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UNIVERSITY OF SOUTH AUSTARLIA
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A Framework of University Incubator to

Maintain Financial Sustainability
Hsiao, Yu-Chan Helen
Supervised by
Professor Lee Luong, University of South Australia
Dr. Juan He, University of South Australia
A thesis submitted in fulfilment of the requirement for the degree of PhD of

Engineering in Manufacturing Management in the School of Advanced
Manufacturing and Mechanical Engineering of the
University of South Australia
April 2008
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Table Of Contents ............................................................................. i

List Of Figures .............................................................................. vii
List Of Tables ................................................................................... x
Abstract ......................................................................................... xii
Declaration ....................................................................................xiv
Acknowledgement.........xv
List Of Publications ...................................................................... xvii
CHAPTER 1: INTRODUCTION
1.1The Background ......................................................................... 1
1.2 The Problem And Its Setting.................................................. 4
1.2.1 Statement Of The Research Proposal ................................... 4
1.2.2 Sub-Problems .................................................................................. 5
1.3 Hypotheses ............................................................................. 9
1.4 Delimitations........................................................................ 11
1.5 Definition Of Key Terms ...................................................... 11
1.6 Abbreviations ....................................................................... 17
1.7 Assumptions ......................................................................... 18
1.8 The Importance Of The Research ........................................ 19
1.9 Research Methodology And Plan ......................................... 21
1.10 Flow Chart of Thesis Outline ............................................... 24
CHAPTER 2: THE REVIEW OF RELATED LITERATURE

2.1
Business Incubator ............................................................... 29

2.1.1 Definitions ..................................................................................... 29
2.1.2 Development Of Business Incubators ................................ 30
2.1.3 Evolution Of Business Incubators ....................................... 32
2.1.4 The Nature Of Business Incubators .................................... 32
2.1.5 Functions Of Business Incubators ...................................... 33
2.1.6 Incubators Under Different Names ..................................... 34
2.1.7 Incubator Types ........................................................................... 34
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2.1.8 Network ........................................................................................... 40

2.2 Some Worldwide Incubators ................................................ 40
2.2.1 Incubators Developed In The United States ................... 41
2.2.2 Incubators Developed In The United Kingdom ............. 42
2.2.3 Incubators Developed In Australia ...................................... 43
2.2.4 Incubators Developed In The United Nations ................ 44
2.2.5 Incubators Developed In Europe .......................................... 44
2.2.6 Incubators Developed In Asia ................................................ 45
2.3 The Needs Of Developing Business Incubators ................... 46
2.4 Sustainability Of Business Incubators................................. 49
2.5 Critical Success Factors Of Business Incubator.................. 50
2.6 University Business Incubators ........................................... 56
2.6.1 Roles Of University Incubators............................................. 56
2.6.2 Sustainability Of A UBI ............................................................ 57
2.7 Entrepreneurial University .................................................. 59
2.8 Entrepreneurial University Incubators ................................ 61
2.9 Profit Model Innovation ....................................................... 64
2.10 Findings And Conclusion ..................................................... 66
Chapter 3: EXPLORATION OF THE SUSTAINABILITY OF

UNIVERSITY INCUBATORS
3.1
3.2
3.3
Introduction ......................................................................... 70
Motivations Of This Survey ................................................. 72
Methodology ..............................................................................74
3.3.1 Target Selection And Survey Strategy .............................. 74
3.3.2 Method Of Questionnaire Design ......................................... 76
3.3.2.1 TheDelphi method ................................................. 76
3.3.2.2 The modified Delphi method 77
3.4 Survey Results ..................................................................... 80
3.4.1 Phase I: Current Status Of UBIs In The World ............... 80
3.4.1.1 History Of UBIs ..................................................... 80
3.4.1.2 Size Of UBIs .......................................................... 82
3.4.1.3 Types Of UBIs........................................................ 83
3.4.1.4 UBIs Annual Budget Sponsors ............................... 83
3.4.1.5 UBIs Annual Revenue Sources............................... 85
3.4.1.6 Strategy Of Sustainability Plan .............................. 87
3.4.1.7 UBIS Funds And Equity Status ............................. 90
3.4.1.8 Summary Of Phase I Survey91
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3.4.2 Phse II: Future Sustainability Plan For UBIs .................... 92

3.4.2.1 Questionnaire Design ............................................ 93
3.4.2.2 UBI Advantages (Q1, Q2) ....................................... 94
3.4.2.3 Can UBIs Take Investment? (Q3, Q4) ..................... 95
3.4.2.4 Future Sustainability Plan Of UBIs (Q5)................. 95
3.4.2.5 Possible Actions To Generate More Income (Q6) ..... 96
3.4.2.6 Plan For Investment And Privatization (Q7 To Q10) 96
3.4.2.7 Summary of Phase II Survey............................................97
3.5 Conclusion............................................................................ 98
CHAPTER 4: AN INTEGRATIVE FRAMEWORK FOR

ENTREPRENEURIAL UNIVERSITY
INCUBATOR
4.1
4.2
Introduction ....................................................................... 103

Needs And Motivation Of Entrepreneurship ..................... 105
4.2.1
Nature Of The University Incubator ............................... 105
4.2.2
Advantages Of The University Incubator ..................... 106
4.2.3
Weaknesses Of The University Incubator..................... 106
4.2.4
Needs Of Entrepreneurship................................................. 107
4.3 Incubation Models .............................................................. 108
4.3.1
Traditional For Non-Profit Model ..................................... 108
4.3.2
Modern Non-Profit Model..................................................... 109
4.3.3
The For-Profit Private Incubation Model...................... 110
4.3.4
University Business Incubator Model ............................ 111
4.3.5
The Hybrid Model .................................................................... 112
4.4 Threat And Sustainability Factors Of UBIs ........................ 113
4.5
A New Integrative Framewark For Entreprenurial
University Incubator .......................................................... 114
4.5.1
The Integrative Framework ................................................. 114
4.5.2
The Organization Structure................................................ 119
4.5.2.1
Structure .......................................................... 119
4.5.2.2
Team And Missions ........................................... 121
4.5.3
The Financial Model of EUI ................................................ 123
4.6
Discussion .......................................................................... 124
CHAPTER 5: THE IMPLEMENTATION FRAMKWORK FOR

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THE MODEL: DEVELOPMENT OF A

TRANSITION PLAN AND A BUSINESS PLAN
FOR PRIVATISATION
5.1
5.2
5.3
Introduction....................................................................... 129
Motivations for Privatization ................................................133
Examples Of A Transition Approach to Privatization....... 133
5.3.1
Top-Down Approach to Privatization ............................. 135
5.3.2
Bottom-Up Approach to Privatization ........................... 137
5.4
Proposed Bottom-Up Transition Process Within The
Campus ............................................................................... 139
5.4.1
Idea Initiation Stage .............................................................. 141
5.4.2
Draft Of Business Plan Stage ............................................. 141
5.4.3
University Promotion Stage ............................................... 141
5.4.4
University Policy Approval Stage ..................................... 142
5.5 Transition Process In Public .............................................. 143
5.6 Establishment Of A Business Plan For A University
Incubation Company .......................................................... 145
5.6.1
Introduction To The Company ................................ 146
5.6.2
Company Organization............................................. 150
5.6.3
Business Model ......................................................... 151
5.6.4
SWOT Analysis.......................................................... 152
5.6.5
Financial Prediction ................................................. 153
5.6.5.1
Resource Planning ......................................................... 154
5.6.5.2
Estimation Of Revenue ................................................. 154
5.6.5.3
Estimation Of Expenditures ....................................... 159
5.6.5.4
Financial Statement ...................................................... 161
5.7 Conclusions ........................................................................ 163
CHAPTER 6: CASE STUDIES

6.1
Introduction ....................................................................... 166

6.1.1
The Need Of Case Study ....................................................... 166
6.1.2
Target Selection....................................................................... 168
6.2 Case 1: Business Incubator Of National University Of
Singapore (NUS) .................................................................. 169
6.2.1
Basic Data Of NUS ................................................................... 169
6.2.2
6.2.3
6.2.4
Introduction to NUS ............................................................... 170

NUS Venture Support (NVS) System ............................... 171
Incubation Framework Of NUS .......................................... 174
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6.2.4.1 Campus Incubation Network ............................... 174

6.2.4.2 Off-Shore Incubation Network ............................. 175
6.2.5
Analysis Of NUS System ....................................................... 176
6.2.5.1
NUS Incubation Framework............................... 176
6.2.5.2
SWOT Analysis of NUS ...................................... 178
6.2.5.3
Evaluation Of Sustainability Of NUS Incubator .. 181
6.2.6
Summary Of NBI ...................................................................... 182
6.3 Case 2: Hefei National University Science Park
Development Co., Ltd. (HFUSP) ......................................... 184
6.3.1
Basic Data Of HFUSP ............................................................. 184
6.3.2
General Description Of HFUSP .......................................... 185
6.3.2.1
Process Of Establishment Of HFUSP ................. 185
6.3.2.2
Organizations And Mission Of HFUSP................ 187
6.3.3
Development Fund ................................................................. 189
6.3.4
Analysis Of HFUSP .................................................................. 190
6.3.4.1
HFUSP Incubation Framework .......................... 190
6.3.4.2
SWOT Analysis Of HFUSP ................................. 191
6.3.4.3
Evaluation Of Sustainability Of HFUSP ............. 193
6.3.5
Summary Of HFUSP ............................................................... 193
6.4 Case 3: National Taiwan University Innovation
Incubation Center & National Taiwan University
Innovation Incubation Company (NTUIIC) ....................... 195
6.4.1
Basic Data Of NTUIIC............................................................. 195
6.4.2
General Description Of NTUIIC ......................................... 196
6.4.2.1
Process Of Establishment Of NTUIIC ................. 197
6.4.2.2
Organization And Mission Of NTUIIC ................. 200
6.4.3
Analysis Of NTUIIC ................................................................. 203
6.4.3.1
NTUIIC Incubation Framework .......................... 203
6.4.3.2
SWOT Analysis Of NTUIIC ................................. 206
6.4.3.3
Evaluation Of Sustainability Of NTUIIC ............. 208
6.4.4 Summary Of NTUIIC ............................................................... 209
6.5 Evaluation Of Case Studies ................................................ 211
6.6 Conclusions ........................................................................ 213
CHAPTER 7: CONCLUSIONS AND FUTURE WORK

7.1
7.2
Conclusions ........................................................................ 215

Future Work ....................................................................... 219
References
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APPENDICES
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Appendix I - The respondents of questionnaire surveys

Appendix II - Questionnaire on the financial sustainability
of university incubators
Appendix III - Questionnaire Phase Two Subject: Move
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UBI to a sustainable organization

Appendix IV - Internship consent letter
Appendix V Visiting case studies photos
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259
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Figure 1-1
Research Flow Chart
Figure 2-1
Outline of Literature Review
Figure 2-2
Growth of the Worldwide Incubator Industry
Figure 3-1
Flow Chart of Chapter 3
Figure 3-2
Six Steps of Scenario Analysis
Figure 3-3
Number of UBIs vs. Developed Years
Figure 3-4
Sizes of UBIs
Figure 3-5
Rented Space of Taiwan UBIs
Figure 3-6
Sources of UBIs Annual Budget Support
Figure 3-7
UBIs Annual Financial Support by the Government in

Taiwan
Figure 3-8
Sources of UBI Revenues
Figure 3-9
Annual Revenue from UBI Business in Taiwan
Figure 3-10 Percentage of Government Support in Total Annual

Revenue
Figure 3-11 Accumulated Surplus of UBIs
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Figure 3-12 Plan for Financial Sustainability

Figure 3-13 Pressure from Support Entities for Self-Sufficient
Incubation Management in Taiwan
Figure 3-14 Possible Modes of Self-Sustainability in Taiwan UBIs
Figure 3-15 Sources of UBI Funds and Equity Status
Figure 4-1
Outline Flowchart of Chapter 4
Figure 4-2
Incubation System Before 1990
Figure 4-3
The Modern Incubation System After 1990
Figure 4-4
Private Incubator Model
Figure 4-5
University Business Incubator Model
Figure 4-6
Emerging Merits of UBI, CPI and IPI into BIC
Figure 4-7
Closely Linked Incubation System
Figure 4-8
The Proposed Integrative Framework of EUI
Figure 4-9
The Proposed Incubation Company Organization
Figure 4-10 Internal Financial Flow of the EUI System

Figure 5-1
Flowchart of Chapter 5
Figure 5-2
Process of the Top-Down Privatization
Figure 5-3
Process of Bottom-Up Privatization
Figure 5-4
Proposed Process of Privatizing A University Incubation
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Company
Figure 5-5
Proposed Incubation Company Organization
Figure 6-1
NUS Incubation Framework
Figure 6-2
Organization Structure of HFUSP
Figure 6-3
Incubation Framework of HFSUP
Figure 6-4
Organization of NTU Incubator
Figure 6-5
Organization Chart of NTUIIC
Figure 6-6
NTUIIC Incubation Framework
Figure 6-7
Internal Interaction of NTUIIC
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Table 1-1
Research Questions and Formulated Hypotheses Of

Current Research
Table 2-1
Types of Business Incubators
Table 2-2
Best Practice of AABI Incubators 2004
Table 2-3
Various Goals in Different Regions/Countries
Table 2-4
Mission, Function and Assessment of UBI
Table 2-5
Some Successful University Business Incubators
Table 2-6
Gross Revenue from Technology Transfer of Some UBI
Table 2-7
Strength and Weakness Analysis of Different Types of

Incubator
Table 3-1
Strategies of Income Sources for Financial Sustainability (Phase I)
Table 3-2
Questionnaire Design for The Phase II Survey
Table 3-3
Actions of income sources for financial sustainability

(Phase II)
Table 3-4
Actions for Raising Investment Fund and Privatizing UBI
Table 4-1
Incubator Statistics Up To 2005
Table 4-2
Proposed EUI Model Vs. Current Various Incubator Models
Table 5-1
Predicted Resource Planning
Table 5-2
Predicted Annual Cash Income
Table 5-3
Predicted Long-Term Investment Profit Rate
Table 5-4
Predicted Long-Term Investment Income
Table 5-5
Predicted Short-Term Investment Income
Table 5-6
Predicted Annual Revenue
Table 5-7
Predicted Annual Salary
Table 5-8
Predicted Annual Cost
Table 5-9
Profit and Loss Statement
Table 6-1
Incubator Selection for On-Site Case Studies
Table 6-2
Timetable of Establishment Process of HFUSP
Table 6-3
Timetable of Establishment Process of NTUIIC
Table 6-4
Asset and Debt Statement
Table 6-5
Table 6-6
Evaluation of Performance Indices
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Business incubation is a dynamic process of business enterprise

development. Incubators nurture young firms, helping them to survive
and grow during the start-up period. Among various types of incubators
the university-based incubators are particularly studied. Although most
university incubators are quite successful in terms of the success rate
and the growth rate of tenant companies, their financial contributions to
the sponsoring universities, however, are still not satisfied. It is found
that behind the successful history records there are still some barriers
impeding the development of an efficient incubator. In this research, a
new model, which integrates merits of public and private incubators into
the university incubator, is proposed for the betterment of its
management scheme. The goal is to develop a successful incubator,
which can earn profits not only for its own financial sustainability but
also be able to generate income for the university.
The outcomes of this research are summarized as follows:

