Small business boost

Electronics Times, April 14, 1998

UK technology start-ups, searching for their first break, are set to benefit from a significant rise in the number of UK small business incubation centres.

Research by the DTI-sponsored UK Business Incubation Centre has established that the number of centres is about to double. The centre has found a total of 25 established projects and has unearthed between 25 and 30 currently being set up.

Typically, the incubators focus on small, fast-growing businesses, and the UK Business Incubation Centre estimates that at least 35% of all projects are of a technology or IT nature.

Industry experts say the expected growth in incubation centres will lead to a much higher survival rate in the technology start-up sector. Walter Herriot, MD at the St Johns Innovation Centre in Cambridge, says the increase in incubation centres was good news for technology start-ups.

'There is a feeling that companies coming into these innovation centres have a much better chance of survival. In general, 50% of high-technology businesses fail within five years. Inside our innovation centre, that figure falls to 20%.'

Malcolm Buckler, CEO of the UK Business Incubation Centre, believes there may be more incubation projects starting up around the UK: 'We haven't located them all yet.'

The increase is seen as overdue in the UK, which seriously lags behind Europe and the US in the sector.

'There are over 900 centres in the US,' said Buckler.'There are very few in this country but they are a useful economic developer. The DTI wants to increase the number of these things.'

The explosion of interest in incubators is due to several factors, said Herriot. 'The trigger for this is the realisation that, firstly, you can make money out of these things and, secondly, that they can add value to the business community.'

Incubators have to be run as businesses and turn a profit as they have no direct government funding. In return, they provide shelter for young businesses as well as advice, which helps businesses get off the ground.

St Johns Innovation Centre is one of the oldest and most successful incubators, currently supporting 60 businesses under its roof. In the past 10 years, the centre has nurtured 150 firms, mostly telecoms, scientific or software projects connected with Cambridge University. Success stories include Ionica and Symbionics.