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Technology Incubators

 By Victoria Scarborough, Materia Prima Ventures

I often get questions from large companies with innovation-based teams about starting a technology incubator to advance their innovation process.  My answer to this question is, it depends on a lot of factors.  Most people know technology incubators as facilities that house a number of startup companies who work on early stage development of technology, which may or may not be aligned with your business needs. Most incubators are co-located with universities in innovation districts around the country, with a few notable powerhouses like Boston (MIT and Harvard) and Silicon Valley.

The incubators are often cosponsored by large technology companies like Microsoft, Google, and Samsung. You must scout each of these incubators to find technology that might help your business. So, the question of starting your own corporate incubator is reasonable if you’re looking to get better alignment with your needs.

First, it takes lots of resources to start and maintain a facility. Be prepared to cover overhead, safety training, security, waste disposal, and managing tenant disputes (it happens)—not to mention keeping regularly scheduled meetings with the companies developing technology.

You have to find startups willing to become tenants. What conditions will you set for that? Are they aligned with your business needs, or are they adjacent to your needs? How many startups can you house? Will it be enough to move the innovation needle given the high-risk proposition of new technology? This is a major undertaking and in the end, it may yield marginal results. We all know how management feels about no results with lots of effort. Failure stays with them a long time.

A better option might be the so-called virtual incubator. You decide to partner with and support a number of startups wherever they reside. Most companies do this anyway but don’t really call it an incubator. In this case, you maintain a portfolio of the most aligned startups and provide money, scale-up facilities, and guidance on how to meet your needs. The budget determines how many companies you can support. This still requires a lot of internal resources and dedication to long-term outcomes to succeed. If your business managers have expectations of meeting short-term goals, this is likely not for them.

Another option that usually doesn’t get much consideration is allowing your employees to form their own internal incubator to work on an idea that resonates with your business needs. Imagine having the freedom to do something interesting that might yield a new product, technology, or process for your company. Who better to take this risk than people you already know have the skills, passion, and know-how to get things done in your company. Obviously, this is a managed project with goals, expectations, and time limits for experimentation. A couple of successful internal ventures may well prove to be your best chance to drive innovation in a less risky way. It also demonstrates confidence in your employees that they can help shape your company’s success. Now that’s motivation!