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Focus on.... business incubators

What's different about a business incubator?

Business incubators aren't just about somewhere to hang your coat and plug in your laptop, a good business incubator is about more than just physically accomodating your business. Whilst any business starting out and growing needs the right accommodation; a building has never grown a business. Most clients of business incubators are attracted by the 'easy-in' and 'easy out' terms, but once through the doors, it’s the access to business growth support that keeps them there.

Incubators, as the name suggests, nurture startup businesses and young companies until they are big enough to leave the nest and make it on their own. A number of studies have shown the positive effect of locating in a business incubator on the longevity and growth of start-up companies. The US small business adminstration published a study showing that only 44% of start-ups remained in business after two years. Contrast that with the success rate of an incubator such as the MedTECH Centre, where all of the original start-ups are still in business and growing.

So business incubators are a new phenomena?

Not really, the formal concept of business incubation began in the USA in 1959 when Joseph Mancuso opened the Batavia Industrial Center in a Batavia, New York, warehouse. Incubation expanded in the U.S. in the 1980s and spread to the UK and Europe through various related forms (e.g. innovation centres, pépinières d’entreprises, technopoles/science parks).

 Her Majesty's Treasury identified around 25 incubation environments in the UK in 1997; by 2005, UKBI (the membership association of organisations and professionals actively involved in enterprise, innovation and sustainable economic growth) identified around 270 incubation environments across the country. A study funded by the European Commission in 2002 identified around 900 incubation environments in Western Europe.

What is new is that the NHS is now understanding that to deliver better care it needs to encourage the next generation of innovators by supporting business incubation.

 Are the challenges facing medical technology innovators different?

MedTECH development cycles are typically shorter than those for pharmaceuticals or other biomedical innovations, and the amount of funding needed to bring a product to market are often less, but that doesn't mean that the challenges facing innovators in MedTECH should be underestimated. MedTECH is a highly regulated market and this is often a steep learning curve, particularly for companies diversifying into healthcare from other domains in, for example, IT.

"Having someone on hand who has direct experience, particularly when trying to access the NHS market, can significantly reduce frustration and mistake proof the route to market," said Paul Hanmer, NHS access consultant for the MedTECH Centre, "the other benefit of an incubator is that there is a community of like minded innovators and entrepeneurs within the companies that are all trying to solve the same general problems and are willing to share their experience."

Funding my idea

 Also, at many incubators that includes help locating startup capital, this can come from a number of sources, direct investment, business angels, grant funding etc. The MedTECH Centre works closely with CLB Coopers and TRUSTECH Smart Healthcare Ventures to forge connections in the banking and investment world, they can speed-dial the investors, angel groups, and venture capitalists who will be most interested in the business plan of MedTECH innovators.

To raise money, you have to meet investors. To meet investors, it helps to be introduced by a reputable source. That’s where an incubator can help a start-up that simply hasn't been around long enough (by its very nature) to have a successful track record.

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