ELEFTHO : Supporting Business Incubators & technology parks.

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“ELEFTHO”: Supporting Business Incubators & technology parks.

Region of Central Macedonia

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Description of policy Name of the policy

“ELEFTHO”: Supporting Business Incubators & technology parks.

Responsible body

General Secretariat for Research & Technology (GSRT) now under the Ministry of Education, is the responsible body. GSRT supports through its programmes, the research activities of both the country's scientific research institutes and those of its productive industry, focussing on areas that are important for the national economy and for the improvement of the quality of life.

GSRT promotes the transfer and dissemination of advanced technologies throughout the country's productive sectors, thus ensuring early utilisation of the results of research activity, contributes to the reinforcement of the country’s research manpower, promotes cooperation with other countries and international organisations on research and technology issues, supervises and supports the 21 of the country's best - known research and technological centres, disseminates research and technology information throughout the country and internationally by means of advanced ΙΤ systems and networks and encourages activities aimed at raising awareness of the general public about research and technology issues.

Implementation period

From 2003 to 2007.

Geographical area coverage

Region of Central Macedonia.

ELEFTHO as a program covered the whole country, but for the purposes of this project we will mainly focus on the specified in the program area (Region of Central Macedonia).

Budget

Total ELEFTHO Budget (nationwide) was €68,9 million. In the region of Central Macedonia two new Incubators were created, I4G and Thermi, with total budget of approximately €20 million (both public and private capital).

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Sources of funding

ELEFTHO, is part of the “Competitiveness 2000 - 2006” Program, (axis 4. “Technological Innovation & Research”, measure 4.2.1.). Financed partly (50%) by Public Funds from Greek State and ERDF with a respective participation of 30% and 70% and partly (50%) by private funding (equity and loans).

Description of the policy

The aim of the programme is to provide incentives for the establishment and development of science and technology parks and technology business incubators (mainly the second), in order to support the creation of innovative and knowledge intensive enterprises and deal with Greece’s weaknesses in the generation of new high value added, innovative enterprises capable, to compete in the international markets. Program came and tried to fill in a gap in the innovation value chain, specifically in supporting and funding new technology start ups.

Having a high rate of business mortality, tech start ups have been also known for a number of positive effects in the economy but also as a high risk investment. ELEFTHO created a number of controlled environments that new ideas could be helped in the first stages of their lives to become successful companies.

Business (Technology) Incubator, is a “system” that provides a business environment to help innovative business flourish and grow fast and strong. Being such systems incubators provide a whole range of services including, business consulting services for the commercialization of ideas, funding services either with own capital or through any available funding sources that are crucial in the seed and early stages of an innovative company, and infrastructure for hosting business and supporting the development and exploitation of technological innovations, and so on.

Business incubators act as a lodging contexture for new companies to encourage them dynamically enter the business market. They welcome mostly new innovative enterprises, which are being offered infrastructure and services, not only in the beginning to help them start and survive, but until they become competitive entrepreneurial units and grow strong out of the incubator.

When incubatees “mature”, they abandon the “protective environment” of the incubator, as they are ready to act independently.

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Objectives of the policy (intended impact)

ELEFTHO’s aim is to create economies of scale to exploit new knowledge through the creation of knowledge - intensive business incubators. The measure aimed (in synergy with Measure 4.1: supporting spin off) to offer incentives to private capital in order to invest in innovative start up companies. Reducing the high risk associated in that stage, program’s main goal was to make it “lucrative” for private funds to invest in an Incubator and through his VC fund to a number of tech start ups, that other wise wouldn’t have the opportunity, or have very little chances to access capital. The programme acts as a safety net for private investors that have already, rather cautiously, invested in innovative SMEs and allows them to feel more confident about such investments as well as to increase them on a more structured, regular and professional basis.

More specific the programme has the following objectives:

• Support the further development of incubators and S&T parks that have already been established and operate in Greece, in order to expand their facilities and acquire the tangible and intangible means, which are necessary for the incubation on knowledge - intensive entrepreneurial activities.

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• Contribute to the creation of new incubators and S&T parks resulting from entrepreneurial initiatives, in agreement or cooperation with regional and local authorities.

• Provide incentives for the installation of tenants in the incubators and in the S&T parks.

Implementation of policy

ELEFTHO as we‘ve already mentioned supports the establishment of fast growing start - up business ventures focused on exploiting innovative know - how and research results with potential market value. Public funding made it possible to provide innovative business opportunities to private investors with a reduced investment risk and create opportunities for profit generation.

New Incubators had the following eligible (in terms of subsidies) activities:

- Investments in land, buildings, equipment, necessary for the housing and networking of incubatees. Investment in land should not exceed 10% of total budget of incubator.

- Consulting services to tenants.

- Investments in equity.

- Related every day running costs of the incubator.