1. From questionnaire survey around more than 100 university
incubators around the world, this research received constructive
opinions from incubator experts to support the proposed concept. This
inspires the author to consider the necessity of a new incubation
model for long-term sustainability.
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2. The method of this survey study combines the Delphi Method and
Scenario Analysis, called modified Delphi method, for worldwide
survey and the Microsoft Excel method for data statistic for both of the
Taiwan and worldwide surveys. By breaking down long questionnaire
into two successive surveys, the replied rate did significantly increase.
3. An integrative framework for the new incubation model has been
proposed for the sustainable operation of university incubator.
National Taiwan University has validated this model in a similar way.
4. The process of privatization of university incubator is proposed to meet
the university administrative procedure. Both of the government
initialized top-down and incubator initialized bottom-up processes are
considered. A Business Plan to suit for the proposed incubation
company is also designed in this work. The sustainability in terms of
financial status has been predicted based on some reasonable
assumptions.
5. In order to verify the proposed model, three case studies through
on-site visits have been carried out to compare their incubation
systems and financial status up-to-date. This can provide a guideline
to adjust the proposed model of this work.
Finally, a comprehensive conclusion and discussions are given to

summarize the contribution and future work of this research.
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I hereby declare that this thesis is my own work and contains no

material, which has been accepted for the award of any other degree or
diploma in any University or Institution. To the best of my knowledge
and belief, this work contains no material previously written by another
person except those that have been referenced and acknowledged.
Signature of Candidate
..
Hsiao, Yu-Chan Helen

School of Advanced Manufacturing and Mechanical Engineering
November, 2006
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The author is greatly indebted to her thesis adviser, Professor Lee

Luong, Head of the School of Mechanical Engineering for his valuable
instructions. Without his continuous guidance this research could not
have progressed. Sincere thanks are also due to Dr. Juan He and Dr.
Sang-Heon Lee for their valuable instructions and encouragement
throughout the course of the authors PhD Program.
The author is grateful to Prof. Yoke San Wong of National University of

Singapore, Prof. Zhang Hui of Hefei National University, and Mr.
Nicholas Wu, of NTUIIC Manager for their arrangements to visit three
Business Incubators. Sincere thanks are also to the three case studies
directors (Mr. Hui Kwok Leong, Dr. Daming Zhang and Prof. J. F. Jiang)
who spent their precious times to introduce their respective incubators
and proofread the visit reports even they are extremely busy.
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The author is also with sincere gratitude to her beloved husband,

Kuang-Chao, and two lovely children, Charming and Jack. During the
long period of study the author kept receiving spiritual support and
computer skill assistance from her family members.
Lastly, the author would like to present this Thesis to her respected
mother.
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F PUBLICATIONS
Published Journal Papers
Fan, K.C.; H. Hsiao; L. Luong; G. Lin and N. Wu. Development of a New

Self-sufficient Model for University Incubator, International Journal of
Innovation and Incubation, 1(1): 33-49, 2004.
Hsiao, H., Fan, K.C., Luong, L. and He, J., Privatization of University
Incubator: Formation Process of a For-profit University
Incubator, International Journal of Innovation and Incubation, 3(1):
1-18, 2006.
Submission Papers
Hsiao H., Luong, L., He, J. and Fan, K.C., Survey of Sustainability Plan of
University Incubators, submitted to International Journal of
Entrepreneurship and Innovation Management (IJEIM). (2007).
Paper in Preparation Submission
Comparison of sustainability of university incubators: a Case Study
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Chapter 1 Introduction
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1.1 THE BACKGROUND
The concept of business incubators was developed in 1959 when the

northeast states of the United States of America were facing a serious
economic recession. A businessman, Mr. Joseph L. Manusco, applied to the
state government to convert his unused industrial land, at Batavia Town in
New York State, into a business centre providing start-up SME companies
with space, facilities, credit and management consulting services. Because
this concept promised to provide job opportunity and promote business
activities in the region, the proposal was soon approved and the first tenant
company moved in. This was the birth of the business incubator (Kuznets,
1996).
During the 80's and early 90's, incubators became a popular economic
development tool as a way to help fledgling businesses grow. Thus, local
economic development agencies, government and private institutions
adopted incubators as a tool to reduce the probability of failure and speed
the process of business creation.
Current incubators are of four types, depending on the nature of their
developers (Yuan, 1995; Smilor, 1987):
- non-profit incubator developed by a non-profit foundation
- private incubator
- government incubator
- university incubator.
A Framework of University Incubator to Maintain Financial Sustainability
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The definition of a general purpose incubator can be stated as an

organization whose purpose is to support the development of start-up
companies. Incubators provide hands-on management assistance, access
to
financing
and
technical
support
services.
They
also
provide
entrepreneurial businesses with shared office services, access to equipment,

flexible leasing and expandable spaceall under one roof (NBIA, 2003).
In addition to these general purpose of incubators, a university business
incubator (UBI or university incubator) also provides more resources of
the campus, such as faculty knowledge, student interns, laboratory
equipment and technology, library, etc. In addition to the general missions
of business incubators, such as regional economy development, job
creation and start-ups, university incubators also bear responsibility to
commercialize campus technologies, assist start-up related curriculum and
foster spinout companies. Although universities have devoted tangible and
intangible assets for incubation programs, previous studies (Hsiao, 2001)
indicate that:
- Incubator contributions to the university are not significant, with only
the space rent and limited equity collected from the tenant companies.
-
Current UBIs still rely on financial support from the university or

government for annual maintenance. The majority of UBIs regard
themselves as a service organization on the campus.
- The financial sustainability of UBIs is still an essential problem. Many

UBIs are currently enjoying only breakeven status. They still position
themselves as service centers rather than profit centers.
- UBIs need to inject an entrepreneurship concept into their management
strategic planning so that they possess the experience to incubate
tenants.
- Incubators also need to be incubated.
Based on the above description, this research intends to find a new
integrative business model for the university incubator toward long-term
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sustainable management. The motivation of this study can be summarized

as follows:
(1) Many universities have faced increasing pressure in fund raising and in
gaining more income in recent years. In this competitive age, stronger
financing can develop a better university. Universities should, therefore,
move to entrepreneurship, such as selling IP, leasing unused land,
providing more industrial services, commercializing technologies, etc.
(2) Current UBIs still rely on financial support from the university or
government for annual maintenance. The majority of UBIs regard
themselves as a service organization on the campus. However,
knowledge can create economy. Similar to the Technology Transfer
Office (TTO), whose mission is to sell campus intellectual properties (IP),
UBI also has the potential to create significant income for the university.
Long-term financial sustainability of UBIs will be requested by the
university in the future. It is time to look at the possibility of a change
of position for UBIs.
(3) Many private incubators have been established in recent years with the
strategy of investment and then incubation for some selected tenants.
The policy is for profit in the long run. UBIs have more intangible
assets from the campus. By learning and implementing the effective
investment policy of private incubators, a UBI can become a profitable
organization for the university. Long-term sustainability will become
possible.
(4) A UBI has many more functions than just incubation. Increasing
revenue from rents, service fees, equity, royalty, etc. can only bring
short-term profit. Technology investment will be a key factor to gain big
returns in the long run. Policymaking, process development and
implementing strategy to reform a UBI into a for-profit and sustainable
company is the theme of this research work. Following this logical
sequence, three research questions are formulated and six hypotheses
established to form the model (Table 1-1). Further details will be
elucidated in the following sections.
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Table 1-1:
Research questions and formulated hypotheses

of current research
Research Questions
Research Hypotheses
Q1: What is the current state

of the UBI management
scheme, its operation and
the status of its selfsustainability?
H 1.1: It is positive that most UBIs are facing

increasing financial pressure.
H 1.2: It is positive that universities possess
abundant resources to help tenant UBIs
to closely link with campus activities.
Q2: How to develop an

integrative framework
(network among university,
government, incubator and
tenants) for UBIs?
H 2.1: The concept of knowledge economy

positively has been recognized by the
global society.
H 2.2: Venture capitals are positively interested
in joining the incubation business with
universities.
Q3: What kind of privatization

strategy of UBIs can break
through the current
conservative mindset of
universities?
H 3.1: It is positive that different universities

have different incubation strategies.
H 3.2: Universities should run their incubator
as an enterprise; it is the way to reach
privatization.
1.2 THE PROBLEM AND ITS SETTING

1.2.1 STATEMENT OF THE RESEARCH PROPOSAL
The aim of this project is to develop an Entrepreneurial University
Incubator (EUI, also called entrepreneurial incubator in this research) for
the purpose of financial sustainability.
Compared to the current university incubators common management

model, which treats the university as a non-profit service provider
maintained by limited income with conservative scope, a more aggressive
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business strategy should be encouraged to gain more legal profit for its
own financial sustainability.
Nowadays, many leading universities have adjusted their management
schemes to entrepreneurship. It is time to consider the reform of UBIs to
for-profit EUIs as well. For a UBI to be a for-profit entity it must have:
- Free-standing position and strategy supported by the university
- A good profit model to generate more income
- Sufficient founding capital from the investors.
This research will include:
(a) Literatures review of current various types of business incubators,
particularly the UBI.
(b) Questionnaire survey of some selected UBIs of Taiwan and other
countries to analyse their current management profile, sustainability
and intention to become privatized.
(c) The development of an integrative model (network among the
university, incubator, government and the tenants) for UBIs viable for
long-term sustainability. Some merits of private incubators will be
adopted to integrate into this model and some benefits from the
university and government will be maintained.
(d) The process of privatization of UBI. It has to break through the
current ivory tower concept inherent in the university.
(e) Establishment of a business plan for the proposed university
incubation company. Prediction of possible income factors will be
analysed based on surveyed and market-available data.
(f) Case studies with some selected UBIs to validate the feasibility of the
proposed model and to adjust the initial assumptions.
1.2.2 SUB-PROBLEMS
In order to achieve the formatting of a EUI and develop a feasible profit
model for financial sustainability, six sub-problems are considered:
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Sub-problem 1: Analysis of current business incubators, their

management schemes and financial status. Particular attention will be
focused on the university incubator.
The first sub-problem is to look at the current types of business
incubators around the world, among which the UBI will be studied in
more detail.
Some
fundamentals,
missions
and
success
factors
will
be
summarized.
Some good-practice UBIs will be listed and their annual income
sources are compared.
Sub-problem 2: Survey of university incubators around the world.
Three questionnaires will be designed, one for the Taiwan region and
two for other countries.
The first questionnaire will target most UBIs in Taiwan, to explore
their
possible
income
sources
and
thoughts
for
sustainable
management.
The other two questionnaires will focus on selected UBIs around the
world with the first as a fundamental survey, i.e. the first phase.
Statistical data will be analysed using the software tool of Microsoft
Office Excel.
The Delphi method and scenario analysis will be used to design the
remaining questionnaire of sustainability plan. The same group of
incubators that were targeted in the first phase will be surveyed again.
Possible approaches to the goal of sustainability will be analyzed.
Sub-problem 3: Development of a new framework of university
incubatorthe entrepreneurial incubator.
Based on the outcome of the second sub-problem, this sub-problem is
to propose a new type of incubator structure.
Page 6
Many modern universities have adjusted their positioning and

mission from academic-excellence universities to entrepreneurial
universities. By adopting the name of entrepreneurs, they indicate
they are looking for profit from industrial cooperation and technology
transfer.
Similar to the growth of any start-up to an enterprise, the university
incubator can also be developed to a for-profit entrepreneurial

incubator. In addition to that the proposed entrepreneurial incubator
will be formed in a private entity, which provides the incubation
business with more flexibility.
This sub-problem aims to develop a new framework of incubation
system. This system will study:
(a) The new structure of this incubator and the relationships among
the university, government, incubator, incubatees and investors.
(b) Validation of the proposed model with some university incubators
that are already privatized.
The public university will be particularly considered because it is
considered not an easy task to break such a universitys ivory tower system,
given so many restrictions from interior rules, conservative mindsets and
government laws which hinder such a plan. However, because the
university initiated the birth of the entrepreneurial incubator, if the
companys management strategy can follow the universitys guidelines, the
university must expect to see its growth. This study will propose a win-win
strategy for all involved parties.
Sub-Problem 4: Privatization of a university incubator.
Based on the outcome of the third sub-problem, a university-based
entrepreneurial incubator can be established.
Although the current university incubator may have made a
significant contribution to regional development, it can never be selfsustainable because the generated profit is so limited. Therefore, if
Page 7
the UBI can be formed to a private type entrepreneurial entity, its

functions can be enlarged to involve more profitable activities, such
as:
(a) Taking investment action
(b) Searching campus IP
(c) Sponsoring technology commercialization (or technology
mining in this thesis), and
(d) Holding start-up competitions.
Although the public university cannot or can only partially invest in
a private company according to the educational law of the country,

it can take the share of the incubation company as long as it
contributes with intangible assets to the company. The university
shall help the company in all possible ways to make it grow.
This sub-problem aims at the study of a possible process to

privatize a UBI. Two approaches will be studied, namely the topdown approach initiated by the government policy and the bottomup approach initiated by the university itself.
Flow charts of these two approaches will be drawn in chapter 6.

The main goal of this study is to prove that the proposed integrative model
can not only help the university incubator to be financially sustainable but
also to create significant income for the university.
Sub-Problem 5: Development of the business plan for a university
incubation company.
Based on the outcome of the fourth sub-problem, the fifth sub-problem is a
general purpose business strategy and financial prediction that should be
applicable to any of the entrepreneurial university incubators (in this thesis
also called University Incubation Company or Incubator Company after
the privatized incubator).
Page 8
Design a business plan that covers the SWOT analysis, the rights
and obligations of the incubation company as well as the
sponsoring university and the possible income sources and cost for
the company.
Predict the financial status of the incubation company, including
the investment strategy, investment return and a financial chart for
six years.
This sub-problem is to verify the sustainability in the long run of the
privatized incubator.
Sub-problem 6: Case studies

This sub-problem aims at case studies of some selected incubators of
public universities. It will be carried out by on-site visits.
(1)
For the current non-profit type UBI, this work will consider the
incubator of National Singapore University (NSUI). The university

supporting system, the incubation framework and the financial
analysis will be analyzed in chapter 8.
(2)
For the current for-profit private type UBI, this work will
consider the innovation and incubation company of National

Taiwan University (NTUIIC) and the Hefei National University
Science Park (HFUSP) in China. Their progress after several years
of transformation will be particularly detailed. The findings will be
the guideline to adjust the assumptions of this research.
1.3 HYPOTHESES
Six hypotheses were formulated prior to this research. They are listed below:
Page 9
The first hypothesis is that most universities have faced financial

pressure due to government budget cut. They have to seek more
incomes from outreaches.
The second hypothesis is that the university has abundant resources to

help startups, the incubator closely linking with the campus activities.
From the universitys point of view the incubators missions are not only
to nurture the start-ups and assist regional prosperity as other types of
incubators, but also to take responsibility to commercialize the campus
technologies and generate incomes for the university.
The third hypothesis is that the concept of knowledge economy has

been recognized by the global society.
The university possesses rich opportunities which have to be used,
including venture capitals interest to seek early stage investment, due
to their interest in some potential start-ups. The investors will join in the
incubation business with the university. Meanwhile, the university will
open its doors to welcome experts to run the incubator together. In
addition to that the university would break some traditional educational
restrictions and empower the faculty to get more people involved in the
incubation business.
The fourth hypothesis is that the university should run the incubator as
an enterprise.
More activities can generate more profit and the success rate of startups in the university incubator must be higher than the off-campus
start-ups. The incubator is not only a service office but also a profit
center. To reach this goal the privatization of the UBI is a positive way.
The fifth hypothesis is that different universities have different resources
and different incubation strategies.
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Page
Analysis of the surveyed data from different university incubators

should be reliable. Physical visits or short-term interns are necessary.
The sixth hypothesis is that, in order to generate more income, the
university should invest potential tenants and get profit from investment
return, rather than just collect the rent. Since many public universities
are restricted in cash investment, the best way is to take investment
through the privatized incubation company.
1.4 DELIMITATIONS
In this research as many existing UBIs as possible will be studied and

surveyed through data from libraries, internet Web searches and private
contacts. The findings and discussions are applicable to the majority of
UBIs.
This research will primarily study incubators belonging to well developed

universities that have abundant intangible resources and good outreach
connections.
This research will deal with educational restrictions set for public
universities whose annual budgets are to a high proportion received
from government.
This research will carry out some case studies on selected university
incubators whose organization structure and management schemes may
not be generalized to all others.

