Venture Nurturing
Dr. Shahram Yazdani
Shahid Beheshti University of Medical Sciences
School of Medical Education
Strategic Policy Sessions: 09
Innovation Process Concept Map
Research
Grants
Seed
Finance
Research
Founders
Researcher
Start-up
Venture Capital
Angel
Investors
Inventor
Dr. Shahram Yazdani
Basic
Research
Applied
Research
Mezzanine
Finance
Venture
Corporate Investors
Capital Firm
Banks
Entrepreneur
Business Plan
Propositional Prescriptive
Knowledge Knowledge
Expansion
Venture Capital
Engineering
Prototype
Main Role
New Firm
Pre-production
Prototype
Product Design &
Development
IPO
Acquisition
Businessman
Mature SME
Large Company
Product
Manufacturing
Venture Nurturing

Apart from financial resources, the
availability of knowledge resources during
the start-up phase also plays a crucial
role in fostering growth oriented spin-offs.
Dr. Shahram Yazdani
Common reasons for failure of new
ventures
1. Insufficient access to capital,
2. Lack of managerial expertise, and
3. Insufficient marketing expertise.
Dr. Shahram Yazdani
Most Appreciated Contributions for
Ventures






Dr. Shahram Yazdani


Financial Advice 44%
Corporate Strategy & Direction 43%
Sounding board for ideas 41%
Challenging status quo 32%
Contacts or market information 26%
Management recruitment 10%
Marketing strategy 7%
Money only 12%
Venture Nurturing: The Role of
Special Persons

A study of high-tech start-ups in Silicon
Valley emphasizes the important role
played by lawyers as bearers of
knowledge between different companies
in the area.
Dr. Shahram Yazdani
Venture Nurturing: The Role of
Special Persons

In Europe, the role of knowledge brokers
tends to be fulfilled by intermediary
organizations and research institutes
setting up spin-off activities.
Dr. Shahram Yazdani
Venture Nurturing

There are three distinct categories of
support activities



Technological nurturing,
Business coaching
Facility management
Dr. Shahram Yazdani
Technological Nurturing

The first activity, technological nurturing,
includes three elements:
1.
2.
Dr. Shahram Yazdani
3.
Searching for ideas that can be
commercialized in a research organization
or university;
Creating fertile ground for technology
dependent applied researches
Protecting the technology base and
intellectual property rights
Business Coaching


When the potential spin-off project
reaches the transition phase,
technological nurturing gives way to
business coaching.
Business coaching activities are classified
into three groups:
1.
2.
Dr. Shahram Yazdani
3.
Business plan development,
Start-up coaching (commercial, financial and
legal aspects of a technology venture)
Specialized advice or consulting on the
business process
Facility Management



The nature of facility management tends
to evolve along the spin-off process.
In the invention phase, start-ups need
relatively small premises, including facility
services such as reception, cleaners,
network access, etc.
Later on in their development they need
more complex and difficult-to-find facilities
located on incubators and science parks.
Dr. Shahram Yazdani
The Spin-off Funnel
Dr. Shahram Yazdani
Financial Resources along the Spinoff Funnel`
Dr. Shahram Yazdani
Venture Nurturing along the Spin-off
Funnel
Dr. Shahram Yazdani
Science and Technology Parks:
Definition

A managed environment set up to
leverage local science and technology or
knowledge resources to enhance a
region’s economic base.
Dr. Shahram Yazdani
Science and Technology Parks:
Definition



Dr. Shahram Yazdani
A property-based initiative, which has formal and
operational links with universities or other higher
educational institution, or major centers of
research;
Designed to encourage the formation and growth
of knowledge-based industries or high valueadded firms, normally resident on site; and
Has a steady management team actively
engaged in fostering the transfer of technology
and business skills to tenant organizations.
International Association of Science Parks
STPs: Global Evolution


The first park was founded in California in
1951, at what is now the center of the
Silicon Valley – the University of Stanford.
There are currently about 700 science
parks worldwide.
Dr. Shahram Yazdani
STPs: Global Evolution
•The first park was founded in California in 1951, at
what is now the center of the Silicon Valley – the
University of Stanford.
USA
50

