David Butler

1
Internationalising Incubator Clients - a new
approach

• David Butler
• Director,
• Canterbury Enterprise Hub
• University of Kent

2
Facts 1

• In Western Europe, traditional manufacturing
  industries such as textiles, automotive, and
  steel have declined over the past twenty years.
• Large manufacturing companies have been replaced
  by growth in service industries, typically
  involving SMEs.
• In Eastern Europe, manufacturing industries are
  thriving due to competitive economies and lower
  wages costs.

3
Facts 2

• The south-east region of the UK is one of the
  most economically prosperous regions in Europe
  But
• In Kent the closest part of the UK to Europe
  99 of businesses have less than 5 employees, and
  most of these are lifestyle businesses that are
  unlikely to achieve rapid growth.
• Less than 6 of Kent companies are engaged in any
  international trade
• The problem to encourage small firms to grow

4
Corporate approach to exporting

• Extensive market research
• Examine options
• Formulation of a business case
• Strategic level decision
• Resources allocated in business plan
• Formation of sales strategies / marketing
  alliances
• The big launch
• Publicity promotion campaigns

5
Exporting the Small Business approach

• In the real world owner-managers appear to
  approach exporting on an almost random basis .
  reflected by actions such as responding to an
  unsolicited overseas enquiry without further
  market research, or selecting a market on the
  basis of it being somewhere the individual would
  like to visit
• A small firms first entry into an overseas
  market may be because a friend or relative living
  elsewhere in the world, has asked them if they
  can supply a product that they need
• Chaston Mangles (2002)

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The response to the problem

• In 2001 the South-East England Development Agency
  (SEEDA) set up a network of 21 Enterprise Hubs
• To provide high-levels of business support and
  advice, with access to investment funding
• Target market High-tech and knowledge-based
  start-ups and early stage companies with
  high-growth potential the 23 of companies
  that will generate 95 of capital growth
• Business ideas should be scaleable capable of
  national market penetration in 1-2 years, and
  international expansion in 3-4 years of achieving
  revenue

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Canterbury Enterprise Hub

• One of the 21 Hubs in the SEEDA Enterprise Hub
  Network
• CEH exists to support new and small firms with
  high-growth potential currently 33 Portfolio
  clients (high-level support) 105 Network
  clients (more general support)
• Clients from biosciences, medical devices, ICT,
  biometrics security, nanotechnology,
  sustainable fuels diamond processing sectors
• Aids commercialisation of research / links
  business with academia
• Access to intellectual property advice finance
  for growth
• Operates Business Incubator 700 sq.m 15 tenants
  waiting list
• New Innovation Centre addition 3500sq.m for early
  2009
• Support for Student Enterprise Society / Kent
  Inventors Club
• Support and advice for student start-up companies
  
• Start-up training for academics high-growth
  companies
• Encourage spin outs from University 9 so far, 3
  last year
• Works closely with two other Kent-based
  Enterprise Hubs

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The challenge for the Enterprise Hubs

• Business support resources, access to investment
  funding, intellectual property advice etc are
  well-provided by the Enterprise Hub Network
• UK Trade Investment (government sponsored
  export advisory service) works well, especially
  for established medium and large businesses
• But there is a gap in provision for small and
  early-stage companies
• Enterprise Hubs have a responsibility to
  internationalise their client companies

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Soft Landings not a new concept

• NBIA Soft Landings designations have been around
  for several years currently 10 across 7
  countries (April 2007)
• NBIA designation - initial approval 2 years
  renewable, seen as a Seal of Approval of good
  practice in activities including
• - Effective incubator management
• - Language training translation services
• - Domestic market research entry assistance
• - Support to access capital and funding sources
• - IP and Patent protection advice
• - Advice on immigration, govt regulations,
  business licenses, import export laws
• - Housing assistance / cultural training
• European Business Incubator Network (EBN) offers
  office and market research facilities for
  Incubator clients in a range of locations around
  Europe pilot EU project, working well.

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Soft Landings - traditional approach

• Provision of business support services for
  companies wishing to trade in other countries
• Support services include market-access advice,
  legal and banking services, translation
  facilities
• Typically real-estate based support designed to
  support relocation to another country, finding
  and acquiring suitable premises.
• Not necessarily appropriate to small or
  early-stage companies that seek collaboration,
  sales agents, or marketing partnerships.