11
Page
1.5 DEFINITION OF KEY TERMS
Bayh-Dole Act. In 1980, this act created a uniform patent policy among
the many federal agencies funding research. As a result of this law,
universities retain ownership of inventions made under federally funded
research (COGR, 1999). In return, universities are expected to file for
patent protection and to ensure commercialization upon licensing. The
royalties from such ventures are shared with the inventors, a portion is
provided to the university and department/college and the remainder is
used to support the technology transfer process.
Business incubation. A dynamic process of business development of a
small and medium enterprise during the startup period, under the
management of an incubator.
Business incubator. A body providing space, services and hands-on
management assistance in order to nurture young firms, helping them to
survive and grow during the start-up period when they are most vulnerable.
Business model. Also called a business design. It is the instrument by
which a business intends to generate revenue and profits (Wikipedia, 2003).
It is a summary of how a company means to serve its employees
and customers and involves both strategy (what a business intends to do)
as well as implementation (how the business will carry out it's plans).
Delphi method. Traditionally a technique aimed at building an agreement
or consensus about an opinion or view, without necessarily having people
meeting face to face, such as through surveys, questionnaires, emails etc.
This technique, if used effectively, can be highly efficient and generate new
knowledge (Wikipedia, 2004).

12
Page
Entrepreneurial university incubator. An incubator registered as a

private company which is authorized by the university to run the
incubation business as an enterprise. In addition to the general missions of
current university incubators, this private entity should be able to generate
profit for its own sustainability and feedback to the university.
Entrepreneurial
university.
university
which
actively
looks
for
industrial collaboration through research contract and technology transfer

in order to obtain more money for university operation, since government
supports are decreasing gradually (Nelson, 2000; Trachtenberg, 2003).
Equity. Funds provided or donated to redeem a business by the sale of
stock (Free Dictionary, 2006).
Equity liquidation. The acquisition of cash-based reward by sale of stocks.
For-profit incubator. This allows portfolio companies to focus solely on
developing a product or service by providing the company with an array of
services, equipment and personnel. The investors or venture capitalists are
offered office space, infrastructure, shared services and often business
expertise (Finer, 2002). This type of incubator is managed for profit. The
main source of income is from investment return. Therefore, the tenant
selection is based on the potential of rapid growth. The private incubator is
of this kind.
Founding fund. A fund raised at the establishment stage of an organization.
Fund. A reserve of money set aside for some purpose or an organization
established to administer and manage a sum of money (Free Dictionary,
2006).
Government incubator. It supports the establishment and growth of hightech startups (Physorg News, 2006). This kind of incubator is developed by
13
Page
the government for the purpose of regional economy or to nurture special

technology based tenants, such as bio- or information technology.
Incubator. Defines a new philosophy of incubation by providing real
business advice, help and resources for entrepreneurs. The incubator is
also about turning any good business idea into reality. It offers advice and
support, cost-effective consultancy and more importantly, access to
professionals and a network that might otherwise be unobtainable - all of
which makes the incubator unique (Manchester U., 2005).
Matching funds. A term used to describe the requirement or condition that

a generally minimal amount of money or services-in-kind originate from the
beneficiaries of financial amounts, usually for a purpose of charitable or
public good (Wikipedia, 2006).
Non-Profit Incubator. Based on the same business incubator model that

was used for visual artists when their business began. Participants are
provided with furnished shared office space, computer, phone, voice mail,
high speed Internet, fax and color copier access (BAC, 2005). Amenities like
a conference room and facility use for events are included. Organizational
coaching and classes covering topics such as grant writing, fundraising and
board development are offered. Cadwalader attorneys have incorporated,
advised and obtained tax-exempt status for hundreds of not-for-profit
organizations under the umbrella of the Not-for-Profit Incubator
(Cadwalader, 2006).
Non-profit organization. Also called "non-profit org" or simply "non-profit"

or "not-for-profit", it may be a formal incorporated not-for-profit corporation
that does not have shareholders, though it may have members and issue
membership certificates or require member loans. It may also be a trust or
association of members. The organization may be controlled by its members
14
Page
who elect the board of directors or board of trustees. Not-for-profit

organizations may have a delegate structure to allow for the representation
of groups or corporations as members. It may be a non-membership
organization and the board of directors may elect its own successors
(Investor dictionary, 2005). It is a tax-exempt organization that serves the
public interest. In general, the purpose of this type of organization must be
charitable, educational, scientific, religious or literary (DeMartinis, 2005).
Preseed capital. A fund for business idea development that can be utilized
to
obtain
information
and
services
related
to
commercializing
technological project (Sitra, 2006).

Profit model. A business model designed to guide a company to improve its
performance and strengthen its core competency, in order to win the
market and finally obtain profit (Liu, 2002).
Seed capital. Also called seed financing or seed money. Money used for
the initial investment in a project or start-up company, for proof-ofconcept, market research, or initial product development (Investorwords,
2006).
SWOT analysis. It is a strategic planning tool used to evaluate the
Strengths, Weaknesses, Opportunities and Threats involved in a project or
in a business venture or in any other situation requiring a decision
(Wikipedia, 2006). It is also a tool for auditing an organization and its
environment. It is the first stage of planning and helps marketers to focus
on key issues.
SWOT stands for strengths, weaknesses, opportunities and threats.
Strengths and weaknesses are internal factors. Opportunities and threats
are external factors (Marketing Teacher, 2005).

15
Page
Technology mining. It supports a university's application of knowledge

objectives through finding commercial opportunities within research
performance. The supporter can also invest in promising research to
develop its commercial potential. Commercially valuable intellectual
property (IP) may result in financial reward for Research Concentrations, as
well as the creator(s) of IP, through the licensing and sale of IP and the
formation of spin-off companies.
Technology transfer. It is to transfer the research results from a university
to the commercial marketplace for public benefit (Phillips, 2002). It is
linked to the fundamental research activities of a university.
University incubator. It is an official business incubator linked to a
university and developed by government. It is also called University
Business Incubator (UBI). It is designed to help young businesses survive
during the tough first years by providing business assistance and services
such as shared receptionist, fax, copier, conference room and lastly lowcost space (Idaho U., 2005).
Venture capital. It means a capital provided by outside investors for
financing of new, growing or struggling businesses. It is also money
provided to invest in a new enterprise or a risky one. This term is used for
capital that is needed for a higher-risk strategy (Wikipedia, 2004).
Venture capitalist (VC). It refers to a person who makes high-risk
investments.
Venture Capital Fund. It is a
pooled investment vehicle (often
a partnership) that primarily invests the financial capital of third-party

investors in enterprises that are too risky for the standard capital markets
or bank loans (Wikipedia, 2004).

16
Page
Venture capital investments. Generally they are high-risk investments

but offering the potential for above average returns (Wikipedia, 2004).
Virtual incubator. It provides Internet space for qualified businesses from
the E-Lab. This service provides access to online marketing opportunities.
The Virtual Incubator is also an online library and its service is free for
student businesses. It is a place for entrepreneurship students and student
entrepreneurs to receive and share advice on how to start and grow their
businesses. The incubator serves as a resource for students to refine their
business plans, find resources in the community and deal with any
problems that may arise (NCATU, 2006).
1.6 ABBREVIATIONS
AABI: Asian Association of Business Incubation
AHU: Anhui University
ASBC: Australia Small Business Council
ATDC: Advanced Technology Development Center
ATI: Austin Technology Incubator
AUTM: Association of University Technology Managers
BAC: Business of Art Center
BCOI: British Central Office of Information
BI: Business Incubator
BIIA: Business Innovation and Incubation Association
BFTC: Ben Franklin Technology Center
CBDC: Community Business Development Corporation
COGR: Council on Governmental Relations
COSBOA: Council of Small Business Organizations of Australia
DTI: Department of Trade and Industry
ECE: Economic Commission for Europe
EUI: Entrepreneurial University Incubator
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HNHTDZ: Hefei New High Tech Development Zone

HFUSP: Hefei National University Science Park
HFUT: Hefei University of Technology
HKITCC: Hong Kong Industrial Technology Centre Corporation
IP: Intellectual Property
ITBI: Israel Technology Business Incubator
ITRI: Industrial Technology Research Institute
KSBC: Kyonggi Small Business Center
M.I.T: Massachusetts Institute of Technology
MOEA: Ministry of Economic Affairs
MSC: Multimedia University of Malaysia
NASA: National Aeronautics and Space Administration
NBIA: National Business Incubator Association
NCSU: North Carolina State University
NCTDA: North Carolina Technology Development Authority
NPO: Non-Profit Organization
NTU: National Taiwan University
NTUIIC: National Taiwan University Innovation Incubation Center
NUS: National University Singapore
NBI: National University Singapore Business Incubator
NUSP: National University Science Park
R&D: Research and Development
RPI: Rensselaer Polytechnic Institute
SBIR: Small Business Innovation Research
SME: Small-And-Medium-Sized Enterprise
SMEA: Small-And-Medium Enterprise Administration
S&T: Science and Technology
TLO: Technology Licensing Office
TTO: Technology Transfer Office
UNIDO: United Nations Industrial Development Organization
USAINS: Group of Companies owned by the University of Sains Malaysia
USTC: University of Science and Technology of China
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UTTO: University Technology Transfer Office

UKBI: United Kingdom Business Incubator
UBI: University Business Incubator
VC: Venture Capital
1.7 ASSUMPTIONS
Four assumptions are proposed in this study as listed below:
Firstly, it is assumed that the incubation program is important to any
university in order to establish close links with regional-economic growth.
Secondly, it is assumed that the university needs to generate more income
through incubation business.
Thirdly, it is assumed that there is a legal way to allow the university to
authorize a private company to run the incubator on the campus.
Fourthly, it is assumed the university annual budget cannot operate
investment activities. The university can only receive the stakes from
donation and equity. Some university foundations, however, are allowed
to take a limited amount of investment.
1.8 THE IMPORTANCE OF THE RESEARCH

Firstly, nowadays, many worldwide universities have recognized the
mission of helping regional economical development and the university
incubator was considered to be an effective means to fulfill such a mission.
The main problems of current UBIs are:

19
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All incubators are positioned as non-profit organizations. Although their

contribution to society is significant, most UBIs could not be financially
viable if the financial support from the university or government was
cut.
Their contributions to the affiliated universities are still not satisfactory

in terms of equity return.
Therefore, the first important task of this study is to conduct an in-depth

survey through website access and questionnaire to explore these problems.
Secondly, in any good business plan, one product generates one profit and
more products generate more profit. Therefore, the UBI should design a
good profit model. in order to design this model:
Some important elements will be considered, such as positioning and

strategy, product and services, business structure and core competency
and execution and resources.
Some innovative profitable activities will be studied, such as technology

commercialization, technology mining, investment, campus business
plan competition, etc.
Therefore, the second important task of this study is to develop an

integrative model for the proposed EUI. In other words, a complete business
plan of the EUI will be proposed and its long-term sustainability will be
estimated by financial forecast.
Thirdly, in this knowledge economy era, many world-leading universities
have stepped beyond their simple teaching/research mission to industrial
cooperation for more income. The characteristics of this move are as follows:
These so called entrepreneurial universities are aware of the value of

IP and actively find markets through the Technology Transfer Office
(TTO). The contribution of TTO to the universitys annual budget has
become an important resource.

20
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Similar to this trend, it is noteworthy that adjusting the UBI to a forprofit EUI could also generate profit and feedback to the university. In
order to give maximum flexibility for business competition, such a new
incubation body should not be restrained by the university bureaucratic
system. In other words, a self-sufficient private type incubator, which
should follow the university guideline, could be a proper solution.
Therefore, the third important task of this study is to develop a feasible

formatting process of a EUI and its structure making it possible to include
external resources.
Lastly, in order to apply the proposed system of EUI and the integrative
model in any university incubator, some case studies with respect to
selected universities will be examined.
In comparison with their existing systems, proper constructive suggestions
will be summarized and proposed for the goal of EUIs with financial
sustainability. This is also important to this research.
1.9 RESEARCH METHODOLOGY AND PLAN

The current management research methods trend is to use various
research methodologies in organizational studies developed over the last
decades of the 20th century (Scandura, 2000). This research adopts the
different research methods of literature reviews, survey research and
interpretation of case study research to deal with the research issues. The
purpose of using various research methodologies, according to McGraths
(1982) typology of research strategies, is to provide a means for addressing
issues of triangulation and validity, including internal, external, construct
and statistical conclusion validity. The use of a variety of methods to

21
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examine a research topic might also result in a more robust and

generalized set of findings and conclusion validation. This research employs
the approach of McGrath, because he provided a comprehensive template
for research strategies.
The goal of this research is to develop a EUI and its corresponding
integrative framework. It is recognized that the incubator plays an
important role for a start-ups fledging and growing stage. An incubator
developed by a university can provide more services than others, such as
the commercialization of matured laboratory technology, technical transfer,
entrepreneurship consultation, sharing of laboratory facilities, universityindustrial-government networks, technology mining and spin-off from the
campus, investment in high-tech IP and potential tenants, etc. Therefore,
the university-based incubation should perform more functions than many
formal incubators. It should step beyond the general missions and head
toward being the profit developer of the university by providing more
services.
This research will investigate the progressive steps from a pure-minded UBI
to an entrepreneurial style for-profit incubator. The project will be carried
out through four stages:
1. Identify the current status and issues of university incubators.
Most UBIs are constrained to non-profit service providers. This research
will look into the management scheme, success factors and financial status
of current UBIs throughout the world. The plan will prove that even for the
best-practiced UBIs, it is difficult for them to reach financial balance by
themselves.
The aim is to discover possible sources of annual income and analyze the
possibility of financial sustainability for most UBIs. Methods of this
research will include:
Literature reviews: library and internet literature search

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The survey research: questionnaire design and survey of as many

as possible UBIs in the world
The Delphi method to get opinions from incubator experts
Statistical analysis utilizing Microsoft Office Excel
Forecast of possible income sources of UBI.
2. Development of a new type of EUI. Many modern universities have

adjusted their position and mission from academic-excellence universities
to entrepreneurship in order to get more money to support activities of the
university. They clearly need more income from other sources. Similar to
the growth of a start-up to an enterprise, the university can develop an
entrepreneurial incubator if the developers of its policy are visionary with
more business strategies beyond the academic horizon.
This project aims at the development of a new framework based on this
concept. The university shall be more aggressive in modern business
incubation under a compromised win-win strategy. Areas of study include:
The features of an entrepreneurial university and its operation
The constitution of the framework of a EUI
The process of privatization of a UBI
Investigation of the possible functions and implementation methods in a
EUI, such as the commercialization of matured laboratory technology,
technical transfer, entrepreneurship consultation, sharing of laboratory
facilities, university-industrial-government networks, technology mining
and spin-off from the campus, investment in high-tech IP and potential
tenants, etc.
3. Development of an integrative model for EUI--the university shared
Incubator Company. It is understood that a private for-profit incubator
must be more flexible and aggressive than those of non-profit
conservative incubators. In view of the many public universities that
cannot or can only partially invest a private company according to the
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educational law; this research will propose a new form of private

incubator company partially shared by the university under the donation
scheme. As a shareholder, the university shall help the company in all
possible ways to make it grow. This stage of research will include the
following concerns:
The definite establishment of an incubation company under the

authority of the university, its future cooperation and financial
advantage to both the university and the company.
Design of an integrative model based on the most functions for this

