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TECHNION – ISRAEL INSTITUTE OF TECHNOLOGY THE SAMUEL NEAMAN INSTITUTE FOR ADVANCED STUDIES IN SCIENCE AND TECHNOLOGY PROJECT IFISE. An Evaluation of the Israeli Technological Incubator Program and Its Projects Final Report Prof. Daniel Shefer Dr. Amnon Frenkel February 2002.

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The Israeli Technological Incubator Program

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The israeli technological incubator program

TECHNION – ISRAEL INSTITUTE OF TECHNOLOGYTHE SAMUEL NEAMAN INSTITUTE FOR ADVANCED STUDIES IN SCIENCE AND TECHNOLOGYPROJECT IFISE

An Evaluation of the Israeli Technological Incubator Program and Its Projects Final ReportProf. Daniel Shefer Dr. Amnon FrenkelFebruary 2002


The israeli technological incubator program

  • The technological incubator is a complementary program

  • The incubator gives a chance to projects that are unable to attract commercial investors in the initial stages of development.

  • Its functions are:

  • Assistance in determining the technological and marketing applicability of the idea and drawing up an R&D plan;

  • Assistance in obtaining the financial resources needed to carry out the project;

  • Assistance in forming and organizing an R&D team;

  • Professional and administrative counseling, guidance, and supervision;

  • Secretarial and administrative services, maintenance, procurements, accounting, and legal advice;

  • Assistance in raising capital and preparing for marketing.

The Israeli Technological Incubator Program


The israeli technological incubator program

  • The Project contribute:

  • Nationally - as a tool for filtering and developing valuable and original ideas and providing seed-capital.

  • Locally - as a means of local economic development through inducing the development of new firms in a specific location.


Governmental funding and selection criteria

The Office of the Chief Scientist of the Ministry of Industry and Trade gives:

To each incubator $175,000 per annum

Each project granted up to $150,000 per year, for a maximum of two years (Level of the given grant is up to 85% of the approved budget of the project).

The principal criteria for project selection are:

(1) product-oriented

(2) primarily export-oriented

(3) based on R&D

(4) feasible with the available resources.

Governmental Funding and Selection Criteria


Objectives of the study

Objectives of the Study

1.To describe the High-Tech incubator as a filter of new technological ideas that subsequently become new technology-based companies.

2. To Identify the type of investors who are willing to participate in funding a project during and after the incubation period.

3.To analyze the geographical distribution of the incubators and to examine their contribution to local economic development.

4.To examine the viability of the Israeli Technological Incubator program as a vehicle for the development of the high-tech industry and as a paradigm for European countries, particularly Italy.


Data source

Data Source

  • The data were collected by means of two well-constructed questionnaires.

  • Managers of 21 of the 24 existing incubators were personally interviewed and samples of 109 projects were examined between May and September 2001.

  • The incubators and the projects within them, were divided into sub-groups: by geographic location (Metropolitan, Intermediate, and Peripheral), type of incubator (general and specialized), and type of sponsorship.

  • The projects were also classified by major field of activity.


Project selection process in 21 incubators by location previous 3 years

Project-Selection Process in 21 Incubators, by Location(previous 3 years)


Project selection process in 21 incubators by incubator type previous 3 years

Project-Selection Process in 21 Incubators, by Incubator Type(previous 3 years)


Project selection process in 21 incubators previous 3 years

Project-Selection Process in 21 Incubators(previous 3 years)


The israeli technological incubator program

Distribution of all Projects in the 21 Incubators, by Field and Location (percentage of total number of projects in the field)


Distribution of projects in the 21 incubators by incubator type

Distribution of Projects in the 21 Incubators, by Incubator Type


The israeli technological incubator program

Distribution of all Projects in 21 Incubators, by Sponsorship (percentage of total number of projects in field)