The incubators’ strategic goal is to establish beneficial links among research and entrepreneurial stakeholders and at the same time set up long - lasting mechanisms:

- Co - operation among scientists, researchers, entrepreneurs and investors.

- Entrepreneurship encouragement by pointing out new ideas and supporting their business-wise utilization.

In particular, incubators provide to the incubatees the following services:

- Building infrastructure management

- Consulting and information provision support

Information about business events and seminars Legal issues

Public offers – participation status, procedures etc.

Business Planning Start - up firms support

Technology management and technology programmes Management, Quality Assurance

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Know - how transfer, Technology / innovation transfer Prototype development

Technology brokers

ΙΤ (web platform, hosting, networking) Business Process Reengineering (BPR) Human resources

- Investing (financial support)

The services to start - ups aiming to support their market development and enable successful “graduation” including:

- Leasing office space to innovative enterprises.

- Business advisory services like above: business planning and business plan monitoring, benchmarking, technical audit, financial consulting, commercial output reports, training, standards advice, informatics, public relations, advertising, legal advice, patenting advice, etc.

- Networking: links with universities, technology institutions, research parks, chambers of commerce, industrial federations and associations.

- Back office services: secretariat, call centre, Internet, accounting, publications.

- General purpose installations: conference and meeting rooms, video conference multimedia rooms, library, computer rooms, restaurant.

Coordination authority

ELEFTHO has been planned and implemented nationally as one program. In that context General Secretariat of Research & Technology under the Ministry of Education, had a very thorough and strict procedure for the initial steps of the policy, mainly proposals screening and evaluation. Every new incubator had to send progress reports quarterly, so the GSRT could evaluate its goals. In the context of Control procedures GSRT contacted a number of tactical on site controls and incubators send reports from time to time to ensure the program meets its goals.

Other organizations involved

ELEFTHO has created a number of new incubators in the country. In the region of Central Macedonia there were two new incubators and one of them is one of the largest in South Eastern Europe in terms of space and funding. Both these incubators had created a number of tools to successfully implement their business plan, funding, networking and supporting activities and in that context cooperated with a number of stakeholders in the area, like universities, technology centers, chambers of commerce, industrial federations and associations and a number of private enterprises.

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Roles in the implementation

In the previous points this was covered.

Implementation output with respect to objectives

Period: start to 2008.

2 new incubators were set up, and still are running, successfully.

17 new investments were made, approximately €8,3m total capital.

5 of them were liquidated positively in the respective period (up to 2008).

2 of them entered the stock market.

8 of them graduated successfully.

52 new tenants entered incubators following the screening procedures.

35 of them were new companies and the rest existed less than 2 years.

11 graduated successfully, 2 failed, and 41 remained in the incubators by the end of 2008.

These quantitative results gathered with 1 to 1 interviews with incubators’ management and the data are according to their statements.

Apart from that, the most significant outputs for the incubators are the following:

• The incubators that were established through the ELEFTHO programme received 50% of their budget in the form of a subsidy. This considerably minimised the underlying risks for investors and made it easier for them to engage in such an innovative project in Greece. It is an aspect that is highly valued by the Greek investors, who are both risk averse and unfamiliar with the management of such ventures.

• Internal investment fund. Another factor contributing to their success is the creation of in house fund, a tool that considerably increased the possibility of the incubator being profitable and successful.

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• Local business networks. The incubator’s partners have assumed that the important role of network creators is to ensure the development of a constant flow of business ventures and ideas and the availability of various exit options from the realised investments.

• Proximity to a strong research base. The location of the incubators is also a considerable attribute as there are close to a major pool of scientific and technical knowledge and resources.

• Highly qualified staff and responsive management Perceptive business professionals with good expertise, who are able to understand both scientific and technical aspects of new business ventures and translate them into market and business language to assist in their successful development.

Generally, the ELEFTHO Programme has produced important added value regarding:

1. Creation a more favourable environment for innovative activities in the Greek market.

2. Boosting entrepreneurship through financial support for the creation of innovative and risky high - tech business ventures.

3. Contributing to the exploitation of research results in association with other community support measures (e.g. the EU's Research Framework Programmes).

4. Creating new employment opportunities

Innovation indicators affected

ELEFTHO’s main aims were the creation of new start ups through increasing of private funding in the innovation process.

Specific indicators that have been affected are:

• New innovative and knowledge intensive enterprises

• New high value added enterprises

• Start - ups enterprises

• New small and medium sized enterprises (SMEs)

• New spin - off and spin - out companies

• Innovative SMEs collaborating with others

• SMEs introducing product or process innovations

• SMEs introducing marketing or organizational innovations

• New – to - market sales

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• New - to - firm sales

Instruments used (e.g. R&D funding, infrastructure, services, joint activities, training, consultation, EC calls)

Infrastructure – housing: ELEFTHO gave the new incubators the ability to offer a number of joint infrastructure services, starting from simple office space, to laboratories, libraries, IT services, common every day services like call centres, sharing day to day services like secretariat, IT rooms, etc.