EUI, which will operate in an entrepreneurial way.
Financial prediction based on the assumption of all possible profits

for the investors and the university.
4. Case study research. Case study research belongs to a qualitative

method. It pertains to the fact that there is a limited number of units of
analyses (often only one) (Welman, 2001). These might be an individual, a
company, an institution or other form of organization which are intensively
studied. It could also be a more aggregated unit of analysis that will depend
on the nature of research and the methodology of the researcher (Ryan,
2002). Considering the accessibility and minimum cost, three fieldwork
case studies of representative incubators will be carried out both of nonprofit and for-profit of UBIs. The main purpose of on-site visit is to study
their management scheme, university supporting system and financial
status. In comparison with their existing systems, proper SWOT analysis
will be elucidated. Realistic data will be taken to verify the feasibility of the
integrative model and the possibility of long-term sustainability for a UBI.
1.10 FLOW CHART OF THESIS OUTLINE

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This research first identifies the problem and the goal: to propose an
innovative integrative framework for the UBI so as to allow its management
more flexibility and independence. The importance of this work is to
transform the current service non-profit mission incubation concept to a
service and for-profit mission concept. The expected outcome of this
change is to move toward an entrepreneurial incubator in order to meet the
global trend of moving toward the entrepreneurial university. The
background, motivation, problem setting, hypotheses and importance of
this research have been described in this chapter.
In Chapter 2, literature reviews will be carried out to identify current
business incubators and university incubators around the world. The
needs of a developing business incubator, the incubator management team
and the forms, functions and missions of a business incubator will be
described in general.
In Chapter 3, a series of questionnaire surveys will be implemented. It will
include the survey of current UBIs in Taiwan and two phase surveys of
UBIs of other countries with the modified Delphi method. By summarizing
the opinions of incubator experts, the hypotheses of possible approaches
toward sustainable operation can be validated.
In Chapter 4, a new integrative model will be proposed in order to achieve
the goal of this research. The survey of some existing models and the
derivation of the proposed model will be described. The importance of main
income from investment return will be illustrated. The proposed model will
be discussed.
In Chapter 5, the privatization process of UBIs will be proposed. It will
consider the restricted rules of the public university and propose a feasible
process to be approved by the university. The top-down and bottom-up
approaches will be proposed to suit different policies, namely the university
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Page
policy and the government policy. A business plan to establish an

incubation company for the public university will be proposed. The rights
and the obligations between the university and the incubation company will
be detailed. The financial prediction will also be investigated to prove the
viability of the company.
In Chapter 6, three case studies through on-site visits will be reported. The
first case studies the Business Incubator of the National University of
Singapore (NUS). Established in 2002, it has an incubation network
strongly supported by the university and the government. The NUS has a
strong desire to become an entrepreneurial university. Although the current
financial status of the incubator is in a break-even condition, this research
shows that without the financial support from the university it is difficult
for the incubator to become self-sufficient. The second case studies the
National Taiwan University Innovation and Incubation System (NTUIIC),
which was privatized in 2002. This is a bottom-up privatizing case. The
third case studies the Hefei University Science Park Development Co. Ltd.
(HFUSP), which was privatized in 2001 in alliance with three local UBIs.
This is a typical example of the top-down case under government policy.
After several years of operation, the current financial reports and
management schemes of both NTUIIC and HFUST have been obtained with
their permission. The sustainability study from financial reports could be
carried out.
In Chapter 7, the conclusions and future possibilities of this study will be
presented.
The flow chart of this research is thus illustrated below in Figure 1-1.

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Research Goal
Problem Setting
(Ch 1)
(Ch 2)
Literature Review of Current Business

Incubators and UBIs
Survey Methodology
(Delphi method and scenario analysis)
(Ch 3)
Current Status Survey
Sustainability Survey
Survey Results
(Ch 4)
A new integrative EUI Model
Linked incubation
system
Integrated
framework
Organization
Structure
Financial
Model
(Ch 5)
Privatization Process of UBI (TDA & BDA)
Proposed Transition Process for UBI
Design of a Business Plan for an Incubation Company
Case Studies
(Ch 6)
Current public UBI
(NUS)
TDA privatization
incubator (HFUSP)
BDA privatization
incubator (NTUIIC)
Conclusions and Suggestions
(Ch 7)
Figure 1-1: Research Flow Chart

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Chapter 2 The Review of Related Literature
T
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ER
RE
EV
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WO
OF
FR
RE
EL
LA
AT
TE
ED
D
C
CH
HA
AP
PT
TE
ER
R2
2
L
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TE
ER
RA
AT
TU
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RE
E
This chapter will start with the review of worldwide incubator systems in
general, from the development to the current status. Then the study will
focus on the review of university business incubators and its relationship
with the entrepreneurial mission of the university. Some existing integrative
models will be particularly reviewed. The structure of this chapter is outlined
in Figure 2-1.
Business Incubator (BI)

(Section 2.1)
Worldwide Incubators
(Section 2.2)
Needs of Developing BI
(Section 2.3)
Sustainability of BI
(Section 2.4)
Critical Success Factors of BI

(Section 2.5)
University Business Incubator (UBI)

(Section 2.6)
Entrepreneurial University
(Section 2.7)
Entrepreneurial University Incubator (EUI)

(Section 2.8)
Profit Model Innovation

(Section 2.9)
Findings and Conclusion

(Section 2.10)
Figure 2-1: Outline of literature review
Page 28
2.1 BUSINESS INCUBATOR

2.1.1 DEFINITIONS
There are no internationally unified definitions for business incubation or
business incubator. Some national incubation associations have their own
interpretations. These interpretations could be varied in wording in different
editions, but the core meaning is not altered. Some typical examples are as
follows:
(a) What is business incubation?
The American National Business Incubation Association (NBIA-2, 2006):
Business incubation is a business support process that accelerates the
successful development of start-up and fledgling companies by providing
entrepreneurs with an array of targeted resources and services.
The United Kingdom Business Incubation Association (UKBI, 2006):
"Business Incubation is a unique and highly flexible combination of business
development processes, infrastructure and people, designed to nurture and
grow new and small businesses by supporting them through the early stages
of development and change".
(b) What is business incubator?
The Business Innovation and Incubation Australia (BIIA, 2006):
Business Incubators are a new hybrid type of economic development facility
that combines features of entrepreneurship, business facilitation and real
estate development. They have proven to be the most effective technique yet
devised for creating employment, commercialising new technologies and
developing local economies.
National Business Incubation Association (NBIA, 2006):
Critical to the definition of an incubator is the provision of management
guidance, technical assistance and consulting tailored to young growing
companies. Incubators usually also provide clients access to appropriate
Page 29
rental space and flexible leases, shared basic business services and
equipment, technology support services and assistance in obtaining the
financing necessary for company growth.
In summary, it is clear that:
Business Incubation is a dynamic process of business enterprise
development of small and medium enterprise during its startup period,
under the management of an incubator.
Business Incubator is a body providing space, services, and hands-on
management assistance in order to nurture young firms, helping them to
grow during the start-up period and expecting them to succeed after they
leave the incubator.
University Business Incubator is a business incubator established by a
university. (For details, please refer to Section 2.1.7 and Section 2.6)
Incubation success means that after it has graduated, the incubated
company still grows, hires more employees, and creates more regional
economy.
2.1.2 DEVELOPMENT OF BUSINESS INCUBATORS
Business incubators nurture young firms, helping them to survive and grow
during the startup period when they are most vulnerable. Incubators provide
hands-on management assistance, access to financing and technical support
services. They also offer entrepreneurial firms shared office services, access
to equipment, flexible leasing and expandable spaceall under one roof. A
private,
non-profit
membership
organization,
The
National
Business
Incubation Association (NBIA), was formed in the United States to provide

integral services such as seminars, workshops, exhibitions, periodicals, and
conferences. An incubation programs main performance index is to produce
successful
graduatesbusinesses
that
are
financially
viable
and
Page 30
freestanding when they leave the incubator, usually after two or three years.
According to the Impact of Incubator Investment Study, 87% of incubator
graduates are still in business (NBIA-1, 2003). The establishment and
growth of Small- and Medium-sized Enterprises (SMEs) are the major
contributions of the incubators to the generation of new jobs in Australia
(Smith, 2001).
Since its first development at Batavia town in New York State in 1959, the
number of incubators has gradually increased throughout the world. For the
period to 2005, the statistical number is around 4000. This data is similar to
the estimate of the historical collection, as shown in Figure 2-2 (Barrow,
2001; Bollingtoft, 2005). The establishment of incubators for small and
medium enterprises aims to provide a favorable environment to help
entrepreneurs start up, or upgrade, their new technology-based business
and thus aid the growth of innovations and the continual regeneration of the
country (Huang, 1999). Koschatzky divides the early development of hightech small firms into three phases: the initiation phase, the development
phase, and the market introduction and production build-up phase. Each
phase is distinguished by different barriers and constraints (Koschatzky,
2003). A business incubator supplying a range of commercial managerial
and technical support services may provide a flexible and responsive way of
addressing these barriers or constraints (Main, 1997; Autio, 1998).
Figure 2-2: Growth of the worldwide incubator industry
Page 31
2.1.3 EVOLUTION OF BUSINESS INCUBATORS

During the early stage of the period 1960 to 1990, the main reason for
business incubators in most places was to recover from economic recession
by means of job creation, regional economic revitalization, and the fostering
of new types of local business. After 1990 the business of venture capitals
started to influence the market ecology. Holding an immense fund, VCs are
seeking potential companies to invest in rather than to establish a brand
new company. This type of business also began to look for potential SMEs.
The incubation system has included the joint venture of investment service
since then (Hsiao, 2001). From this macro perspective, several studies have
suggested that business incubation is an effective business development tool,
which requires modest investment and provides an excellent return on
investment to the regional economy (Markley, 1995; Sherman, 1998; Smilor,
1987). From 2000 up to the present, the wave of incubator industry has
been characterized as the growth and diversification period (Albert, 2002).
2.1.4 THE NATURE OF BUSINESS INCUBATORS
A business incubator is an economic development tool designed to accelerate
the growth and success of entrepreneurial companies through an array of
business support resources and services. It is established and sponsored by
the government, a non-profit organization, the private sector, or universities.
Through the support of sponsors, services are provided to help a young
business avoid potential pitfalls and take advantage of the opportunities that
a new business needs to grow. A business incubator's main goal is to
produce successful firms that will leave the program financially viable and
freestanding. This strategy is called the creation of new enterprise (Low,
1988). This definition reflects a growing awareness that entrepreneurship is
a process of becoming rather than state of being (Bygrave, 1989).
An incubator nurtures several start-up SMEs (normally numbering 10 to 25)
for a period of 2 to 4 years during their early stage of commercialization.
Page 32
These
incubator
"graduates"
create
jobs,
revitalize
neighborhoods,
commercialize critical new technologies and strengthen local and national

economies.
Critical to the definition of an incubator is on-site management, which
develops and orchestrates business, marketing and management resources
tailored to a companys needs. Incubators usually also provide clients access
to appropriate rental space and flexible leases, shared basic office services
and equipment, technology support services, and assistance in obtaining the
finance necessary for company growth.
2.1.5 FUNCTIONS OF BUSINESS INCUBATORS
Different incubators may possess different functions according to their
development objectives. In the early stage (1980 to 1990), there were
generally four main functions, known as CARE (Greenwood, 1992):
z
Creation: to create new companies
Attraction: to attract more startup companies moving in from other

regions
Retention: to maintain the business activities of tenant companies
Expansion: to expand the business scales.
In recent years, more functions are provided based on the type of incubators
and the needs of tenant companies, such as:
z
Assistance in the formulation of a business plan that specifies the

design,
operational,
financial,
physical,
service,
legal,
and
administrative framework according to selected objectives (such as:

Mian, 1997; ITEK, 2003; Adelaide Univ., 2003; SMEA, 2003; UNIDO,
2004).
z
Assistance in obtaining research funds from the government or

provision of commercialization funds by the incubator itself (ATDC,
2004; NCSU, 2003; CBDC, 2006; BFTC, 2003; Maryland Univ., 2005).
Page 33
Providing short courses, seminars, conferences, exhibitions (NBIA-1,

2003; ITEK, 2003; SMEA, 2003) for exchanging experiences and for
attracting students to establish technology-based firms (ITEK, 2003),
or even a degree course to tenant companies (Adelaide Univ., 2003).
Promotion of university-industry technology transfer (Tornatzky, 2000;

Allen, 1999).
Assistance in raising capital from venture funds (ITBI, 2003).
2.1.6 INCUBATORS UNDER DIFFERENT NAMES

Business incubator (BI) is an umbrella term for any organization that
provides access to affordable office space and shared administrative services
(Allen, 1990; Fry, 1987). Over the years, BIs have been marketed under a
variety of more or less synonymous labels, including Business Accelerators
(Barrow, 2001); Research Parks (Money, 1970); Science Parks (Martin,
1997); Knowledge Parks (Bugliarello, 1998); Seedbeds (Felsenstein, 1994);
Industrial Parks (Autio, 1998); Innovation Centers (Campbell, 1989);
Technopoles (Castells, 1994); and Networked Incubators (Hansen, 2000).
Thus, some incubators have been established to accelerate regional
economic development and to help capitalize investment opportunity, while
others have been established for the purpose of commercializing academic
research, typically by bringing small, high-tech firms into contact with hightech university campuses.
2.1.7 INCUBATOR TYPES
There is no standard legislation regarding business incubators. However,
specific government policies on business incubators have often played an
important role, e.g. as regards regional development or the development of
high technology industry. Allen and McCluskey (1990) have proposed a
continuum model consisting of four organizational ideal types of incubators:
two non-profit and two for-profit incubators. Bollingtoft (2005) modified the
model by adding a fifth hybrid type. These archetypes are referred to in
Table 2-1.
Page 34
Table 2-1: Types of business incubators
Yuan (1995) and Smilor (1987) classified incubators into four types: 1.
incubator developed by the government, 2. incubator developed by a nonprofit organization, 3. incubator developed by a private company, and 4.
incubator developed by a university. Peters (2004) defined three types: forprofit, non-profit and university incubator. Grimaldi (2005) maps business
incubators into four categories: Business Innovation Centres (BICs),
University Business Incubators (UBIs), Independent Private Incubators (IPIs),
and Corporate Private Incubators (CPIs). An introduction to each type is
given as follows.
1.
For-profit property development incubators (early stage, 1980)
As BIs began to take root in the early 1980s, two broad strategies emerged
(Smilor, 1986). One approach was to renovate older or vacant buildings and
Page 35
lease space relatively cheaply. This strategy focused more on giving

entrepreneurial actors access to space than on building up companies, e.g.
by expanding operations, personnel, and markets. Here, success was
defined in terms of leased space and incubatees ability to meet monthly
expenses.
The second strategy was a more conscious attempt to foster new ventures
through value added services in order to leverage resources to help
companies grow. With this strategy, some incubators sought an equity
position in tenant companies around 30-50% (Finer, 2002). Although
providing space was still important, the main focus was on developing firms.
Success here was defined in terms of expansion and the ability of tenant
companies to eventually stand on their own. However, the majority of this
type of for-profit incubators did not live up to expectations as they did not
always deliver promised services.
2. For-profit seed capital incubators
Incubators of this type are usually co-founded or co-managed by venture
capital companies. This is a new type of incubator developed since about
1995, when the venture investment business began to strongly influence the
market (Acorn, 2003). Although the major goal is to gain a quick investment
return through growth of the stock value, the interests of venture capitalists
have now moved to longer-term investment with part of the fund allocated to
some potential start-up SMEs (Vista, 2000). Some universities have the
policy to own the incubator but allow the incubator to be operated
independently and flexibly. The incubators total profit can be counted as
extra income for the university. The incubator is thus formed as a private
corporation, such as the ITEK Co. of University of South Australia (ITEK,
2003) and the North Carolina Technology Development Authority (Brotherton,
2000). Under the Chinese governments national plan, this is the major
model that has operated in China since 1993. However, recent reports show
that universities have found the burden too heavy when the majority of small
companies fail to survive. Therefore, the policy has changed to encourage the
Page 36
universities to share the incubator and the tenant companies, rather than
to own the whole, as before (Tsuo, 2000).
3.
The university incubators
Also called science parks, research parks, or technology parks, an academic

