University-based incubators are often set up as engines of innovation, to support entrepreneurship and, by extension, economic growth. But are we truly seeing — and counting — the outcomes that matter?
As Canada pursues a national innovation agenda set out in its 2017 federal budget, there is an opportunity to re-imagine how we see, track and reward incubation, which has been identified by Ottawa as a key additive in its formula for stimulating growth.
Incubators and hubs that provide resources, mentoring and services to entrepreneurs have been set up at universities around the world in the belief that this intersection of knowledge creation, industry and public funding will spur the innovation economy locally, nationally and internationally (Etzkowitz 2002). However, you get what you measure. In an attempt to show the impact of substantial investment, most of these organizations report metrics such as investment raised by client start-ups and jobs created. These intermediary measures are useful but far from complete. They may fail to encourage a great deal of the real potential of university-based incubation: to connect businesses to university resources and know-how; to build expertise in commercialization of research; and to shift culture and mindset in order to create not a few but an army of high-impact entrepreneurs who can participate in the kind of innovation-driven growth the Group of Twenty nations have agreed is needed to reinvigorate the global economy.
Reasons given, though anecdotally reported rather than tracked, for placing incubators at universities include providing entrepreneurs with access to university resources, knowledge and talent, and supporting the universities’ mandate of delivering training and identifying useful research applications. A 2011 report from NESTA, a UK-based innovation foundation, suggested incubators could also usefully be measured on how their client companies hire and groom students, use or help develop emerging technologies, and access university faculty as consultants in areas of expertise including, for example, virtual reality or commercialization (Dee et al. 2011).
Commercializing Long-term, High impact Research
Increased translation of research into start-up companies and growth of science-based firms has traditionally been a key dream driving investment into university incubation; however, success metrics are also at odds with how these firms grow (sometimes taking 10 years, rather than months, to achieve revenue and scale), which could cause incubators to favour quick-to-market tech (apps and software), despite the benefit being at ground zero for revolutionary science-based advances such as in materials and health. However, technological progress could be a valuable metric (Maine and Seegopaul 2016).
Moreover, these university incubators can, in theory, help with a major challenge that is critical to start-ups commercializing advanced research, such as clean tech: access to resources. These firms are in danger of “lock-in”: spending money on machinery or full-time employees while they still may need to change strategic direction (Lubik and Garnsey 2016). By accessing university equipment or personnel, they can build flexibility into the system. For example, Simon Fraser University’s (SFU’s) 4D LABS, a $40 million state-of-the-art materials facility, offers industry users, such as start-ups, access to its physical resources, faculty and graduate students, letting those firms grow their resource bases and teams without long-term investment. Tracking such interactions would help and, perhaps more importantly, encourage them.
There is also benefit in looking at the individual rather than the venture. According to research on a cluster in Cambridge, England, entrepreneurs go through several unsuccessful attempts at commercialization before they succeed, suggesting tracking serial entrepreneurs could show regional cultivation of talent (Evans and Garnsey 2009).
Incubation from Education Onward
This leads to perhaps the most important role university incubators can play, which again goes untracked at a larger scale: the training and mindset change of students, faculty and, later, community clients. In a set of national consultations on innovation run across Canada in the summer of 2016, accessing innovative talent and people was one of the most prominent concerns; however, traditional incubation metrics also do not track talent creation and mindset shift. While typical metrics focus on the stage where raising equity investment is possible, incubation can — and, I would argue, should — be viewed as a continuum, from education, through firm formation to the growth stage, each of which has its own inputs and outcomes. Moreover, by teaching real visioning, operation and other entrepreneurship skills early, later-stage coaches and incubators can focus their efforts on growth and scale rather than on fixing bad habits and attitudes ingrained over time.
Some universities in Canada are already exploring the power of early-stage incubation melded with education. At SFU, students from all disciplines can come together in classes that function like incubators, teaching interdisciplinary groups of students to first deeply understand areas ripe for impact (health, social innovation, sustainable design, commercialization), and then build and test solutions with assistance from later-stage incubators such as the Coast Capital Savings Venture Connection and RADIUS social incubator. Some students start as early as in their second undergraduate semester and some as grad students and even as professors. These safe, education-based spaces make entrepreneurial experiences accessible and build key entrepreneurial traits, such as creativity, tolerance of ambiguity, the ability to pivot and interdisciplinary teamwork. These activities are also pivotal to assist with research commercialization, which is often said to be lacking in Canada, by creating these skills and mindsets in more scientists and technologists. In fact, programs such as Young Entrepreneurs Leadership Launchpad (YELL) work at the high-school level to start nurturing this mindset even before university, increasingly linking participants to university student entrepreneurs as inspiration and mentors. Creating and empowering large numbers of entrepreneurs to develop the powerful underlying skills that, when they found or work in companies, cannot help but improve downstream metrics around funding and jobs.
Incubation for Impact
This educational power of university incubation has one more very powerful part to play in creating economic engines of long-term impact. Perhaps one of the most interesting statements made at an innovation round table in Vancouver, British Columbia, this past summer was that, in order to be an innovation nation, Canada needs to focus on problems that matter to the world. However, deep understanding of complex problems requires experts and disciplines to come together, and the mindset to seek to understand underlying challenges and systems before launching a venture. SFU’s RADIUS social incubator brings together community partners and faculties to build these skills and solutions. These societal contributions can be measured later by metrics such as decreased wait-times in hospitals or the carbon captured. They are not measured by traditional metrics either, but can be measured over time to help show why this innovation agenda can make a difference to Canadian lives.
Counting What Counts
Incubation at universities is unquestionably a powerful tool to support and encourage innovation in Canada. However, in order to do that we need to measure and reward the full spectrum of incubation, understand its impact and prioritize the measures that will, over time, create an army of innovators, societal outcomes and, yes, jobs and funding. While doing so is clearly more work, leaders, supporters and networks of these incubators need to communicate — via metrics — what they want to see and where impact is actually happening.
Dee, Nicola J., Finbarr Livesey, David Gill and Tim Minshall. 2011. “Incubation for Growth: A review of the impact of business incubation on new ventures with high growth potential.” London, UK: NESTA. www.nesta.org.uk/sites/default/files/incubation_for_growth.pdf.
Etzkowitz, H. 2002. “Incubation of incubators: innovation as a triple helix of university-industry-government.” Science and Public Policy 29 (2): 115–28.
Evans, M. and E. Garnsey. 2009. “The Cambridge High Tech Cluster on the Eve of the Financial Crisis.” University of Cambridge Centre for Technology Management Working Paper 2009/05.
Lubik, Sarah and E. W. Garnsey. 2016 “Early business model evolution in science-based ventures: the case of advanced materials.” Long Range Planning 49 (3): 393–408. doi:10.1016/j.lrp.2015.03.001.
Maine, E. and P. Seegopaul. 2016. “Accelerating advanced-materials commercialization.” Nature Materials 15: 487–91.