Joint activities: In order to support the specific needs of the incubatee's entrepreneurial schemes, incubators have created a strong group of external associates composed by:

Scientists - Researchers (Universities, Technological Parks, Research Institutes etc.) and professionals (Industry, Trade etc.).

EC calls: Offering a large number of funding alternatives, incubators helped tenants explore all European union funding calls and try to raise capital for their activates.

Consulting services: Support for the commercial use of research results.

The creation of new enterprises is a critical path and empowerment strategy for the development of a sector of industry especially a technology based sector. The tasks in this category are intended to create new knowledge –intensive companies that are based on the utilization of research results.

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Impact of policy Beneficiaries

The ELEFTHO programme focused on fast growing start - up business ventures and new small firms from various high technological - innovative sectors. The main beneficiaries are existing SME’s with a will to start an innovative spin out, universities, tech parks and researchers to form new spin offs, and generally every private or public body wishing to set up an innovative company.

General Beneficiaries

The general beneficiaries of the project are the incubator’s shareholders and the SMEs hosted by the incubator. Other beneficiaries are researcher bodies and academics applying for funds to commercially exploit their research results, the region’s SMEs looking for funding and specialised services in order to expand their activities which aim to become a more competitive economic environment. Also innovation intermediaries of the life sciences, information and communication technologies, environmental technologies, energy sector etc.

Type of actual impact

- 67% of the enterprises entered in the 2 incubators are new businesses (start – ups).

- 82,50% of the active enterprises have their main production facility in the Incubator. A percent of 25% have also, additional manufacturing, sales and service locations elsewhere.

- Only 3 of 52 new tenants entered the incubators were subsidiaries or branches of other companies.

- 55% of active enterprises are entrepreneurs in the sector of information and communication technologies.

- The tenants invest a significant percentage of their annual turnover on R & D.

- By the end of 2008 total 52 active enterprises hosted (not to different for today’s tenants).

- Only 2 out of 52 enterprises failed totally, a very small number.

Incubators Advantages:

- The incubators consider that the provision of professional support services is their first advantage. This advantage followed by the quality, the cost and the flexible terms hosted in the incubators, alternative and in house funding, clustering and networking with relevant businesses. Their final advantage is the attractive business environment and image.

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- Tenants, on the other hand, rank quality, cost and flexibility terms hosted in the incubators, first in importance. The following factors have the same importance for all.

Sustainability of the policy

Successful innovation is based on research and private investment policies - a combination that generates new types of business ventures and entrepreneurship. Incubators mainly aim at both the stimulation and management of the knowledge and technology flow exchanged amongst universities, R&D institutions, companies and markets; it also provides value - added services along with high quality infrastructure, contributing thus, to the economic growth of the local community.

By its nature this policy has an increased management cost and difficulty, especially in averse risk cultures, so these mechanisms must keep subsidized to be able to bring the results that are capable of.

Development, employment and cohesion indicators affected

The implementation of the policy had a direct effect to the competitiveness of the regional enterprises through the improvement of their innovation capability and thus an indirect affect to the development, employment and cohesion indicators of the region.

More than 220 new jobs created due to ELEFTHO Programme in the region the period from 2003 to 2008 and also there is a higher surviving percentage rate for start-up firms, and a consequently improvement of their growth rate.

Dissemination of the policy

In order to be viable incubators must be always feed their procedures with new knowledge, research results, innovative ideas, business plans and so on, as well as provide the system with alternative funding sources. In order to be successful on that there have created dissemination and promotion mechanisms and strategies, like conferences, events in Universities, contests, funding competition etc all over Greece.

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Type of Policy - Policy in the field of:

Please tick appropriately 2.1. R&D spending

2.2. Private R&D spending 2.3. Public R&D spending

2.4. Innovation funding X

2.5. Information intelligence, foresight future thinking

2.6. Technology transfer X

2.7. Cooperation of industry and academia X

2.8. Technology and innovation intermediaries X

2.9. Innovation networking X

2.10. Global innovation supply chains X

2.11. New product development X

2.12. Innovation marketing and promotion X

2.13. Technology and innovation infrastructure X

2.14. Virtual innovation networks, tools and platforms X

2.15. Human capital and training in innovation X

2.16. Innovation ecosystems support 2.17. Living Labs creation / support 2.18. Clusters creation / support

2.19. Incubators creation / support X

2.20. Science and technology parks creation / support

2.21. Regional innovation systems support X

2.22. IPR management X

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Please tick appropriately

2.23. Innovation awards and competitions

2.24. Innovation monitoring, measurement and benchmarking X

2.25. Other policy field

ELEFTHO : Supporting Business Incubators & technology parks.