Improving Evaluation Practices at Universiy Technology Incubators

Abstract

University technology-based incubators (UTBIs) have an important role in the development of new technology-based firms [NTBFs]. By providing a favourable environment for these companies it significantly reduces firm failure. In order to maximize the attainment of the incubator goal, UTBIs expect tenants to grow within a particular time. It, therefore, applies a strict incubatee evaluation practice that evaluates which incubatees show sufficient commercial viability to get further support and which ones do not. However because of the heterogeneity in development paths between NTBFs, considerable differences exist among incubatees. Slow growing NTBFs are not always a direct sign of lower commercial viability. Instead, these companies often show a slow commercial growth in their early stage but can grow out to large cooperation’s later on. These firms often need the intensive support from the incubator before they can show such growth. The question that arises: are summative indicators, like revenue or firm size, appropriate benchmarks for future incubation evaluation? Or should an incubator have a more balanced approach that better takes into account the heterogenic and nonlinear development of NTBFs? Not taking into account that this might lead to ineffective and inefficient evaluation and thus inefficient incubation. The study calls for an improved incubatee evaluation method that better take into account the dynamics of NTBF development. It provides an answer to the following research question: How can incubatee evaluation be improved within a university technology incubator? The study concludes that better progress evaluation can be reached when the incubator carefully takes into account the nonlinear development NTBFs. Firms that deal with long periods of technology/product testing, might be not need extensive support. This implies that they might need support at a later stadium, to grow the business. Also, capital-intensive firms or firms with a strong focus on R&D have higher incubator needs for support. Evaluators should be well aware of this when evaluating their potential.