incubator of this type is an affiliation of a university (Felsenstein, 1994). The
main goal of university-related incubators is to transform research and
development findings into new products or technologies; that is, they are
primarily interested in development as an end in itself, rather than nurturing
and developing entrepreneurial talent, companies and profits, as is the case
in other types of incubators.
This approach is rooted in the belief that ideas that come from the university
can be valuable. It is the incubator's goal to augment the university's special
role of providing a fertile environment for the growth and development of new
ideas, and to create opportunities for the application and further evolution of
those ideas into the greater community through the channels of commercial
activity. Resident companies are mostly established by students and/or
professors (Meyer, 2003). They tap into a variety of resources including
research facilities, students, the know-how network and faculty, while
offering the academic community the entrepreneurial exposure in a "real
world lab" (Lerner, 2004).
The university owns the resources of large campus space, advanced
technologies developed from its laboratories, the best research equipment, a
number of famous professors and students, numerous patents, a good R&D
environment, library and high speed network system, etc. (UBI, 2006). In
recent years, however, every university has faced the pressure of fund raising
for its annual budget and future development due to the decline of the
educational budget from the government. The concept of the Knowledge
Economy hence inspires the university to look for income from the
knowledge it possesses. The development of incubators has been stimulated
by and spread among many universities in the world since 1990 (Mian, 1997).
Page 37
4.
The non-profit development corporation incubators
The non-profit development corporation incubators can be either publicly

sponsored or nonprofits sponsored. The main objective of the former often is
job creation, while the latter often focus mainly on area development (Allen,
1990; Kuratko, 1987).
5.
The for-profit collaborative incubators
The for-profit collaborative incubators, here called networked incubators, are

explicitly based on a mutual recognition of the value of collaboration as one
of the most important features of the incubator. This is an incubator
managed by a private limited company, which is owned by the companies in
the incubator. The fact that incubatees all operate under one roof makes
collaboration much more likely. Collaborative relationships can involve
formal or informal partnerships, joint ventures, or (basic) information
sharing (Bollingtoft, 2005). Sharing knowledge can facilitate hatching and
leveraging of technologies through the incubation process. Knowledge
strategies include both the leveraging of internal knowledge as well as the insourcing of external knowledge for the firm through the corporate incubator
(Becker, 2006).
6. Incubator developed by non-profit organization
This is a type of non-profit business incubator operating with the help of a
community or an economic development foundation (Wiggins, 2003). All
incubators, if they are not private or for-profit, must be non-profit. These
certainly include all university-based incubators (Peters, 2004). Since the
characteristics and missions of different type of incubators are different, this
study will cluster university-based incubators in a separate category and
describe them in more detail in the next section.
Non-profit organizations, due to their nature, have particular missions in
certain areas. For instance, NASA (National Air and Space Agency) of the USA
is famous in aerospace research and development (Carayannis, 2000; Goral,
Page 38
2003); the Fraunhofer Institute of Germany is a foundation for science and

technology development; ITRI of Taiwan aims to upgrade emerging industrial
technologies (Hsu, 2001). All these institutes have established incubators for
technology transfer to their spin-off companies. Therefore, the main goal of
this type of incubator is to seek more income from the equity or licensing fees
negotiated with each company. The revenue can then feed back to their
further research.
7. Incubators developed by the government
Government can help local universities and research institutions establish a
non-profit private organization to operate the incubation system by providing
initiative funds. Such a partnership allows the incubator to take advantage of
both the expertise of the private sector, or public sector, and the use of
public funding.
The incubation system initiated by government policy will always enjoy
support from the government (Abetti, 2004). These supportive resources will
go directly to the incubators established, normally with the following items
(SMEA, 2005):
z
Initial funds or match funds for the establishment of new incubators.
Beneficial regulations to encourage the establishment of new regional

incubators, such as the SBIR (Small Business Innovation Research)
grant for start-ups in the incubator, Incubator Award, Technology
Park or Science Park Plan.
Subsidy of the annual operating budget in the first stage to help

growth of the incubator, hopefully to reach a self-sustaining maturity
stage.
Infrastructure construction, such as highway system, high speed

networks systems, etc.
Government will support the incubation association for activities

such as annual meetings, conferences, workshops, and exhibitions to
provide opportunities for experience exchanges.
Page 39
Government resources are enormous. With the strong support schemes,

incubators of this kind can always get incentives and easily grow. Because
the main goal is to help regional economy and create more jobs, the type of
tenants could be any business, from high-technology to traditional
businesses.
The traditional government-owned incubators have the common mission of
creating new economy in the society. They are developed by: (1) state or city
governments, (2) universities (funded by government), and (3) government
special purpose agencies. In addition to the annual budget sponsored by the
government, they normally may take extra fees, royalties, or 1-5% equity
from the tenant companies.
For-profit private incubators grew rapidly after 1990 by the interest of
corporations and Venture Capital (VC) firms. Their purpose aimed at the
investment return by fast technology commercialization so as to grow
companies rapidly for stock market or acquisition. These are so called
Accelerators or catalyst groups with the Internet business model of
without the wall. They normally take 10-30% for corporation type and 2060% ownership of their clients for VC type by direct investment at the early
stage (Harley, 2002).
2.1.8 NETWORK
Incubators provide a network in a linear model from universities to
incubators which is later introduced into industry (Massey et al, 1992), in a
cyclic model transferring knowledge and know-how to and from industry and
universities (Rothschild, 2005); there can even be a network among
incubatees (Bollingtoft, 2005).
2.2 SOME WORLDWIDE INCUBATORS

Page 40
There has been a long history in Australia and overseas of governments and
public
sector
organizations
assisting
industry
development
through
strategies which include the provision of industrial estates or subsidized

factory space. In the UK, for example, the first industrial estates were
developed in the 1920s while in the United States similar initiatives were
taken as part of the New Deal in the 1930s (ASBC, 1989). The histories of
the development of incubators in some representative countries are
delineated below.
2.2.1 INCUBATORS DEVELOPED IN THE UNITED STATES
The concept of incubator originated in 1959 when most of the northeast
states of America were facing a serious economic recession. A businessman,
Mr. Joseph L. Manusco, applied to the State Government to convert a block
of his waste industrial land, located at Batavia town in New York State, into
a business center to provide start-up SME firms operational space, facilities,
credit, and management consulting services. Because this concept promised
to provide job opportunity and promote business activities for the region, the
proposal was soon approved and the first tenant company was accepted to
move in. This was the birth of Business Incubator (Kuznets, 1996).
Business incubators have arisen typically from local needs; these needs vary
considerably between communities. However, their establishment has grown
out of regional policy objectives, which have generally involved, in order of
importance:
z
Creating jobs
Regional economic revitalization
The fostering of new types of local business.
In the United States, Pennsylvania has been the state most active in the
development of incubators since 1980. This was because of the decline of
large manufacturing industries, especially the steel industry after 1976. The
Page 41
State Government resolved to develop strategies to build on existing skills

and resources to improve the relative wealth of the state (Allen, 1987). Four
Ben Franklin Technology Centers (BFTC) were established after 1982 in
collaboration with four universities, namely Pennsylvania State University,
Philadelphia
University,
Leigh
University,
and
Pittsburgh
University
respectively for the purpose of business incubation (BFTC, 2003). BFTC

created an economic miracle for Penn State University and established a
model of creating technology-based enterprise. A similar type of pioneering
work to assist the growth of SMEs for generating small firms in high-growth
technology-focused industries could also be found at Massachusetts Institute
of Technology (MIT) in the 1980s (Birch, 1987), at San Francisco Bay Areas
Silicon Valley between 1950 and 1990 (Larson, 1984), and at Research
Triangle Park of North Carolina State in 1959 (RTP, 2000; NCSU, 2003).
Nowadays, there are more than 1000 incubators established in the US
(Barrow, 2001; Bollingtoft, 2005).
2.2.2 INCUBATORS DEVELOPED IN THE UNITED KINGDOM
In the UK, business incubators developed following massive retrenchments
in the steel industry. The development of UK business incubators has been
strongly employment driven since the mid-to-late 1970s. Individual facilities,
referred to locally as managed workspaces, are funded by the Department
of Employment as part of the Local Enterprise Agency Scheme (LEAS).
Between 1981 and 1986, the LEAS assisted in the establishment of about
250 enterprise agencies in England, Wales, and Northern Ireland. These
Local Employment Agencies (LEAs) are designed to play an important role in
promoting economic activities by providing free advice and counseling to
encourage and assist establishment of viable small firms (BCOI, 1987).
A representative body, UK Business Incubation (UKBI, 2006), launched by
the Department of Trade and Industry (DTI) and Treasury of the Home Office
now acts as a catalyst to extract maximum benefit from incubation practices
in the UK and to raise awareness and understanding of the role and benefits
Page 42
of business incubation. UKBI has been the UKs principal and successful
authority on incubation, incubation development, and good practice since
1999.
UKBIs focus on high quality, professional incubation has helped a wide
range of organizations to create the right environment for nurtured and
supported growth, including universities, science parks, research and
development laboratories, commercial clusters, and social regeneration
projects. Up to May 2006, there were 320 incubators across the country. The
theme of UKBIs eighth annual conference in 2006 was focused on the
Sustainable Future that provides learning and networking opportunities to
member incubators toward financially viable status in the future.
2.2.3 INCUBATORS DEVELOPED IN AUSTRALIA
The Council of Small Business Organizations of Australia is widely
recognized as a peak body of small business organizations, industry groups
and individual firms. It was founded in 1979, incorporated in 1985 and
operates through a permanent secretariat based in Canberra (COSBOA,
2006). Incubators in Australia are organized by the Business Innovation and
Incubation Association (BIIA, 2006), which sets best practice standards for
the incubator industry in Australia and provides advice on:
z
Incubator feasibility studies
Incubator business plans
Evaluating Incubator projects
Networking Incubators.
The forms of incubator which are attracting most attention in Australia are
those linked to higher education institutions and those public sectors
established to foster employment creation. The perceived link with university
provides the incubator with an image of having a broadly based and highly
stable support structure from academia (ITEK, 2003). The first of these
facilities, Nascent Technology Ventures (NaTeV) in collaboration with Royal
Melbourne Institute of Technology (RMIT), was launched at the end of 1984
Page 43
with funding support from the Department of Industry, Technology and

Commerce (Nimmervoll, 1985). During 1985 to 1988, other technologyoriented incubators have been developed (ASBC, 1989). The national
incubator statistics in 2005 were (BIIA, 2006):
Total number of Australian Government sponsored small business
incubators operating March 2005: 79
Total number of tenants in all incubators: 1,200
Number of tenants departed from incubators since 2000: 1,300
Estimate of graduation rate: 60%
Average incubator occupancy rate: 73%
2.2.4 INCUBATORS DEVELOPED IN THE UNITED NATIONS

The United Nations Industrial Development Organization (UNIDO) is the
specialist United Nations agency helping developing countries and transition
economies to pursue sustainable industrial development. It provides tailormade solutions to today's industrial problems by offering a package of
integrated services addressing three key concerns: (1) competitive economy,
(2)
sound
environment,
and
(3)
productive
employment
at
policy,
institutional and enterprise level. UNIDO was established by the UN General

Assembly in 1966 and became the sixteenth UN specialized agency in 1985.
UNIDO's current membership numbers 169 countries (UNIDO, 2004).
2.2.5 INCUBATORS DEVELOPED IN EUROPE
The Enterprise Development Programme of the United Nations Economic
Commission for Europe (UN/ECE) was launched in the late 1990s to provide
a politically neutral, supportive forum within which governments could
exchange experiences and learn from each other about how to structure
public-private sector dialogues in cost-effective ways. One of the goals is to
assist in developing a network of science parks, technopoles, and business
incubators to encourage exchange of practical experience. Up to 2001 there
were twenty-seven countries plus the European Commission participating in
Page 44
the incubator networking in which SMEs were the priority focus for
government policies throughout the UN/ECE regions, targeted to stimulating
economic prosperity and growth in employment (ECE, 2000).
In East Europe, after the democratic change, some communist countries
began the transformation process and fundamental rebuilding of the
economic system. In this circumstance, especially from a local perspective,
there emerged an interest in different types of institutional forms of
entrepreneurship. In Poland, for instance, the concept of business
incubators appeared in 1990 (Matusiak, 2003). In 1993-1998, the Polish
government launched a Micro-Enterprise Development Project to support the
development of entrepreneurship infrastructure in Poland. Since the
beginning of the 1990s, a total of 64 incubators has been established, from
among which 44 were still active in 2001.
2.2.6 INCUBATORS DEVELOPED IN ASIA
The Asian Association of Business Incubation (AABI), developed in 2002,
promotes
business
exchanges
among
incubation
Asian
activities
incubators,
by
facilitating
incubator
clients
information
and
related
organizations. Ultimately, this contributes to increased economic activity in

East Asia (AABI, 2006). The current AABI comprises associations that
organize
incubation
resources
and
facilities,
organizations
operating
incubation programs, and more, located in China, India, Japan, Korea,

Malaysia, Singapore, and Chinese Taipei. The current 14 members are:
z
Business Innovation & Incubation Australia (Australia)
Torch High-Tech Industry Development Center, Ministry of Science

and Technology, China (Beijing, China)
Shanghai Technology Innovation Center (Shanghai, China)
Hong Kong Science and Technology Parks Corporation (Hong Kong,

China)
Chinese Business Incubation Association (Chinese Taipei)
Business & Technology Development Strategies LLC (India)
Page 45
Ministry of Science &Technology India (India)
Japan Association of New Business Incubation Organizations (Japan)
Korea Business Incubation Association (Korea)
Multimedia Development Corporation (Malaysia)
National Incubator Network Association (Malaysia)
New Zealand TRADE & ENTERPRISE (New Zealand)
Nanyang Technological University (Singapore)
Economic Development Board Singapore (Singapore)
In order to promote cross-border interaction between incubators and

entrepreneurs within AABI member countries, AABI selects and designates
AABI incubators that have the capability of supporting foreign enterprises to
develop their businesses in the local market. Judges from AABI Incubator
Selection Committee scored all of the 20 nominees based on AABI Incubator
criteria. Table 2-2 lists six incubators that have been designated as "AABI
Incubator" for the year 2004. (AABI, 2006)
Table 2-2: Best practice of AABI Incubators 2004
Economic Entity Incubator
People's Republic of China
Incubator
Shanghai Technology Innovation
Center
Hong Kong, China
Hong Kong Science & Tech Parks
India
TREC-STEP
Japan
Kitakyushu Telework Center
Singapore
JTC Technopreneur Center
Chinese Taipei
National Taiwan Univ. Innovation &

Incubation Center
Page 46
2.3 THE NEEDS OF DEVELOPING BUSINESS INCUBATORS

In the last decade business incubators have been attracting increasing
attention from indigenous policy makers, academicians, economists, donors
and international organizations. The reason for this is that in developed and
developing countries and countries in transition, small- and medium-sized
enterprises
constitute
significant
economic
actor
and
contribute
significantly to gross domestic product and new job creation.
From a
political and social point of view, governments and international donors

consider
assistance
to
small-
and
medium-sized
enterprises
as
an
instrument for economic growth and poverty alleviation through selfemployment. It is also seen as a means of strengthening the private sector
and a way to foster the reduction of regional disparities through
decentralized local or regional development.
In the majority of the countries in transition, there is a lack of support
services to enterprises. Even though governments have already set the goal
of developing entrepreneurship, support to the private sector and the
promotion of the infrastructure are rather weak and still at an infant stage.
The experiences of some advanced market economies, such as the European
Union members and the United States of America, demonstrate that special
emphasis should be put on beginner or start-up enterprises. In many cases
the development of new businesses is strongly associated with self-educated
start-up companies that are badly in need of support services to implement
their idea.
It is evident that for regional economic growth the development of business
incubators is urgently needed everywhere, including developing and
developed nations. Different environmental conditions generate different
goals, which are largely dependent upon the support of government policy. A
summary of some examples is listed in Table 2-3.
Page 47
Table 2-3: Various Goals in Different Regions/Countries

Country or
Incubators Primary Goal
Reference
To produce successful firms that will
NBIA, 2003
Region
USA
leave the program financially viable

and free-standing.
Economic
To emphasize local development and ECE/Trade/253,
Commission
job creation; the technology
European
orientation is often marginal.
United Nations
To facilitate economic development
2000
UNIDO, 2004
by improving the entrepreneurial

base.
United Kingdom
To run incubation network and help
UKBI, 2006
break down barriers and identify

opportunities to develop the
industry.
Israel
To support and help technological
ITBI, 2003
entrepreneurs turn their ideas into

exportable commercial products and
form productive business ventures.
Taiwan
To speed up industrial upgrades.
SMEA, 2003
Korea
To enhance the competitiveness of
KSBC, 2004
small- and medium-sized businesses

and to nurture new venture
businesses.
Australia and
To create employment,
New Zealand
commercialise new technologies and
ANZABI, 2006
develop local economies.

