Viv Hallam

1
Incubation in Practice A perspective from
Yorkshire

• Viv Hallam
• Director, Inkopo Limited
• 10 April 2006

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Todays discussion

• Business incubation in Yorkshire
• Inkopos private sector incubation model

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Yorkshire

• The largest county in England
• Located at the heart of the UK
• 220 miles from London - just over two hours on
  the train

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Yorkshire - one of Europes fastest growing
regions

• Population of 5 million (UK 60m)
• Employment levels above European average
• Total GDP output worth 75 billion per annum
• Largest concentration of Universities in Europe
• Over 26,000 private companies

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Incubation in Yorkshire

• Focus of incubators are around key clusters
• Bioscience and chemicals
• Advanced engineering and metals
• Food and drink
• Digital and creative industries (10bn)
• Healthcare
• Mainly government funded, and several linked to
  universities
• Very few privately funded incubators
• Over 35 incubation environments

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Diverse incubator environments
UniversityIncubators
Leeds Metropolitan Uni, Huddersfield Business
Generator, Think Business _at_ Bradford
Media centres
Leeds Round Foundry, Huddersfield Media Centre,
Barnsley BIC
Technology / science parks
York Bioscience, IT Centre, Sheffield Technology
Park
Innovation centres
Inkopo, Leeds Innovation Centre
Managed workspaces
Offered by local councils with basic incubation
and private sector with basic services
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Advanced Manufacturing Park - Sheffield
IPI Bradford Univ
Round Foundry - Leeds
Barnsley BIC
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Regional support for incubators

• Strong support from Yorkshire Forward the
  Regional Development Agency
• Key objective is to increase the business birth
  survival rate
• Funding from key sources EU, RDA, local
  councils, regional universities
• Business Support Networks include
• Business Link
• Chambers of Commerce
• Connect Yorkshire
• Yorkshire Association Business Angels

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Whats important to the incubator?

• Public sector funded
• Business Birth Rate Strategy
• Sustainability of business
• Cluster growth
• Budget ceilings
• Evidence of support
• State aids
• Jobs outcomes
• Programme evaluation

• Private sector funded
• Motivation of people
• Fit with the market
• Clients ability to pay now
• Graduation potential
• Investment readiness
• Business valuation
• Future client relationships

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Two distinct incubator models
Leeds Met Univ
Inkopo
Purpose
Public sectorNot for profit
Private sectorFor profit
Opportunity for all
Identify and back the winners
Emphasis
Increase number of businessstart ups, create
jobs
Develop sustainable businesses and share the
rewards
Objectives
Sector focus
Creative services
Technology
Funding
Government funding to subsidise services
premises
Fees from services, equity stakes, commercial
rents, bank loans
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Two distinct incubator models
Leeds Met
Inkopo
Client selection
Partially selectiveLow threshold
Highly selectivePick the winners
Client numbers(over 36 mths)
Applications 90Entrants 60Graduates
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Applications 50Entrants 15Graduates
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Services
Generic support and some specific services
Value added services Specialist advice
3 9 months Short term support
6 36 months Long term support / as required
Incubation period
Client funding
Grants, small firms loan, banks loans
Access to private capital andbusiness angels
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The self-sustaining structure
Property
Investment
Incubation Management
Consulting
Technical (and other) Services
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Inkopos private incubator business model
Consulting Services
Investment and Financial Services
People Services
Incubation Management
Property Development And Services
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Consulting Services
Feasibility studies Business planning Technical
reviews IP strategies Project management Due
diligence
15
People Services
Consulting Services
Investment and Financial Services
Psychometrics Team role profiling Interim
management Search and Selection
Incubation Management
Property Development And Services
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Property Development and Services
Facilities Management IT and Technical
Services Feasibility Studies Property Development
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Metic House, Normanton, West Yorkshire
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Investment and Financial Services
Raising funding for clients Finance
management Bookkeeping services Business
Angels Venture Capital
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Venture Capital

• 5.0m repayable grant from DTI Early Growth
  Fund
• For investment in early-stage, principally
  technology-based companies
• Yorkshire and The Humber region only
• To be matched for by private investment
• 2.0m x 35 first-stage deals _at_ av. 60k each
• 2.0m in follow-on investments _at_ av. 150k each
• lt 400k aggregate in any one company

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How does it work?
DTI 5.0m repayable grant
Investee Company
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The story so far ..

• 150 Applications since June 2004
• 15 - healthcare, life sciences, biochemicals
• 60 - IT, web/net, communications, electronics
• 14 investments completed 1.3m invested
• Matching investment
• 1.3m from Viking Club members
• 0.7m from other private investors
• Av. 3 deals per Viking Club member
• One investment (25k) written off
• One AIM flotation

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Scensive Technologies
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Scensive Technologies Ltd.
Electronic Nose Technology Bloodhound ST214

• Spin-out from Leeds University
• Seed Capital from Viking Fund
• Flow injection system
• (pulse or sniff of volatiles to create odour
  finger prints)
• Applications
• Human Health
• Animal Health
• Security Public Safety
• Industrial Production
• Food Drink

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Any Questions ?

• Viv Hallam
• Director, Inkopo Limited
• 10 April 2006