodelconfirmsthisreasoning.thiscanbeseenintable 6.OftheeightICTincubators,sevenofthemoperateundertheAcceleratormodel(88%), leavingonlyonethatoperatesasatraditionalincubator. Table&6:&Incubator&Model&and&Industry&Sector& Model&and&Sector& ICT& General& Clean&tech& Healthcare& Multiple& Other& Total& Accelerator& Incubator& Both& Total& $Client$Stage$of$Development$ ClientStageofDevelopmentreferstothestageanincubatorclientmustbeintogain admittanceintotheincubator sprogram.therearethreepossibilities.theincubatormay acceptfirmsatallstagesofdevelopment,onlyacceptstartups,oronlyaccepthighgrowth Firms. 50%ofincubatorsinTorontoonlyacceptclientswhoareintheStartupphaseintheir businessdevelopment.another45%acceptallfirmsnomatterwhatstageofdevelopment theyarein,andtheremaining5%mustbeinthehighgrowthstageinordertogain admission.startupcompaniesarethemostpopularincubationclientsbecausetheyarethe onesthatcanbenefitfromincubationservicesthemost.highgrowthfirmsareattractive clientsforincubatorsbecausetheirtimentonmarkethorizonwillbequicker,buttheirneeds 29

31 requireanincubatorthatcanhelpsecurefinancing.onepossibilityforthesefindingsis thatincubatorscapableofsecuringthefinancinghighgrowthfirmsneedarealsoableto meettheneedsofstartupcompanies,thereforesupportingallfirms. Figure&3:&Toronto&Incubator&Development&Stage&Admittance& Client&Stage&of&Development& AllFirms StartNupsOnly HighGrowthFirms $Profit$vs.$Non@Profit$ ProfitNseekingincubatorsexpecttoseeafinancialreturnfromtheirincubationactivities, whereasnonnprofitincubatorsmaybemotivatedbymultiplefactors.afinancialreturn maybeintheformofprogramfees,rentpaid,orinexchangeforequityinthecompany. NonNProfitincubatorsmayalsoexpecttoseeafinancialreturn,butmaybeinterestedin commercializinganinnovation,orpromotingeconomicdevelopmentthroughjobcreation. Four(20%)oftheincubatorswereForNProfitwhiletheremaining16(80%)areNonNProfit. ThereasontherearesomanymoreNonNProfitincubatorsinToronto,islikelybecauseof 30

32 thenumberofuniversitiesandcollegesintoronto.thesehostorganizationsare discussedfurtherinsection Figure&4:&Toronto&Incubator&Profit&vs.&NonHProfit&entities& ProSit&vs.&NonHProSit& Proqit 16 NonNProqit $Host$Organization$ TheHostOrganizationidentifiesthetypeoforganizationthatestablishedtheincubator andthemotivationsbehinditsgoalsandobjectives.intermediariesactonthebehalfof anotherparty,autonomousactindependentlyandareselfnmotivated,universityand Collegeincubatorshaveanacademicaffiliation,andGovernmentmeansthattheincubator hasagovernmentbody(federal,provincial,ormunicipal)directlyrunningit.themost commonhostorganizationforanincubatorisuniversitiesandcollegeswith40%, followedcloselybyautonomous(nohostorganization)with(35%),thenindependent (20%),andlastlyaGovernmentalorganization(5%). 31

33 Thereareafewcommonsensereasonsthatacademicinstitutionsarethemostpopular HostOrganization.Theseinstitutionsprovideaccessto;youngentrepreneurseagerto starttheirownbusiness,intellectualcapitalfromtheinstitution sfaculty,facilities(labs) necessarytotestbusinessideas,andthechancetocreateanexperientiallearning opportunityforthestudentbody. Figure&5:&Toronto&Incubator&Host&Organizations& Host&Organization& Intermediary Autonomous University/College Government TheAutonomousorganizationtypehasthesecondmostpopularaffiliation.As demonstratedintable7,sixoftheseven(86%)autonomousorganizationtypescome fromtheacceleratormodel,whileonlyoneofseven(14%)comefromthetypical Incubatormodel.DemonstratingthatAutonomousincubatorsaremuchmorelikelytobe AcceleratorsthanIncubators(atleastinToronto). 32