Distribution of all projects in the 21 incubators by field

Distribution of all Projects in the 21 Incubators, by Field

N=208


Sources of funding of incubators

Sources of Funding of Incubators


Sources of funding of incubators1

Sources of Funding of Incubators


Average source of funding of incubators by location

Average Source of Funding of Incubators, by Location


Average source of funding of incubators

Average Source of Funding of Incubators


Projects that secured significant complementary funding by field

Projects that Secured Significant Complementary Funding, by Field


Major sources of complementary funding

Major Sources of Complementary Funding


Major sources of complementary funding1

Major Sources of Complementary Funding


Projects that graduated and projects that dropped out by field previous 3 years

Projects that “Graduated” and Projects that “Dropped Out”,by Field (previous 3 years)


Projects that graduated by location previous 3 years

Projects that “Graduated”, by Location (previous 3 years)


Graduating projects that succeeded and did not succeed in securing financial support by field

Graduating Projects that Succeeded and Did Not Succeed in Securing Financial Support, by Field


Graduating projects that succeeded and did not succeed in securing financial support by field1

Graduating Projects that Succeeded and Did Not Succeed in Securing Financial Support, by Field


Graduating projects that secured financial support by financial source

Graduating Projects that Secured Financial Support, by Financial Source


Graduating projects that secured financial support by financial source1

Graduating Projects that Secured Financial Support, by Financial Source


Managers level of satisfaction

Managers’ level of satisfaction


Managers level of satisfaction by location

Managers’ Level of Satisfaction, by Location


Barriers and obstacles to the operation of an incubator

Barriers and Obstacles to the Operation of an Incubator

* Level of importance=% of incubators reporting the specific factor as being important or detrimental.


Description project initiators

Description Project Initiators

Distribution of Project Initiators, by Sex

N-176


Description project initiators1

Description Project Initiators

Project Initiators, by Level of Educational

N-176


The israeli technological incubator program

Project Initiators, by Previous Place of Work


Distribution of initiators by project field and previous place of work

Distribution of Initiators, by Project Field and Previous Place of Work


Preferred location of project after graduation

Preferred Location of Project After Graduation


Preferred location of project after graduation by region

Preferred Location of Project After Graduation, by Region


Reasons for choosing a specific incubator

Reasons for Choosing a Specific Incubator


Project initiators reasons for choosing an incubator by location

Project Initiators’ Reasons for Choosing an Incubator, by Location

Spearman’s rho:

Between metropolitan & intermediate region rs= 0.790, sig.=0.000

Between metropolitan & peripheral region rs= 0.615, sig.=0.011

Between peripheral & intermediate region rs= 0.713, sig.=0.00


Project initiators reasons for choosing an incubator by type and fields of activity

Project Initiators’ Reasons for Choosing an Incubator, by Type and Fields of Activity

  • The importance of proximity to place of residence emerge as the major reason for selecting the particular incubator, in general type as well as in specialized type of incubator, and in all fields of activity.

  • Fordrugs project, similar projects within the incubator are also important

  • Initiators ofmedical equipmentproject value highly acquaintance with the incubator’s mangers

  • Initiators ofenergy and ecology projectsput premium on fast admission to the incubator

  • High importance attached by the biotechnology, drugs and medical equipment projectsto the proximity to the university.


Projects source of funding

Projects’ Source of Funding


Projects source of funding1

Projects’ Source of Funding

The highest share of venture capital in a project’s average budget in metropolitan regions (11.2%), and the lowest is in peripheral regions (3.1%), can be associated with the degree of risk to the investment in each region


Projects source of funding by location

Projects’ Source of Funding, by Location


Projects source of funding by incubator type

Projects’ Source of Funding, by Incubator Type


Projects source of funding by field of activities

Projects’ Source of Funding by Field of Activities

  • Projects inmechanical engineering, drugs, and biotechnologyreceived a high share (77.4%, 73.2%, and 73.2% ,respectively), of their budgets from the OCS.

