High Technology Incubators

1. Introduction

1.2 Problem Statement

The basic problem addressed by this report has two aspects. The first is to better understand how PPTC has generated its remarkable success record at incubating high-tech businesses, and the factors that enable that success. The second half of the problem is to understand whether those factors, or their equivalents, can be translated to the European arena. The answers to these problems will then determine appropriate advice to HTC management.

Thus, the general set of questions which will guide the research efforts in this study are:

  • What is the governance model of PPTC?
  • What is the finance model of PPTC?
  • What factors identify the ventures PPTC supports?
  • What impact does PPTC incubation have on the ventures it supports?
  • How does PPTC compare to European technology incubators?
  • What conclusions and recommendations are most appropriate to present to HTC?

1.3 Scope, Design and Methodology

1.3.1 Scope

The scope of this project is specified as the in-depth analysis of one specific Silicon Valley incubator, PPTC, and benchmarking that incubator’s performance against a second Silicon Valley based incubator and several key European incubators. Benchmark incubators in this study included PPTC and RocketSpace, based in Silicon Valley, plus European incubators VentureLab Twente, Utrecht, Inc., Incubator3Plus, Amsterdam Center for Entrepreneurship (ACE), DNAMO, which was founded by Yes Delft, and Young Entrepreneurs Are Here (YEAH).

1.3.2 Design

The basic design of this study is mixed-methods with both quantitative and qualitative data collected. The study design is to investigate the current operational processes of PPTC and of the various benchmark incubators, then do a compare-and-contrast analysis of PPTC. In addition to PPTC itself, an investigation of the ecosystem in which PPTC operates will provide an understanding of which ecosystem elements are important to the success of PPTC, along with whether those elements can translate successfully to the European venue to replicate PPTC’s success in that environment.

1.3.3 Methodology

This study was conducted via a series of semi-structured in-person interviews with key management members of several incubators, including PPTC and several European incubators. Specifically, two incubators in Silicon Valley (PPTC and RocketSpace) were interviewed, and six European incubators. The incubators and their locations included in this study were:

  • PPTC, Sunnyvale, CA
  • RocketSpace, San Francisco, CA
  • Young Entrepreneurs Are Hear (YEAH), Groningen
  • DNAMO (founded by YesDelft), Rotterdam
  • Amsterdam Center for Entrepreneurship (ACE), Amsterdam
  • Incubator3Plus, Eindhoven
  • Utrecht Inc., Utrecht
  • VentureLab, Twente, Enschede

In each case, at least one senior manager was interviewed and wherever possible two or three managers. These questionnaires, conducted in face-to-face interviews, include both quantitative responses using Likert scales, and open-ended qualitative responses.

In addition to interviewing the incubator staff, start-up ventures were also interviewed from each of the listed incubators. The ventures interviewed in this study were:

  • Social Mining (VentureLab, Twente)
  • WISER (VentureLab, Twente)
  • Peer+ (Incubator3Plus)
  • VEG Interior Building Systems BV (Incubator3Plus)
  • Inviso B.V. (Incubator3Plus)
  • Parade Media Group BV (Incubator3Plus)
  • Active Roads (Incubator3Plus)
  • EmulTech (Incubator3Plus)
  • 3dock (Incubator3Plus)
  • Bloomsix (ACE Amsterdam)
  • Uber (RocketSpace)
  • Parallocity (PPTC)
  • Techdirt (PPTC)

Questionnaires used in the study differed between incubator and sponsored ventures; both questionnaires are provided in Appendixes B and C. All interviews were conducted in person, during August and September 2011. The methods to be used in this research project consisted of three key types of data collection:

  • Semi-structured interviews of current and former management of PPTC and of key personnel of benchmark organizations;
  • Mixed method (i.e., quantitative/qualitative) surveys of ventures which have participated (or are currently participating) in the PPTC incubator to gain their perspective on the incubator process;
  • Case study method to evaluate PPTC’s overall business characteristics.
  • In more detail these methods include:
  • A series of semi-structured interviews of key PPTC personnel will be conducted to elicit more details about how PPTC operates, their experiences with the organization, and other relevant details.
  • A series of mixed-method surveys of key personnel of several ventures which are either current members of the PPTC incubator or previously were members of the PPTC incubator process.
  • Development of an in-depth case study of PPTC as a business to provide a basis for benchmarking PPTC against both European incubators.

Data sources for this method come from two types of sources, primary information sources and secondary information sources.

Primary Information

  • Financial and company documentation directly available from PPTC.
  • Semi-structured interviews with key personnel at PPTC, and with key personnel at Yes?, Delft and Incubator3Plus.
  • Surveys of key personnel of ventures participating in the PPTC incubator process, including those currently in the incubator and those who have “graduated” from PPTC.

Secondary Information

  1. Financial and business reviews and assessments of PPTC from respected sources: Moody’s, Investors’ Business Daily, Wall Street Journal, etc. as well as public filings such as those mandated by the U.S. Securities and Exchange Commission (SEC).
  2. Literature review with special focus on areas of:

a. Key success factors in incubator business models worldwide; this topic provides insight into technology incubation from the perspective of the incubator;

b. Benefits accrued and other impacts on start-up businesses by participating in such incubator models; this topic provides insight into technology incubation from the perspective of ventures participating in the incubator. These secondary data sources include journal articles, publications on incubation business models access from the Bradford & Tilburg Virtual Library. Other online resources such as web articles will provide a useful starting point from which the research will be .