Commerce Report Benchmarks Technology Incubator Performance, Practices

Citing inadequate information available to those who oversee technology incubators, yet emphasizing the incubators' significant and measurable impact on communities, the U.S. Department of Commerce's Technology Administration has released a study that highlights 17 of the nation's top incubators. A National Benchmarking Analysis of Technology Business Incubator Performance and Practices details the role business incubators have in technology development strategies.

Working with the National Business Incubation Association (NBIA), Commerce's Office of Technology Policy (OTP) sought to identify factors that contribute to business incubator performance. OTP collaborated with NBIA and the Southern Technology Application Center at the University of Florida to produce the study, ultimately to allow economic development officials to gauge their efforts and increase the return on investment in business incubation.

To determine the 17 "best-in-class" incubators out of a field of 79, NBIA researchers gathered data on employment and sales revenue growth from incubator managers. The 17 are said to constitute the top 10 programs nationally in either revenue or employment growth. These top programs offered a full array of incubator services and had a strong relationship with either a research-intensive university or medical research institution, or were located in a metropolitan area with a high concentration of technology-based companies and associated business support firms, according to the study.

Additional findings, as outlined by NBIA researchers, include:

• Forty-eight percent of the technology incubators were focused on information technology and electronics, compared to 24 percent focused on biotechnology and biomedical applications and another 28 percent involving a mix of client company technology concentrations.
• Forty-four percent of incubators focused on companies that primarily had product-oriented business strategies, compared to 18 percent focusing on service-oriented strategies and 38 percent on clients with a mix of strategies.
• The clients of incubators with a greater biotech/biomedical client focus had raised more money, obtained more research support, held more patents and licensed more technology than their peers.
• Biotech/biomedical-focused incubators' clients had slower revenue growth than IT/electronics and mixed technology incubators' clients and fell behind mixed technology incubators in employment growth. In other words, they grew but growth was based on investment capital.
• Service oriented incubators' companies grew faster both in terms of revenues and employment than product-focused incubator clients.

The report concludes that "the strength and pervasiveness of ties to community technology generators, as well as the individual skills of the incubator manager, are greater predictors of performance than whether the incubator provides mentoring relationships or loaned executives for use by client firms."

A National Benchmarking Analysis of Technology Business Incubator Performance and Practices is available at: http://www.technology.gov/Reports.htm