What has changed in the business culture of incubators for the last 10 years?
Tom Strodtback: Everything's changed. We've seen the creation and development of different accelerators and incubators. At first, incubators were based in universities or non-governmental organizations; then, private funds and corporations began investing in their development, which affected the incubator’s functions: they've focused on developing particular technologies. Another change was switching to supporting a wide range of startups instead of developing "key" projects. Previously, incubators could collaborate with one team of entrepreneurs for two-three years so as to elaborate a business plan and launch the product. Now that takes two to three months, and the first sales are made in less than a year. During this time, startups get the necessary expert evaluation. What is more, if the novice entrepreneur is smart enough, he or she would contact potential customers even before launching the product.
Lynn Robertson: Not only private companies, but also banks and other major organizations started to work with incubators and support startupers. This way, companies aspire to get new technologies for improving their operation. For example, if the banking sector needs, but can't develop them fast enough, it's a lot easier to start a collaboration with some startup that deals in the technology they need. Such a strategy can become a new business model for a company. Thus, banks fund startups that work in the field of finance, as they can later use their results.
How incubators help startup teams?
Lynn: The greatest problem that novice entrepreneurs face is defining their target group. Staruppers don't always have access to the market, so it’s hard for them to study the client's demands. To do that, it is necessary to communicate with the market's players, and incubators offer such an opportunity: meeting different experts and getting their opinion on the product and the possible demand. Also, novice entrepreneurs often need help from a mentor to bring the project to the stage of investing. What's more, sometimes one even has to explain them what investing is. Startupers have to understand that their main goal is to sell the product, so as to bring profit to both the company and the investor, and not just think in terms like "I have a great project and I just have to find someone to invest in it". Yet again, it all comes to defining the target audience: the better one understands the customers, the more the profit will be. And that is how the world works.
Tom: The reason why startups fail (I am talking about Europe and Asia in the first place, as I work there), is that they don't create products that have a place in the market. Usually, one has an idea, works on it, develops it — but that won't bring anyone far as long as no one is willing to buy the product.
Maybe it’s just because there are few startups with good ideas?
Tom: Surely, if one invents a treatment for cancer, defining the target group won't be a problem: it is obvious. But that is not all that a new company needs. A technology can be good, but if there's no market for it, the project will fail.
So what does a university have to do to become entrepreneurial? Open a startup?
Tom: When talking about entrepreneurial environment in universities, the presence of incubators is not as important as the innovative, leader features that the university has. This means doing relevant and — which is also very important — applied research. Such universities should also aim to commercialize their products, and be open to interactions. If an incubator is based in such university, it will benefit from its resources and entrepreneurial atmosphere. Yet, sometimes incubators appear in universities that are not ready for interacting with the outside world — then, they have to literally fight against the university's policies. I mean sometimes universities create platforms for supporting novice entrepreneurs, but don't support these very platforms themselves.
Lynn: In many cities of the United Kingdom, there are incubators based in universities. And I believe that here, at ITMO University, the entrepreneurial environment is even more advanced than in some of them. Yet, there are also universities that only start developing entrepreneurship and don't even know how to do it.
Can you comment on the development of business incubators in Saint Petersburg?
Lynn: I was pleasantly surprised when I learned that there are 27 or 28 business incubators and accelerators in Saint Petersburg. It's really great that there are so many means to supporting novice entrepreneurs. Liverpool, where my office is located, is also a very entrepreneurial city, yet there entrepreneurs don't always know where to get this or that kind of help. I don't know whether the problem is solved here, but I really hope that the system for supporting entrepreneurs is sound and clear, and they know where to get help.
Is there a need for this many incubators and accelerators? Don't they copy each other's functions?
Lynn: In Liverpool, for instance, it is as following: different incubators and accelerators support business on different stages of development by providing targeted help on solving specific problems of particular project areas. If all incubators will have similar functions, they will compete with each other, which makes no sense at all — collaboration and information exchange is a lot more effective. Yet, this strategy may not work well for large cities like Saint Petersburg, as there are lots of entrepreneurs here.
Tom: It is great when startups get help from all sides and different sources, but sometimes incubators start competing with each other. Yet, if they can both compete and collaborate, that is an entirely different matter. A lot depends on financing, as well. If several incubators are sponsored by the same source, they have no choice but to compete among themselves. In the USA, the system is slightly different: incubators are often financed by different funds, so they collaborate easily. I can't say anything about the situation in Saint Petersburg, as I just didn't have time to assess it. Yet, I really liked the people here — they are a lot friendlier than in Moscow. Personally, I didn't really like it there. Saint Petersburg, on the other hand, is a really nice and beautiful city.