34 Table&7:&Incubation&Model&compared&to&Host&Organization&Type& Model&and&Host&Organization& Intermediary& Autonomous& University/College& Government& Total& Accelerator& Incubator& Both& Total& ReferringbacktotheNonNProfitdiscussionfromtheprevioussection,thereasonthereare somanymorenonnprofitincubatorsthanprofitincubatorsisbecausetorontohassomany UniversityandCollegehosts.TheseresultsareillustratedinTable8.InCanadamost universitiesandcollegesarepublicinstitutions,andnonnprofitorganizations. Table&8:&Profit&vs.&NonHProfit&Organizations&Compared&to&Host&Organization&Type& Profit&vs.&NonHProfit&and&Host&Organization& Intermediary& Autonomous& University/College& Government& Total& NonHProfit& Profit& Total& $Year$Founded$ TheYearFoundedcharacteristicwasincludedfortworeasons.First,incubationappearsto havebecomemorepopularrecentlyandincubatorsseemtobeemergingmorefrequently. Second,businessincubationisanevolutionaryprocess,andAcceleratorsappeartobethe incubationmodelcurrentlypreferred.theargumenthasbeenmadethatweare approachinganacceleratorbubblethatissoontopop(caley&kula,2013).ifalarge numberofacceleratorsareopeningintorontothismaybeworthadeeperinvestigation. FurtherdetailonthisacceleratorbubblecanbefoundinSection

35 ThetwofiguresbelowpresenttheprogressionofbusinessincubationinToronto.Both figurespresentonlythebusinessincubatorsthatarestillactiveintoronto.figure6 identifiesthenumberofactiveincubatorsfoundedbeforetheyear1990upuntiltoday. Figure7focusesonthenumberofincubatorsthathaveemergedsincetheyear2000.It shouldbeexplicitlystatedthatthenumberofincubatorsrepresentedarecumulativeand anyincubatorthatceasedtooperateduringthistimeisunaccountedfor. Figure&6:&Toronto&Incubators&Active&Today&by&Decade:&Pre&1990&H&2013& Year&Founded&(pre&1990&H&2013)& andearlier 91to'00 01to'10 11to'

36 & Figure&7:&Toronto&Incubators&Active&Today&by&Year:&2005&H&2013& Year&Founded&(2005&H&20013)& Basedonthedata,itappearsthatbusinessincubatorshavebeenemergingmorerapidlyin recentyears.note,thisdataisbasedontheyeartheincubatorwasfounded,anddoesnot includethenumberofincubatorsthathaveceasedtooperateduringthesameperiodof time.thequestionofhowmanyhaveshutdownintorontoisbeyondthescopeofthis paper.basedontheirrapidgrowthinrecentyears,assumingfewincubatorshaveclosed between2001and2013,wecanconcludethatthenumberofbusinessincubatorsin Torontoisindeedgrowingrapidly. TodeterminewhetherbusinessAcceleratorsarebecomingthemostpopularinnovation developmentmodel,theyearanincubatorwasfoundediscomparedtothedifferent programmodels(incubator,accelerator,orboth).theresultsofthiscomparisonare illustratedintable9. 35