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Gaps in current Soft-Landing provision

• Essentially uni-directional and highly
  competitive the focus is on attracting incoming
  companies for regional economic growth
• Real-estate based - assumes companies want to
  relocate to trade not always true
• Good levels of business support available but
  less emphasis on cultural and family support
• Young companies often need more that incubator
  premises and business support technology-based
  companies may need RD resources or university
  collaboration
• Young companies expect advice from Incubator
  managers about suitable target markets or
  locations
• Obligations on incubators to internationalise
  clients

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Challenges of international relocation

• International relocation is not just about
  setting up a new business or subsidiary company
  in a new country. In order to really succeed it
  requires
• Introductions into new markets
• Providing introductions to established networks
• On-going high-level business support including
  sector-specialist advice.
• Fully integrating with the local business
  culture
• Ensuring suitable domestic support, with access
  to housing, schools, mortgages, social and
  community life

13
Reciprocal Soft-Landings Network

• The Reciprocal Soft-Landings Network (RSLN) is a
  new concept that aims to build on existing good
  practice to proactively encourage start-up and
  early stage companies to engage in international
  trade at levels that are appropriate to their own
  stage of development, including
• Research or product development collaboration
• Finding sales agents, distributors or strategic
  marketing partners
• Licensing of intellectual property
• Setting up overseas subsidiaries

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What is different about the RSLN?

• RSLN aims to take the good practice demonstrated
  by the existing NBIA designation process a stage
  further
• To establish accredited standards of
  best-practice in Soft Landings provision on an
  international basis
• To enable incoming companies to access broad
  ranges of established business sector, marketing,
  research and support networks in the new host
  countries beyond those offered by individual
  incubators
• To broaden the range of social and family
  support available recognising that family
  comfort and stability is an important contributor
  to business success in a new country
• To raise the level of company movements between
  countries

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The proposed RSLN model

• Network members will be made up of a consortium
  of incubators, science parks, universities,
  economic development agencies, and business
  support specialists. One of those will act as the
  lead partner.
• Network Member consortia will be assessed against
  specified quality standards and accredited by one
  or more of the international bodies. Draft
  criteria for those standards are in preparation,
  and will incorporate NBIA / EBN good practice
• In the early stages there will be one consortium
  in each country that will act as a gate-keeper
  for client companies trading with other parts of
  the Network.
• As the Network grows then larger countries may
  develop regional consortia.

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RSLN developing the network

• Pilot stage initial members
• New River Valley Economic Development Alliance,
  Virginia Tech Radford Universities, Virginia
  USA
• Canterbury Enterprise Hub, University of Kent,
  SEEDA Enterprise Hub Network, UK
• Phase 1 members
• 8 10 consortium members accredited by mid 2009,
  from UK, USA, Poland, Canada, Australia, Northern
  Ireland, India, Spain France
• By late 2010 20 consortia members from around
  the world
• Project to be self-financing from 2011

17
RSLN progress to date

• Pilot exchanges between UK / USA 6 small UK
  companies to make a trade visit to Virginia in
  April 2008, with a similar number of US companies
  visiting UK in October 2008.
• EBN (300 incubator members in 30 countries) have
  confirmed support for the project and will back
  applications for project funding to World Trade
  organisation. EBN have also offered use of their
  accreditation resources.
• NBIA (900 incubator members in 47 countries)
  RSLN project to be presented at NBIA conference,
  May 2008, to seek similar support.
• Website (including initial consortia members)
  planned for October 2008.

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Criteria for consortia involvement

• Ability to provide high levels of business
  support
• - Access to finance - RD grants, Proof of
  Concept V-C funding, loans
• - Access to marketing and distribution support
• - IP guidance support
• - Incubator facilities or commercial workspace
• - Legal, regulatory, taxation, financial
  employment guidance
• - Business culture advice translation
  facilities
• - Access to technical expertise / academic
  research
• Ability to offer high levels of family social
  support
• - Finding setting up homes, schooling, local
  facilities
• - Understanding national cultures
• - Finding bank accounts, insurance, local laws,
  transport

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• Todays Challenge
• The Krakow Technology Park and the three
  associated Universities in Krakow are regarded as
  ideal potential partners to represent Poland in
  the Reciprocal Soft-Landings Network
• We would welcome you to join us in discussing the
  future of this project