Hong Kong
To promote technology innovation &
HKITCC, 2005
development, product design &

development and technology transfer
Page 48
service provision.
Singapore
To expand support to new
HOTSpots, 2006
enterprises for entering into overseas

market.
Anhui province
To nurture new startups and invest
HFUSP, 2004
their potential tenant.
Apart from physical incubators, which must possess space and facilities to
lease to tenants, there is also another system called Virtual Business
Incubator, which makes services available in cyberspace. They connect
companies together with customers, suppliers, partners, and operating
management through networks. The company does not reside in the
incubator building.
2.4 SUSTAINABILITY OF BUSINESS INCUBATORS

Financial self-sustainability is essential to an incubation programs longterm survival; its ability to grow strong, lasting companies; and its ability to
have a significant positive impact on its community. It also reduces a
programs vulnerability to the changing attitudes of funders. Achieving
financial self-sustainability does not preclude income from outside sources,
however. It simply means an incubator is on sound financial footing and has
predictable, reliable sources of funding (NBIA-3, 2003).
In Australia, business incubators, once established, should operate as a selfsustainable business. When properly set up they need no further
government assistance. Neither the Federal Government nor State/Territory
Governments have a program to support business incubators once
established. It is anticipated that funding provided in response to the
feasibility will enable the incubator to be self-sustaining (BIIA, 2006).
Page 49
2.5 CRITICAL SUCCESS FACTORS OF BUSINESS

INCUBATORS
The
incubator
helps
overcome
bureaucratic
obstacles
and
provides
affordable space and shared facilities and a variety of support systems to

entrepreneurs to accelerate new company development. Although incubators
can help tackle many problems, the incubator itself still has to be incubated.
A variety of critical success factors have been reported in terms of different
types of incubators (Forster, 1989; Watson, 1998; Lin, 1998; Lorraine, 2000).
Most incubators have some common success factors as described below.
z
Establishing goals and selecting sponsors
The first step is to make a realistic assessment of the profile of the local
entrepreneur and the gaps in knowledge, facilities, and functions that the
incubator must be designed to fill. This forms the base of a good business
plan, which then serves to mobilize broad sponsor support and raise finance
(Lalaka, 1996; Lorraine, 2000). To access working capital finance includes
the evaluation of financial options, access to loans and grants, loan
packaging, and introduction to venture capital institutions and venture
capitalists (Smilor, 1986).
Incubators should focus on an essential planning issue as the subsector
niche on which design must focus. The single subsector focus has the
potential for better cooperation and competition among tenants, perhaps
some expensive research facilities provided for shared use, and more
concentrated technical assistance from the incubator management.
Incubators the world over should be considered as partly social investment.
This usually requires a public-private partnership, with the public sponsor
federal, state, city, or universitycontributing in cash and in kind toward
the investment and initial operating costs for three to five years, until
revenues match expenses.
Page 50
Linkage to professional/communities support
The incubator may be embedded in the structure of the technical

university/research complex or stand alone. While a stand-alone incubator
would have greater autonomy and flexibility, each option has its advantages,
and the arrangement adopted may depend largely on the predilections of the
primary promoter. Moreover, an incubator is not hardware-intensive but
software-intensive, and it can utilize the research equipment, information
services, and other resources at the centre (Lalaka, 1996).
Community
support
plays
an
import
role
in
sustaining
incubator
development. Most incubators reflect a communitys efforts to promote its

economy, create jobs, and leverage entrepreneurial talent for a more viable
long-term economy (Smilor, 1986). This support may come from private
individuals, city/state/county government, industrial councils, universities,
and chambers of commerce. This support is also crucial in leveraging
additional assistance from professionals and others in the community who
may be able to provide business expertise to the tenant companies (Chan,
2005).
z
Networking of entrepreneurial support
Networking programs include institutional networking, networking of

tenant/off-line firms, networking of financing/business consulting firms,
and government/local community support (Lee, 2004).
Entrepreneurship requires links or relationships not only among a variety of
institutions, but an entrepreneurial network can provide links and
relationships that can promote and sustain new ventures in an incubator.
Professional support comes through networks with accountants, lawyers,
and financiers. State and local government provide incentives, direct aid,
and access to contracts while responding to creative pressures of emerging
business interest groups. Other support networks take a variety of forms:
key individuals, consultants, workshops, business education programs, and
social and civic groups.
Page 51
Incubators try to advance tenant company development by providing the

interface for a broader and richer range of networking opportunities to
entrepreneurs.
z
Entrepreneurial education program
To deal with this problem, many incubators recognize the need for
entrepreneurial education to help the entrepreneur to do business outside
the incubator. An incubator seeks to develop the necessary skills so that
entrepreneurs can extend their own abilities in running a company. Training
and education in the incubator may be a formal and structured program of
both theoretical and how-to topics, or it may be an informal process of
interaction, discussion, and exchange. Programs may be developed in-house,
related to continuing education efforts in a university, or provided by
consultants, academics, and experienced practitioners. Part of the education
process also occurs through peer interaction (Lalaka, 1996; Smilor, 1986).
The opportunity to meet and talk with other entrepreneurs is a valuable
learning experience that the incubators can help facilitate.
z
Policy and legislative support
The technological innovation process is a larger constellation of interrelated

issues, including state policies for investment, education and trade, and
involving a variety of players, both in the country and abroad (Lalaka, 1996;
Etzkowitz, 1999; Lalkaka, 2003).
The legislative and regulatory system should:
1. Simplify the regulatory system to reduce the registration costs and time
for starting a business, and promote environmental and labor laws that
protect all shareholders;
2. Encourage the creation of sound, imaginative funding mechanisms,
together with tax incentives for corporate and cooperative research and
venture creation;
Page 52
3. Strengthen the legal system to protect business rights and intellectual

property, settle disputes, and administer taxes fairly;
4. Facilitate access to public procurement of raw materials and goods in an
open, transparent manner; and
5. Help the early-stage enterprise attract foreign investment and technology
as well as transfer its know-how and invest abroad.
z
Plan the physical facilities to stimulate creativity
Tech-based businesses can be promoted by a variety of mechanisms and do

not necessarily need a resident physical facility such as an incubator
building. The recent experience, however, is that clustering of entrepreneurs
or their location under one roof (as in an incubator) has many beneficial
effects, such as the stimulation of creativity among one another (Lin, 1998;
Lee, 2004).
z
Build a dynamic management team
Industrializing countries often make a wide search for the best management
personnel, provide a good compensation package to attract and keep the
team, and are willing to incur the expense of continued training.
Within the management team, the deputy may have complementary
experience in real estate management, accounting systems, and equipment
procurement. Ideally, the bulk of the manager's time should be devoted
firstly to providing support to help the companies grow, and secondly, to
running operations in a self-sustainable, businesslike manner (Lalaka, 1996;
Lorraine, 2000). Typically the main tasks of the manager are raising funds
for the incubator and tenants and maintaining good relations with the
managing board and professional community.
z
Selecting the firms to survive and grow
The steps to secure the best mix of tenants are: first, market the incubator
to target audiencesparticularly banks, technical universities, research and
manufacturing
organizations,
and
chambers
of
commercethrough
Page 53
professionally
designed
promotion
campaigns;
second,
develop
clear
admission and exit criteria, based on the incubator's mission and the
regional conditions; and third, implement the selection in a transparent and
fair manner.
The selection process usually comprises the following (Lalaka, 1996; Csaszar,
2006):
1. Administration of a questionnaire to the candidates;
2. Interview by the incubator manger to assess generally the candidate's
entrepreneurial qualities;
3. Review of the technical section of the business plan by a technical review
group, and the market, management, and financing aspects by a business
group;
4. Contractual/lease agreements to enable the tenant to move in.
The technology-related product or service should conform generally to the
country's priorities and the incubator's mandate, and should normally be
less than twelve to eighteen months from market entry.
z
Added value through quality services
General services are provided such as finance service, marketing, legal

support,
counseling
and
training
services,
business,
administration,
information services, shared office facilities and equipment services, and

affordable modular rented space on flexible terms. Services and support
should be prioritized in accordance with the development process of the
technology firms (Chan, 2005). To enable the incubator to become selfsupporting, the choice of services and fees charged need to be balanced and
based on analyses of market needs. In U.S. incubators, services most in
demand are tenant networking and mentoring through university faculty
and business executives, facilitating strategic partnerships, and securing
temporary staff (Lalaka, 1996; Lee, 2004).
z
Finance for the incubator and enterprises
Page 54
The entrepreneurial culture, research capabilities, and other conditions for

establishing an incubator exist, but a serious obstacle is the lack of finance.
Governments in industrializing countries are reluctant to make such
investments due to scarce resources in the face of emergent priorities, the
need for quick returns and demonstrable results in job creation, or simply
because there is incomplete understanding of the longer term benefits of
investing in technological enterprises.
Incubators require finance for investment (business planning, building
construction
or
renovation,
office
equipment,
training,
and
other
preoperational costs) and working capital for the initial two to three years of
operation. Budget for the following years should be gained from rent,
services and other income to at least break even the cost.
More critical is the access to enterprise finance by the incubator tenants,
because without the resources to move from research-based concept to
prototype and pilot production, the tenant may fail. Most countries have a
variety of schemes intended to give SMEs grants, loans, or some
combination for research, promotion, investment, and working capital
The incubator can also prepare the early-stage business for venture finance.
Some countries have made a fair start on creating the technology appraisal
capability and tax/market regimes for venture capital mechanisms, for
example India and Indonesia.
z
Monitoring performance and assessing impact
Most incubator managements have struggled to survive in the last decade,

and have had little time or resources to step back and evaluate their
performance. In the past there have been limited assessments of benefits
and costs, partly because of the lack of data and partly because many
benefits are of a long-term nature and not readily quantifiable. The tasks are
continuous monitoring to upgrade the quality of services and reaching out to
incubator associations, other incubators, and their tenants abroad.
Page 55
2.6 UNIVERSITY BUSINESS INCUBATORS

2.6.1 ROLES OF UNIVERSITY INCUBATORS
Business incubators linked to universities or other research facilities may
also provide an additional range of technology-oriented, value added services
such
as
faculty
conveyance,
consultants,
library
services,
student
employees,
university
laboratories/workshops
and
image
equipment,
mainframe computers related R&D activity, technology transfer programs,

employee education and training, sports and social facilities (Mian, 1997).
A summary of the mission and functions of the current university incubator
are listed in Table 2-4 (ATI, 2003; RPI, 2003; Mian, 1997; Grimaldi, 2001;
SMEA, 2003).
Table 2-4: Mission, function and assessment of UBI
Mission
(1) Enrichment of the academic environment

(2) Technology transfer
(3) Technology commercialization
(4) Regional economic development
Functions
(1) Space, facility, laboratory equipment rent

(2) Managerial training and assistance
(3) Seminars,
conferences,
exhibitions,
financial
assistance, etc.
(4) Faculty and student involvement
Assessment
(1) Performance outcomes
Factors
(2) Management policies and their effectiveness

(3) Value-added services
The most common type of incubator developed by public universities is a

non-profit incubator. The incubator brings together valuable business,
government and academic resources to catalyze business development of
Page 56
high-growth
technology-based
companies,
mainly
in
engineering
and
biotechnology areas. The university provides space and buildings, and

partial seed money. The co-founders raise the initial funds. Although the
incubator is an independent entity, the director must report to a senior
university member who is authorized to monitor the incubation performance.
2.6.2 SUSTAINABILITY OF A UBI
As the university incubator is not for profit, the rent charged is usually lower
than the standard rate in the immediate vicinity. The annual budget of a UBI
normally comes from the rent, services, equity, royalty, and a subsidy from
the university or government. As it is financially self-sufficient, the annual
surplus will return to the university or, in some places, accumulate to a fund
to sponsor the tenant companies. This type of incubator is quite successful
worldwide. Some examples surveyed are listed in Table 2-5 (Hsiao, 2001).
Table 2-5: Some successful university business incubators
University
Co-Founder
Since Annual Budget
Success
Rate
North Carolina State government,

State Univ.
1999 Rent, royalty, equity
N/A
Venture capitals
(Non-profit)
Georgia Tech. State government
(Non-profit)
1980 State government,
>80%
rent, equity (5%),

royalty
Boston College Federal

(Virtual)
1980 Services
>90%
1963 Rent, space sale,
>80%
government, state
government
Philadelphia
Other 27 nearby
Univ.
universities, city
(Non-profit)
government
Pennsylvania
State government
State Univ.
services
89%
service, royalty, and
Page 57
(Non-profit)
Rensselaer
equity.
State government
Polytechnic
Rent, services,
Inst.
donation.
>80%
(Non-profit)
Lehigh Univ.
State government
(Non-profit)
>80%
rent, equity (3-5%),

and royalty.
Maryland
State government
Univ.
rent, equity (1% each
(Non-profit)
year).
Univ. of Texas State government,

at Austin
1989 City of Austin,
>80%
>80%
IC2 Institute.
service, equity (1%)
Manchester
Government,
1999 Rent, equity, royalty N/A
Univ.
foundations.
(Non-profit)
(corporate &
for profit)
National Univ. none
2002 University, rent
>80%
1997 Government, rent,
>80%
Singapore
(non-profit)
National
NTU Incubation
Taiwan Univ.
Corp. (2002)
service, investment
(for-profit)
Universities and other research organizations are major developers of
technology business incubator programs. Technology business incubators
provide a mechanism for technology transfer, promote the concept of growth
through innovation and application of technology, support economic
development strategies for small business development, and encourage
growth of local economies (Callahan, 1999). However, it was found that
technology business incubators have not had a high incidence in technology
Page 58
transfer despite the fact that many were established with that goal in mind
(Phillips, 2002).
Universities are increasingly looking to develop their own funds in order to
provide pre-seed and seed funding of spinout companies. They are now
performing many functions of an incubator in that they do not have clearly
defined walls (Lockett, 2002). Although their contribution to the society is
significant, behind the historical records most of the university incubators
cannot be financially freestanding if the financial support from the university
or government is cut. In addition, their contributions to the universities are
still not satisfactory in terms of equity return. Since the last decade when
some countries launched a new policy to permit the corporatisation of public
universities, for-profit university incubators have been inaugurated in those
countries, such as China (Tsuo, 2000; Harwit, 2002), Malaysia (USAINS,
2004) and Australia (ITEK, 2003). Although the business model is more
multi-directional and flexible, the history of for-profit university incubators
is still young. So far, there are no significant statistics to judge their success
in terms of financial sustainability (Corti, 2004). Nevertheless, it is a
desirable trend for their own long-term viability.
2.7 ENTREPRENEURIAL UNIVERSITY