37 Table&9:&Cumulative&Number&of&Business&Incubators&Still&Active&by&Incubation&Model& Cumulative&Number&of&Business&Incubators&Still&Active&by&Incubation&Model& Accelerator& Incubator& Both& Total& 1990&and&earlier& &to&2000& &to&2010& &and&after& Ten(12N2=10)Acceleratorswerefoundedbetween2011andtoday.Thatmeans11 Acceleratorsinlessthan3years.ItalsoshowsthatonlytwoactiveAcceleratorprograms wereinoperationpriorto2011.bycomparison,onlyoneincubatorwasfoundedbetween 2011and2013.Acceleratorsareinfactemergingquickly,andappeartobethemore popularincubationmodel.whetherornotanacceleratorbubbleexistsintoronto,isa topicthatwouldmeritadditionalresearch. 3.2.&Analysis&of&Published&Business&Incubator&Performance&Metrics& FromthelistofTorontobusinessincubators,threewereselectedforadeeperanalysisof theirpublicallynavailableperformancemetrics.thethreechosenincludethedigitalmedia Zone(DMZ),MaRSDiscoveryDistrict,andINcubes.Performancemetricsincludeany indicatorsofhowtheincubatorisperforming.thedmzisauniversityincubator,nonn profit,andfocusedonict(digitalmedia)aswellasothersectors.marsisanintermediary, bothanacceleratorandincubator,nonnprofit,andisfocusedonvariousindustrysectors (ICT,Cleantech,Healthcare,andSocialInnovation).INcubesoperatesautonomously,andis afornprofitacceleratorfocusedontheictsector. 36

38 37 Priortocommencingtheanalysis,alistofincubatorperformancemetricswasidentified, basedontheliteraturereview(appendix3).theyweredividedintoeightcategories(or reasons)formeasurement.theseinclude,(1)incubatorattractiveness,(2)company Status,(3),Economic,(4)Financial,(5)ExternalEngagement,(6)Innovation Commercialization,(7)InternalSupport,and(8)CompanySatisfaction.Thesecategories areexplainedinmoredetailintable10. Table&10:&Measurement&Category&Descriptions& Measurement&Category& Description& Incubator&Attractiveness& Indicatesthelevelofdemand,orpopularityofanincubatorprogram (numberofapplications,numberofclients,numberofcompanies,sizeof investornetworketc.).canbeusedtopromotehowpopulartheprogramis. Company&Status& Indicatesthestateofcompaniesandgraduates(thriving,acquired,onhold, dissolved,losttouch),andcurrentcompanies(levelofgrowth,milestones, etc.).canbeusedtodemonstrateresults. Economic& Indicatestheimpactontheeconomy,primarilyrelatedtoemploymentbut generallyfactorsthathelpgrowtheeconomy.canbeusedtodemonstrate contributionstothelocalcommunity,ornationaleconomy. Financial& Indicatesinvestmentsandothersourcesoffinancingsecuredbythe companysuchasseedfunding,venturecapital,debt,grants,andreturnon equity.canbeusefulforpotentialinvestors. External&Engagement& Indicatesthelevelofengagementwiththeexternalcommunitywhether investors,mediaoutlets,politicians,orfutureentrepreneurs.canbeusedto helppromotetheincubatorandenhancereputation. Innovation& Commercialization& Indicatesthecommercializationofideasthroughpatents,trademarks, copyrights,royalties,licensing,andmore.canbeusedtodemonstratethe incubatorsabilitytohelpmakeanentrepreneur sideacommerciallyviable. Internal&Support& Indicatestheamountofsupportgiventocompaniesthrougheducation, mentoring,businessdevelopment,marketing,legalservicesandmore.can beusedtodemonstratesomeofthevalueincubatorscreateforcompanies throughtheirservices. Company&Satisfaction& Indicateshowcompaniesfeeltheprogramhashelped,andincludesthings likesuccessstories,testimonials,andnetpromoterscore( Howlikelyisit thatyouwouldrecommendthisprogramtoafriendorcolleague? ).Canbe usedtogetfeedbackfromgraduatesonhowtheincubatorhashelpedthem succeedorfail.usefulforinternalimprovementandexternalpromotion. Source:$Created$by$the$author$with$influence$from$MaRS$(Caley&Kula,2013)$ Eachmeasurementcategorycontainsexamplesofrelatedperformancemetrics.Some performancemetricsmightapplytomorethanonemeasurementcategory.forexample,if