  • Medical equipment and energy and ecology –both received a high share (30.3%)of their budgets from strategic partner


Project initiators level of satisfaction with incubator support system

Project Initiators’ Level of Satisfaction with Incubator Support System


Project initiators levels of satisfaction with incubator support by location

Project Initiators’ Levels of Satisfaction with Incubator Support, by Location

Spearman’s rho:

Between metropolitan & intermediate region rs= 0.636, sig.=0.005

Between metropolitan & peripheral region rs= 0.665, sig.=0.003

Between peripheral & intermediate region rs= 0.880, sig.=0.000


The main factors affecting the initiation of a project

The Main Factors Affecting the Initiation of a Project

Lowest score were given to connection with suppliers, available suitable space and access to imputes.


Factors and barriers to and support of an incubator s operation

Comparison of Incubator Managers and Project Initiators

Factors and Barriers to and Support of an Incubator’s Operation


Level of satisfaction from elements of the technological incubator program

Level of Satisfaction from Elements of the Technological Incubator Program

  • The ranking of the score given by incubator mangers and project initiators to their level of satisfaction from each of the 18 factors yielded a very similar rank order.

  • The factors that received the highest scores were in descending order:available suitable space, legal counseling, IPR protection, management support, and strategic counseling.

  • In overall, incubator management expressed a slightly higher level of satisfaction than did project initiators, Nevertheless, the rank order of the factors given by each group is very similar.

  • In metropolitan and intermediate regions, incubator mangers gave a much higher score to international collaboration, than did project initiators.


The israeli technological incubator program

Project Initiators’ Level of Satisfaction from Services Provided Versus Level of Importance Attached to These Services


Level of satisfaction versus level of importance attached to incubator services by location

Level of Satisfaction versus Level of Importance Attached to Incubator Services, by Location

  • Project initiators gave the highest scores of importance in both relative and absolute terms, to financial support, financial sources, and marketing, regardless of location

  • On the other hand, project initiators gave the highest scores level-of-satisfaction to available suitable space, in all the three regions

  • Legal counseling received high level of satisfaction in metropolitan and peripheral regions, but not in the intermediate region

  • Management support received a high level of satisfaction in the intermediate and peripheral regions.


Level of satisfaction versus level of importance attached to incubator services by incubator type

Level of Satisfaction versus Level of Importance Attached to Incubator Services, by Incubator Type

  • There is very little difference in the level of satisfaction with the program by project initiators of both general type and specialized type.

  • Also there is very little difference in the level of importance attached to the various factors by project initiators of both general type and specialized type.

  • However, there exist a significant difference between the level of importance and the level of satisfaction

  • Project initiators gave available suitable space, management support and ipr protection high scores, of satisfaction,

  • However, they gave high scores of importance to financial support, financial sources, marketing, and networking of strategic partners.  


Conclusions and recommendations

Conclusions and Recommendations

  • The incubator program seems to fulfill its purposes. The most successful projects were those belonging to the following fields of activity: biotechnology, drugs, and software.

  • Public support might be required to increase peripheral incubators rate of success.

  • It is conceivable that public support for projects and incubators should be field-specific and location-specific, respectively.

  • Large number of projects located in peripheral regions are very likely to remain operating in this regions upon graduation.


The israeli technological incubator program

  • There is positive trend toward the specialization of the incubator. Although, specialized incubators did not show a greater rate of success.

  • The level of satisfaction of incubator managers from the program is only moderately high.

  • Incubator managers complain primarily about a deficiency in financial support and a lack of management knowledge.

  • The incubator requires an improvement in their performance.

  • The program should concentrate on selected factors that the incubator mangers ranked as very important.


The israeli technological incubator program

  • To improve the rate of success, both incubator mangers and project initiators suggest improving financial sources and support, as well as management knowledge and support.

  • The leadership and capabilities of the incubator manager are extremely important to the success of the incubator and the projects within it.

  • Incubators should provide a platform for promoters and entrepreneurs with new ideas.

  • Innovators from academia and R&D departments desperately need the support of the incubator’s manager and its professional staff.


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