In the United States, formal university-industry technology transfer took off
after the passage of the Bayh-Dole Act in 1980 (Public Law 96-517). Due to
the decrease in government funds, some large, private, research-oriented
universities are seeking more industrial collaboration and technology
transfer to get more money to support the operation of the university.
Because of the new strategy of regional development and industrial
cooperation, the traditional teaching/research mission of the universities
has been extended, resulting in a new concept of entrepreneurial university.
Many world-class universities, such as MIT, Stanford, Penn State University
Page 59
and RPI, have adjusted their positioning and strategy toward entrepreneurial
universities since 1990 (Powers, 2000; Slaughter, 1997; Trachtenberg, 2003).
In the USA the Bayh-Dole Act provides the basis for current university
technology transfer practices (COGR, 1999). The Act provides incentives for
universities to increase patenting in those fields in which licensing is an
effective mechanism for acquiring new technical knowledge (Shane, 2004).
Many universities began to patent and get private returns from their
inventions by means of the Technology Transfer Office (TTO). By law, the
universitys share of the royalties must be plowed back into the research and
educational activities of the university. Because of the legal benefit,
universities are encouraged to evaluate and disseminate their technologies
through patent protection (Nelson, 2000). The contribution of TTO to the
universitys annual budget has become an important source of funding.
During fiscal 1997, universities responding to the Association of University
Technology Managers (AUTM) survey reported $698.5 million in gross
income from 6,974 licenses and options yielding income (Norwalk, 1998).
The significance of university technology transfer can be realized by three
examples of famous universities as shown in Table 2-6 (MIT, 2005;
Standford Univ., 2005; NCSU, 2003). This part of the literature review
reflects the third hypothesis of this research, knowledge is economy, and
its recognition by the global society.
Table 2-6: Gross revenue from technology transfer of some universities
University (Fiscal year)
Total number of
Gross revenue
invention
from
disclosures
technology
transfer
MIT (FY 2002)
484
$35.7 Million
(FY 2005)
512
$60 Million
Stanford (FY 2002)
385
$52.7 Million
(FY 2004)
436
$49.5 Million
132
$7.76 Million
North
Carolina
State
Page 60
Univ. (1998 to 1999)

In addition to technology transfer, many universities are developing some
spinout companies from campus research teams. However, the development
of entrepreneurial infrastructure is a primary factor to ensure success
(Degroof, 2004; Druilhe, 2004; De Coster, 2005). Meanwhile, the formation
process and selection of startups vary greatly among different universities
(Csaszar, 2006; Wright, 2004; Rasmussena, 2006; Rowe, 2004). Some
reports emphasize the importance of leveraging the external resource to
assist the campus spinouts (Wright, 2004) and the business incubator
(Bollingtoft, 2005; Strid, 2002). It is also noted that risk taking is the most
important dimension in developing an entrepreneurial university, and it may
be the prerequisite for commercialization (Todorovic, 2005).
2.8 ENTREPRENEURIAL UNIVERSITY INCUBATORS

In addition to the examples of entrepreneurial universities, many private or
forprofit incubator examples can also be found and are shown to have
strong characteristics for pursuing maximum profit. A private or for-profit
incubator is usually owned and run by venture and seed capital investment
groups or real estate development partnerships. As the incubators are
looking for profits, the investors and the management team take the
responsibility to select the most potential SMEs and market driven products.
This type of incubator can be very efficient. The main revenue of the
incubator is not only from the leasing rents, but also in large proportion
from the negotiated equity of the young companies. As the company grows,
the stock value increases. Then the incubator can sell part of the stocks to
get extra income. Many universities feel that the money invested in the
incubator will pay big dividends when the companies are successful (UBI,
2006). Therefore, the main goal of this type of incubator is to look for profits,
more than for job creation or regional economy. To achieve this goal, care
Page 61
must be taken in the tenant selection. Usually only those companies with hitech and market demanded new products would attract the interests of the
incubator.
Currently, there are about 360 for-profit incubators in the United States,
representing about 30 percent of all incubators (NBIA, 2003). The incubation
industry is attracting scores of private-sector entrepreneurs who are
touting themselves as the next big thing. By offering more and better
services than their public-sector counterparts do, they believe that they can
usher startups and, of course, themselves to faster and bigger paydays
(Keaveney, 2000).
In Japan, most incubators were invested by private sector and strongly
supported by the Governments policy (Ohtsubo, 2002). In Singapore, the
Government developed a HOTSpots, "The Hub of Technopreneurs" Program,
which created a belt of 10 choice locations in Singapore specially tailored for
technopreneurs and technology-related companies. Offering an exciting mix
of hard and soft infrastructure solutions, HOTSpots is the answer to fasttrack enterprise growth. The HOTSpots program is made up of seven
partners:
four
development
companies
and
three
local
universities
(HOTSpots, 2006). The National University of Singapore (NUS) established

the NUS Enterprise in 2001, aiming to be a catalyst for the development of
innovation
and
entrepreneurship
within
the
NUS
Community
and
translating NUS knowledge into value for the economy (Phang, 2006).
In Hong Kong, the Incubation Program is in the charge of the Hong Kong
Industrial Technology Center Corporation (HKITCC) developed in 1993 by
the Government. HKITCC's mission is to facilitate the promotion of
technological innovation and development and the application of new
technologies in industry in Hong Kong (HKITCC, 2006). The Corporation is
governed by a Board of Directors appointed by the Governor. The incubation
program was designed to address some of the formidable barriers being
encountered by technology oriented small startup companies, with special
Page 62
considerations given to Hong Kong's unique business environment. It also

supports local universities for technology transfer and incubation.
In
Taiwan,
some
VCs
have
started
to
establish
private
incubator
corporations to look for long-term investment. It is a new industry

encouraged by the Government. By the end of 2002, there were only six forprofit private incubators in Taiwan (Chang, 2003). As all are still at the early
stage, none has yet made a profit. NTUIIC is the only incubation company
founded by the university, National Taiwan University, in 2002 with all
capital coming from investors (NTUIIC, 2003). The company is authorized to
run the universitys incubation business and to invest potential tenants. In
return, the NTU takes 20% share from the company as the donation.
The University of South Australia has a 100% owned incubation company,
the ITEK Pty Ltd., which nurtures potential teams to form start-up
companies (ITEK, 2003). Manchester Innovation Ltd is an incubation
company funded by Manchester University and a non-profit foundation to
foster start-ups in bio-medical products (Manchester, 2003). Indiaco Ltd.
started in 2001 with private incubation and investment business. It
established an intranet for its tenants and developed a milestone-based ementoring tool that guides tenant companies through various stages of their
start-up venture development process. It created a success story with USD 3
million incomes at the end of 2002 (Patwardan, 2003).
The incubator itself is a dynamic model of a sustainable, efficient business
operation (Rice, 1995; Quitter, 1999). Financial self-sustainability is
essential to an incubation programs long-term survival. It also reduces a
programs vulnerability to the changing attitudes of founders (NBIA, 2003).
For the entrepreneurial incubators, this is a long-term investment. This kind
of incubator should be encouraged and promoted by governments, so that
private sector can assume the responsibilities instead of the government. A
private incubator will pay more attention to management efficiency and
incubation performance in order to obtain high revenue.
Page 63
2.9 PROFIT MODEL INNOVATION

Profit model innovations, in addition to product innovations, have been
considered to contribute most to corporation profit. Only through a regularly
reviewed effective profit model design will a company be able to maintain and
sustain its competitiveness (Liu, 2002). ATTs research arm, Lucent
Technology, invested large amounts of research funds to develop wireless
communication technology, yet never benefited from its commercial value.
Meanwhile, commercial companies such as Motorola, Nokia and Ericsson
benefited significantly from the popular application of wireless technology
and became the leaders in the communication industry.
It is well known that IBM (Liu, 2002) was the company that introduced the
first generation of personal computer, which immediately became the
industry standard of desktop computers and brought about todays network
revolution. However those companies who benefited most today are Intel
(through CPU), Microsoft (through OS), and Dell (through its distribution).
Taiwanese components companies are among those who benefited.
Digital Equipment Corporation (DEC) invented network switch devices,
Routers, yet missed the Internet market totally. Cisco was able to bring the
product into the right market at the right time with the appropriate profit
model. (Liu, 2002)
On the other hand, GE, a traditional industrial company, was able to adopt
an appropriate profit model consistently and to vigorously revise its model to
fit into the latest business environment. It has been increasing its
profitability consistently since 1980, and became the highest market value
company in the world (Liu, 2002).
Page 64
An incubator without significant outside revenue sources will need a large

amount of rental income to achieve self-sustainability. In practice, however,
to get income solely from rent is not a good profit model. In any business
plan, one product generates one profit, and more products generate more
profit, such as the entrepreneurial networking (Grau, 2001), technology
mining in the campus (ITEK, 2003), technology transfer (Phillips, 2002),
industrial cooperation (Etzkowitz, 2002), etc. Some visionary incubators
have started e-mentoring and e-coach, in the name of e-incubator, to gain
more profit (Kotelnikov, 2003).
Some science parks also foster the establishment and growth of new
technology-based firms, which are located on technology incubators within
the park. It shows that parks can manage to attract entrepreneurs with
better human capital, as measured by educational attainments and prior
working experience. On-incubator firms perform better in terms of adoption
of advanced technologies, aptitude to participate in international R&D
programs, and establishment of collaborative arrangements, especially with
universities. They more easily gain access to public subsidies. Therefore, onincubator
firms
show
higher
growth
rates
than
their
off-incubator
counterparts. (Colombo, 2002).

Another incubation model integrates venture funds into incubation so that
incubators can invest some potential startups (Grandi, 2004; Grimaldi,
2005). One example was carried out at North Carolina Technology
Development Authority in the USA (NCTDA). The TDA accomplished this
mission through three primary business sectors: entrepreneurial support,
including the development of business incubators; capital formation for
emerging
companies
through
direct
investments;
and
research
commercialization that moves research from the university laboratories into

companies (Brotherton, 2000). In 2002, however, due to uncontrolled
expenditure by team members, TDA officials were projecting a $1 million
deficit by the end of the following June, even after making cuts. That left the
agency with two options: obtain a new revenue source or close up shop
Page 65
(Burns, 2002). A similar story of an incubators funds running out also

happened to the ViTeC incubator (Martinez, 2002). This obviously indicates
that a good profit model still needs a good management team.
2.10 FINDINGS AND CONCLUSION

In the above comprehensive literature review, as outlined in Figure 2-1, the
first part reviewed the general development of business incubators and their
worldwide status. Business incubators are developed based on regional
needs. Different regions may have different needs. Table 2-3 summarizes the
comparison of incubators goals in different countries. Most business
incubators are of the non-profit type. This type is basically developed by a
government, non-profit foundation, or university. The for-profit incubators
are about 10% of the total, statistical data will be given in Table 4-1 (Barrow,
2001; Harley, 2002; Bollingtoft, 2005; NBIA, 2006). This type is basically
developed by a private company. The strengths and weaknesses of the four
types of incubators are summarized in Table 2-7. It is noted that only the
private incubator has the profit model (Acorn, 2003). Details of this model
will be discussed in chapter 4 (Sec. 4.3.3).
Table 2-7: Strength and weakness analysis of different types of incubator

Incubator Type
Strength
Weakness
Government
Incubators
(non-profit)
Strong financial support

Strong government linkage
Regional economic needs
Large space
Good common facility
Supported by research
institute
Regional high tech needs
Large space
Strong venture support
More active in investment
Emphasize in management
incubation
Less technical support

Breakeven operation
Loose academic
connection
less entrepreneurship
Breakeven operation
Loose academic
connection
Non-profit
Incubators (outside
university)
Private
incubators
(for-profit)
Limited incubation space

No academic connection
Less technical support
Higher risk
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Select market needed tenants

only
Run by entrepreneur
More profitable model
Strong university linkage and
assistance
Government financial support
Campus spinout tech
company
University
incubators
(non-profit)
Poor common facility
Less entrepreneurship
Breakeven operation
Need support fund
The second part of the literature review focused on UBIs. It found that most
UBIs are based on a non-profit mission. Behind the attractive records of
success rate, one should look at the financial status for long-term
sustainability. The disadvantages of current UBIs are:
z
Most UBIs are positioned as a non-profit organization and annual

incomes are very limited.
Most UBIs still strongly rely on the financial support of the university
and the government.
From Table 2-7, it is obvious that UBIs should adapt the merits of private
incubators for more profit. The immediate mind change would be to treat the
incubator with entrepreneurship. The second change would be to take on
investment in order to expect profit return. The third would be to get
investment funds by corporatisation (also called privatization).
Many public universities are facing financial problems due to increasing cuts
in educational budgets. Facing the competition era, they have to seek more
income from outreach in order to enhance their facilities and research
capability. One remedial method is to disseminate technology transfer and
create more income, which is the trend of the so-called Entrepreneurial
University. It shouldnt be overlooked that UBIs can also move the
university
to
entrepreneurship
if
proper
management
strategy
is
established. A successful UBI should be able to generate significant revenue

and feedback to the university. It is believed that the features of a private
incubator result in the biggest incubation income. Its advantages are:
z
Providing more functions and more incubation business with flexibility
Page 67
Obtaining more funds form venture capital
Taking investment activities
Paying
more
attention
on
management
scheme
and
incubation
performance.
Therefore, integrating the merits of a private incubator as well as university
value-added services and resources, such as human resources with various
expert technologies, various laboratory equipments, potential R&D activities,
library services, and conference facilities, into the UBI is a very possible way
to success. In order to support this new type of UBI, an integrative model for
UBIs is necessary, one which integrates the merits of university resources,
industrial expertise, venture capital funds, and government support. This
research aims to develop a EUI and an integrative model for practical
realization.
Regarding the integrative model in a modern incubator, the integration of
venture funds into incubation business is a trend recognized worldwide. A
good first step toward self-sustainability is to develop a realistic budget plan
and stick to it. Meanwhile, restructuring current UBIs and bringing in more
business opportunities to increase incomes is very important for the goal of
long-term sustainability. How to maximize the inputs of university and
regional resources and how to design an integrative model will be the keys to
success. This is the importance of this research work.
In summary, most papers focus on the strategies, practices, success factors,
missions, impacts, etc. of current incubators. Only a limited number of
papers have noticed the importance of sustainable operation, but without
explicit plans or models to implement. Therefore, this research will propose
an integrative model for UBIs, and the investigation of current UBI practice
in the world is necessary. The next chapter will carry out a survey of the
sustainability of worldwide UBIs.
Page 68
Chapter 3 Exploration Of The Sustainability Of University Incubators
C
CH
HA
AP
PT
TE
ER
R3
3
EXPLORATION OF THE
SUSTAINABILITY OF UNIVERSITY
INCUBATORS
The basic principle of business incubation is that an incubator should be a