60
Europe
Japan
70
Asia
Pacific
80
90
Rest of
World
00
Estimated total number: 700

Dr. Shahram Yazdani




300 in North America
240 in Europe
80 in China
30 in Asia Pacific
50 in rest of World
Roles of STPs
Dr. Shahram Yazdani
1. Recruit and co-locate new and established knowledgebased companies;
2. Promote innovation based on ‘smart’ technologies;
3. Provide an interface or shared research environment for
research organizations and private industry; and,
4. Leverage local knowledge resources to enhance a region’s
economic base.
5. Cooperation in R&D with scientific research institutes and
laboratories;
6. Financial consulting and assistance in obtaining venture
capital;
7. Professional, technical, administrative and legal assistance;
8. Information and telecommunications services;
9. Supportive business infrastructure.
Specialized services of STPs to
private companies
o
o
o
o
o
o
o
Dr. Shahram Yazdani
Assessment of technological and innovation needs;
Research, development and transfer;
Project management;
Promotion of research outcomes;
Promotion of the ‘culture’ of innovation;
Marketing;
Establishment of partnerships and networks in
research and transfer;
o Monitoring and rising of financial resources;
o Enhancement of human capital skills;
o ‘Incubation’ of technological innovative businesses.
Different Parts of STPs
I.
Dedicated sector of the University involved in the
study of the specific field.
II. Research Centers: where ideas are developed into
prototypes and possible manufacturers are identified.
III. Incubator-Innovation Centre: which is an
establishment housing a partnership between the
innovator and the manufacturer, where the prototype
is further developed into a marketable product.
IV. which is an office type facility, dedicated tBusiness
Centre: o those who have passed the incubating
period and have products of a rather small scale.
Dr. Shahram Yazdani
Different Parts of STPs
Dr. Shahram Yazdani
V. Centre for auxiliary industries – Containers: which is
a letable industrial space, used for assembling and
packaging of larger scale products.
VI. Serviced sites/plots or pre-built factories: which could
be leased or sold to companies that decide to remain
in the STP on a permanent basis.
VII. Technological Centers: which deal solely with the
testing of products. A partnership can use this facility
at any stage of the development of the product to
determine its properties, such as strength, quality,
composition etc.
VIII.Training Centre for Staff: which is dedicated to the
continuous training of staff that work or intend to
work in the STP.
Different Parts of STPs

Apart from the above main components, a
Park may have some supplementary
uses, which could contribute to its R&D
role and to the cross-fertilization process,
such as:


Dr. Shahram Yazdani


A congress center,
Public or private agencies involved in
research,
Special elementary and high schools, and
A business school
Spectrum of Science Parks
Dr. Shahram Yazdani
The Raleigh-Durham Research
Triangle Park


One of the largest research parks in US,
home to more than 130 organizations, 99
of them R&D related.
With over 39,500 employees entering the
8-mile by 2-mile Park each day. The
combined annual salaries in RTP amount
to over $1.2 billion dollars
Dr. Shahram Yazdani
History of Technology Incubation


It has been asserted that small
businesses are the engine of growth for
the U.S. economy (Birch 1987).
Small entrepreneurial companies created
approximately 80% of new jobs in the
U.S.
Dr. Shahram Yazdani
History of Business Incubators



By 1984 there were only 26 business
incubators in the USA.
This figure grew to 550 by 1998.
Today there are probably more than
3,000 business incubators worldwide.
Dr. Shahram Yazdani
Business Incubator


1.
2.
3.
Dr. Shahram Yazdani
A business incubator is most broadly defined
as a facility providing favorable controlled
conditions for the development of new
companies.
The controlled conditions include at least
three types of resources:
Facilities support,
Administrative assistance, and
Professional expertise, e.g., management,
marketing, accounting, financial and legal
services.
Business Incubators


A typical business incubator is a multitenant facility with common office
equipment and a shared conference
room.
There is also an on-site full-time manager
to assist in the delivery of business
assistance training and services.
Dr. Shahram Yazdani
Benefits of Incubators

A survey by the US National Business
Incubation Association (NBIA) in 1998
described the key US incubator statistics
as follows.

North American incubators had created
19,000 companies that were still in business
and 245,000 jobs;
Dr. Shahram Yazdani
Physical Plant








Dr. Shahram Yazdani
Multi-tenant facility
Flexible space
Shared conference room
Shared telecommunications equipment
Designed to encourage interactions
Include common kitchen area
Careful site selection
Feasibility study to confirm viability, location,
etc.
General Office Services

Shared office equipment







Dr. Shahram Yazdani

Telephone answering
Photocopy machines
Fax machine
Computer servers
meeting rooms
Flexible leasing arrangements
Internet access
Secretarial services
Business Assistance Services
Dr. Shahram Yazdani
1.
2.
3.
4.
5.
6.
7.
8.
9.
On-site management
Business plan development
Mentoring programs
Market analysis, Marketing assistance
Copyright and patent assistance
General legal assistance
Entrepreneurial training
Presentation training
Enable incubatees to meet and learn from other
firms
Business Assistance Services
Dr. Shahram Yazdani
10.Organizing access to workshops and
prototyping facilities.
11.Business management training
12.Organizing networking functions
13.Accounting, bookkeeping assistance
14.Aid in attracting investors; Access to capital
15.Financial planning;
16.Introduction to potential customers.
17.investment memoranda, and recruitment.
Services During Seed Stage

Write business plan



Management, market, technology, products
License technology
Attract angel investors or specialized
firms
Dr. Shahram Yazdani
Services During Start-up

Bring in professional investors




How is the company valued?
Attract management team
Build-out facility
Begin product development
Dr. Shahram Yazdani
Services During Expansion Round



Continue product development
Provide “proof of principle” or other
“validation”
What justifies a step-up in valuation?
Dr. Shahram Yazdani
Finance Schema of Incubators


The 900 incubators, the NBIA estimates
that 75% are not-for-profit and 25% forprofit ventures.
Most for-profit incubators do not receive a
public sector subsidy.
Dr. Shahram Yazdani
Different Organizations of Incubators

In general, state-supported nonprofit
incubators are the most popular, followed
by university-hosted incubators, though
for-profit models have increased
dramatically since the late 1990s.
Dr. Shahram Yazdani
Different Organizations of Incubators

In the specific case of technology
incubators, the majority are hosted by
academic institutions (McKinnon and
Hayhow 1998).
Dr. Shahram Yazdani
Effectiveness of Incubators

New enterprises that receive the benefits
of a business incubator have low failure
rates (13.9%), and upon graduation 87%
locate locally
Dr. Shahram Yazdani
Cost-Effectiveness of Incubators


Dr. Shahram Yazdani
Campbell et al. (1988) probed the
question of business incubators as an
effective job creation strategy.
The conclusion was that incubators had a
public sector cost per direct job created
that ranged from $3,500 to $10,000
significantly less than “traditional industrial
recruitment programs,” which had an
average public sector cost per job of over
$40,000.
A more complex classification
Management Support
High
Medium
Low
Business
Incubator
Business &
Technology
Incubator
Technology
Incubator
Managed
Workplace
Enterprise
Center
Innovation
Center
Industrial
Estate
Business
Park
Science
Park
Low
Medium
Dr. Shahram Yazdani
Technology Support
High
Population Ratio Approach



US to I.R.Iran Population Ratio
300,000,000 vs. 70,000,000
Approximately 4 : 1
Dr. Shahram Yazdani
US Infrastructure





US have 900 Incubator
US have 400 Technology Incubator
US have 300 Science Park
36,000,000,000 $ Venture Capital
US have 2500/100,000 Researcher
Dr. Shahram Yazdani
I.R.Iran Estimated Needs





Iran Needs 250 Incubator
Iran Needs 100 Technology Incubator
Iran Needs 70 Science Park
Iran Needs 10,000,000,000 $ Venture
Capital Investment
Iran Needs 1,000,000 more
researcher
Dr. Shahram Yazdani
“Number of Ideas to Support” Approach
Dr. Shahram Yazdani
The Origin (Quantity) of Entrepreneurial
Ideas That Potentially Deserves Support




Yearly 1,800,000 Young Adult of 18 Years
Old
Yearly More Than 800,000 University
Graduate
More Than 30,000 University Faculty
Member
70,000 R&D Worker
Dr. Shahram Yazdani
How Many Incubators is Needed to Support
1000 Entrepreneurial Ideas in Iran


For supporting 1000 Idea per year We
Need 300 Incubators (1000/3.3)
To Support 1000 Idea at Seed Phase we
Need 75,000,000 $ Seed Finance (1000
* 75,000 $)
Dr. Shahram Yazdani
Innovation Process Concept Map
Specialized Technical Advice
Start-up Coaching
Supports
Facility
Management
Business Plan Development
Research Institutes
Universities
Science &
Technology Business
Supporting
Organization
Technology Parks
Incubators Incubators
Research
Grants
Seed
Finance
Research
Founders
Researcher
Start-up
Venture Capital
Angel
Investors
Inventor
Dr. Shahram Yazdani
Basic
Research
Applied
Research
Mezzanine
Finance
Venture
Corporate Investors
Capital Firm
Banks
Entrepreneur
Business Plan
Propositional Prescriptive
Knowledge Knowledge
Expansion
Venture Capital
Engineering
Prototype
Main Role
New Firm
Pre-production
Prototype
Product Design &
Development
IPO
Acquisition
Businessman
Mature SME
Large Company
Product
Manufacturing
Thank You !
Any Question ?