dynamic model of a sustainable and efficient business operation. Nevertheless,
an evaluation of the literature (chapter two) indicates that whilst most
incubators focus on the performance of the incubation, only private
incubators are concerned about financial profit. Since financial independence
is essential to an incubation programs long-term survival, it is necessary to
determine how financial independence can be achieved. The purpose of this
research is to develop a sustainability plan for university business incubators.
In this chapter, responses to a direct questionnaire are used to explore the
current financial status and the sustainability plans of UBIs in Australia and
overseas. The survey results will show if all hypotheses are confirmed in
practice.
3.1 INTRODUCTION
A basic principle of business incubation is that an incubator should be a
dynamic model of efficient business operation and have a significant positive
impact on its community. Financial self-sustainability is essential to an
incubation programs long-term operation. University business incubators
(UBIs) have long adhered to the goals of the commercialization of new
technologies and local economic development. However, although UBIs have
an exemplary record in terms of their positive contribution to society most
UBIs are in need of financial support from a government and/or university in
order to cover normal operating expenses. The performance of UBIs can be
assessed by three dimensions: (1) program sustainability and growth, (2)
tenant firm's survival and growth, and (3) contributions to the sponsoring
Page 70
university's mission (Mian, 1997). It clearly points out that the incubators
own sustainability and its contribution to the development body are the key
factors of performance assessment. So far, these requirements have not been
met by most university incubators. In view of this drawback, the Ministry of
Economic Affairs (MOEA) of Taiwan has launched a national program referred
to as the second generation of incubation projects in 2007 to help UBIs work
more closely with the industry. The expectation is that after five years, most
UBIs can be self-sustained [MOEA, 2007].
Achieving financial self-sustainability involves the creation of more revenue
streams and the control of expenses. Increasing income from internal sources,
such as rent, services, VC funds, and support from graduates, is a basic
consideration (Cammarata, 2003). Both, facilitating technology transfer and
creating the infrastructure required to survive in the private sector are
important for turning incubators into commercial successes (Yunos, 2002).
Continuing
government
support
to
new
technology-oriented
start-up
companies can certainly help them to grow (Watson, 1998; Goral 2003).
However, the UBI itself is not a direct beneficiary. It is apparent that
generating revenue only from incubation services is the current operational
mode of non-profit business incubators, including most UBIs. Although some
UBIs can balance the operational cost from high rent income, most UBIs still
are not self-sustainable if the subsidy from university or government is cut
(Mian, 1997). This survey will show statistical data to demonstrate that
increasing revenue from rents, service fees, cash-in equity, royalties, etc., can
only bring short-term profit at most.
Section 3.2 describes the motivations and sample selections of this survey.
The methodology and processes are explained in Section 3.3. Questionnaire
design and statistical surveyed data are analyzed and discussed in detail in
Section 3.4. Overall findings will be concluded in Section 3.5. A flow chart of
this chapter is depicted in Figure 3-1.
Page 71
Introduction
(Section 3.1)
Motivations of survey
(Section 3.2)
Methodology (Section 3.3)
Method of questionnaire design

(Section 3.3.2)
Target selection & survey strategy

(Section 3.3.1)
Survey result
(Section 3.4)
Phase I
Phase II
(Section 3.4.1)
(Section 3.4.2)
Conclusion
(Section 3.5)
Figure 3-1: Flow chart of chapter 3
3.2 MOTIVATIONS OF THIS SURVEY

In recent years, many universities have faced growing pressure to raise more
funds and increase income. In this age of intense competition, stronger
financial
policies can
help
develop
better
university
infrastructures.
Universities should, therefore, turn to entrepreneurship, such as selling IP

rights, leasing unneeded land, providing more industrial services, and
commercializing technologies in order to increase available finances. However,
many universities still have no strategy for capturing some of these values
commercially (Zedtwitz, 2003). Some universities have attempted to develop
an entrepreneurial focus, recognized as the entrepreneurial university, by
Page 72
means of packaging value added technologies through the technology-transfer

office to the market and creating entrepreneurship programs within the
campus (Etzkowitz, 2000; Trachtenberg, 2003; Todorovic, 2005; Markman,
2005). So far, few of these offices have returned profits to their universities,
such as MIT, Stanford University, North Carolina State University.
Current UBIs still rely on financial support from the university or government
for annual maintenance. The majority of UBIs regard themselves as service
organizations on the campus. However, knowledge can create economy.
Similar to the Technology Transfer Office, which is the major channel towards
the entrepreneurial university, a UBI also has the potential to create
significant income for the university. In the current economic climate, many
academic and service departments are under scrutiny in terms of their ability
to sustain themselves. Long-term financial sustainability itself will be
requested by the universities sooner or later. It is time to consider the
possibility of reforming the UBI structure.
Many private incubators have been established in recent years with the
strategy of investment in, and then incubation of, selected tenants. Their sole
policy is pro-profit in the long run. Learning the effective investment policies
from private incubators and implementing it, a UBI can reform to a profitable
organization in the university if the policy is on the right track. UBIs also have
many more functions than just incubation. NBIA member incubators have
reported that 87 percent of all firms that graduated from their incubators are
still in business, and 84 percent continued to provide a return to their
investors (NBIA, 2003). This research emphasizes that most UBIs have
overlooked the benefit of direct investments in their own potential tenants.
This will be the key factor to gain great returns in the long run. If the university
could learn some entrepreneurial spirit from successful private incubators,
the UBI could become a sustainable spin-off of the university. This is the main
motivation for this research.
Page 73
The questionnaires for this research were designed in two phases: general
survey and advanced survey. The strategy and methodology of this survey will
be explained in the next section.
3.3 METHODOLOGY
3.3.1 TARGET SELECTION AND SURVEY STRATEGY
The empirical analysis of this survey is based on two comprehensive and
consecutive surveys of sustainable perception at selected UBIs. In the first
phase, the questionnaire is designed to explore the current scale, financial
status and future plans for sustainability of each investigated UBI (see
Appendix II). As to the selection of targets, the sample size must not be too
large or too small. Although the larger the sampling size the more reliable the
result, such size would be costly and time consuming as the survey is a
difficult and complex task (Cochran, 1963). If the sample is too small it will be
less reliable. Sampling should be of an average size (Huang, 2001). Up to 2005
the total number of incubators in the world was about 4000 (Barrow, 2001;
Bollingtoft, 2005), among which the number of non-profit incubators was
about 3000, and UBIs were below 1500. This survey adopts a random
sampling method which is based on the theory of comprehensive statistic as
well as on objective means (Yates, 1953). The phase I surveyed began in
September 2004. A general questionnaire was designed and e-mailed to a total
of 262 UBI directors, whose names were gathered from respective websites or
from the member lists of incubator associations, such as NBIA of USA, UKBI of
UK, UNIDO of the United Nation, AABI of Asia, and CBIA of Taiwan. These
comprised 56 UBIs in Taiwan and 206 UBIs in other countries.
It has to be mentioned here that in the first attempt to contact the 206 UBIs
outside Taiwan, the questionnaire, containing more than ten questions, was
attached to an email and sent out to all the selected targets. The response rate
was extremely low. It seemed that receivers treated it as a commercial survey
like many others, with long questions, and therefore ignored it. After changing
Page 74
the strategy by sending emails to each individual in the name of the research
student, this new approach resulted in many responses and assistances in
answering questions and giving comments. Other factors in receiving a high
response rate were to ensure that the questionnaire was concise and to
include a sincere cover letter to explain the purpose of the survey and the
importance of a response. In the end, after reducing the number of questions
to ten, 72 completed questionnaires were collected after several rounds of
email requests over the duration of six months.
In Taiwan, the National Business Incubation Program started from 1997,
launched by the Small & Medium Enterprise Administration (SMEA) of the
Ministry of Economic Affairs (MOEA). Owing to high land prices and limited
budget, this program mainly encouraged and supported universities to
develop incubation centers based on university assets and to rapidly establish
the incubation service network around the island (Huang, 1996). Up to the
end of 2003, there were 60 UBIs (SMEA, 2005). This part of the survey started
in December 2003. Owing to good connections of the author, this survey
questionnaire was sent out to all 56 UBIs (excluding four newly established) to
investigate general income sources and future sustainability plans. Many
UBIs promptly responded enthusiastically and expressed their interest in
knowing the results. Others had to be encouraged through telephone calls or
third party connections. It proved that, in small areas, using telephone tracing
is the most efficient means to conduct a questionnaire survey (Cooper, 1964;
Payne, 1974). Due to the countrys small territory, this method has resulted in
effective returns. Up to the end of March 2004, 45 complete questionnaires
were received, with a high response rate of 80.4%.
Combining two batches of survey in phase I and excluding 41 invalid samples
due to undeliverable addresses, a satisfactory response rate of 53 percent (117
out of 221) was gained. The list of these 117 UBIs and contact persons (mostly
are directors (Hsiao, 2001)) is given in Appendix I.
The gathered data provided useful information about the history, size and
Page 75
annual income sources of each UBI. Agreement and disagreement responses,

detailed
with
individual
comments,
helped
to
design
the
advanced
questionnaire for the phase II survey. It was found that most UBIs have yet to
perceive the significance of investment return as a major income source for
long-term sustainability. In addition, they never seemed to have considered
that a possible way to acquire these investment funds is the privatization of
UBIs. The second questionnaire was therefore designed with a more or less
heuristic approach to bring the respondents toward a forecast view (see
Appendix III). The phase II survey was done by sending out questionnaires one
by one, along with the first survey results, to those 72 respondents of the
phase I survey outside Taiwan. Because the incubation history in Taiwan is
still young and government support is the main driving force (Huang, 2001), it
is still too early to consider a sustainability plan in this context. In the end, 50
completed questionnaires were received after six months, and a higher
response rate of 69.4 percent was gained. This successful result was achieved
by using the same strategy as in the phase I survey, i.e. by continued email
trace to each recipient. The majority of those who replied strongly supported
this research. They also requested to receive the results of this research, as
they presumed they would be facing the same self-sustainable problem in the
future if without subsidies from university and government. There were also
some UBIs that disagreed stating that UBIs should be reformed into a profit
center and generate more income for the university.
3.3.2 METHOD OF QUESTIONNAIRE DESIGN

3.3.2.1 The Delphi method
The Delphi method has traditionally been a technique aimed at building
agreement or consensus about an opinion or view, without necessarily having
people meet face to face, such as through surveys, questionnaires, emails etc.
This technique, if used effectively, can be highly efficient in generating new
knowledge. The Delphi method is a systematic interactive predictive method
based on independent inputs by selected experts. To build consensus, the
Page 76
Delphi method often uses the Hegelian dialectic process of thesis (establishing
an
opinion
or
view),
antithesis
(conflicting
opinion
or
view)
and
finally synthesis (a new agreement or consensus), with synthesis becoming the

new thesis. All participants in the process shall then either change their views
to comply with the new thesis or support the new thesis to establish a new
common view. The goal is a continual evolution towards 'oneness of mind', or
consensus on the opinion or view (Wikipedia, 2006).
Overall, the success of the Delphi method varies. There have been many cases
when the method produced poor results. Still, some authors attribute this to
poor application of the method and not to the weaknesses of the method itself.
It must also be realized that in fields such as science and technology
forecasting, the degree of uncertainty is so great that exact and solely correct
predictions are impossible. Therefore a high degree of error is to be expected.
Another particular weakness of the Delphi method is that future developments
are not always predicted correctly by iterative consensus of experts but
instead by unconventional thinking of amateur outsiders.
3.3.2.2 The modified Delphi method
Principally, this research complies with the process of the Delphi method,
namely (1) questionnaire survey of selected experts and (2) iterative surveys of
the same group of experts. All incubation experts, however, have different
definitions of sustainability plan based on their respective environments and
comprehensions. From the first survey reports it was found that many experts
enjoy their missions from the university as a service provider to the tenants
and participate in the entrepreneurship curriculum of the faculty as well as
the students. Their point of view of sustainability is continuing to contribute to
the university with the current breakeven financial status. The purpose of this
research is to bring in a new concept of being an entrepreneur oneself, rather
than just an entrepreneur trainer. Based on this concept, the incubator has to
have its own profit model beyond the current breakeven status. Moreover, this
research proposes that to get and increase the investment return by directly
Page 77
taking cash investment to the potential tenants is a possible provision for the
incubators long-term income source, since the incubator has paid a long-term
service and watched the promising growth of these potential tenants. This
concept, or forecast, may not be immediately accepted by the UBI directors as
it will certainly generate a heavy burden and create a difficult pathway to
reach.
The questionnaires design based on the Delphi method was modified on the
following considerations:
1. Long questions will incur refusal.
A complete questionnaire is often too long for a never-known expert who often
ignores such surveys. It is a common phenomenon that normal questionnaire
surveys have a very low response rate, say, less than 30 percent (Huang, 1996).
In order to reduce the reading and answering load and to gain cooperation by
participating in this survey, the author deliberately separated the long
questionnaire into two phases: the first phase is a general survey with not
more than ten questions. The second phase was then sent out as ten more
questions to the same experts who replied to the first questionnaire. Certainly,
attaching the first survey results and explaining the need of this advance
research to attract their interest was a good policy to achieve a high return
rate.
2. Experts viewpoints will be forced to change by the Delphi method.
As indicated earlier, one weakness of Delphis method is to force the experts
to compromise their subjective viewpoint to align with the common view.
When the selected experts are not aware of a new concept, the forecast is
very much dependent on the environment and the scenario analysis of each
expert and the most common view may not reach a high percentage of
consistency. This research did not use the same questionnaire for the
second phase survey. Instead, a heuristic approach that presents the
questions in close concatenation in order to lead the experts to a new
environment was adopted. Since each question is related to the previous
Page 78
one, the selected views will have a certain degree of consistency in sequence.
The judgment of each view by the experts is not directly based on their
existing knowledge. Rather, it is based on their awareness during the
sequential process of this entirely new concept, which guides their
subsequent views. In this research, this systematic approach is defined as
heuristic analysis. In contrast to the cross impact analysis used in the
Delphi method in which the probability of occurrences is influenced by
other experts, this heuristic analysis will help experts to derive the
subsequent judgment by their own former selections.
3. Scenario Analysis
Scenario analysis is an important procedure in strategic planning for the
future development of any new industry. Since some factors have a high
degree of uncertainty that might influence future development, scenario
analysis provides a systematic methodology to explore the significance of these
factors and to sort out consensus view. Through this procedure the planners
can systematically investigate possible outcomes due to these uncertain
factors as a basis for future strategy selection.
Scenario analysis can focus on a particular industry, such as the incubation
industry, to build consensus on the possible structure change of the industry.
The uncertainty of theses factors may be caused by the environments of
current internal missions and future global requirements. Scenario analysis
has been applied to the forecast of new industry development by a company
(Schoemaker, 1995; Bood, 1998). Since the incubation business will form up a
new industry, the survey questionnaire should consider the procedure of
scenario analysis. The common six steps of scenario analysis are illustrated in
Figure 3-2 (Yu, 1998).
Page 79

1. Identify
decision focus
2. Select key
decision factors
3. Analyze external
forces/drives
6. Decision contents
4. Develop
scenario logics
5. Modify scenario
contents
Figure3-2: Six steps of scenario analysis

Based on the above analysis, a modified Delphi method is proposed to design
the questionnaire. This questionnaire will bring in a new concept of
entrepreneurship to UBI directors and guide them gradually to the scenario
that privatizing the UBI could be an essential way toward a sustainability
operation in the future. The statistical analysis results of the survey are
presented in the next section.
3.4 SURVEY RESULTS

3.4.1 PHASE I: CURRENT STATUS OF UBIs IN THE WORLD
In phase I, the worldwide survey and the Taiwan survey were conducted
separately. Because of limited space, the following statistical charts merge two
sources of data plotted in different colors. However, analyses are treated
separately as their types are quite different.
3.4.1.1 History of UBIs
(A) Outside Taiwan
With the exception of some very old UBIs, such as the one at Philadelphia
University, most UBIs in the USA started after 1981 with the goal of helping to
fight regional economic recession during that time. The creation of UBIs with
similar missions rapidly increased around the world after 1996, especially in
Page 80
Asia, for the purpose of fostering more start-up companies in emerging

technologies, such as IC, Internet, opto-electronics, telecommunications and
information. This survey result shows that UBIs outside Taiwan established
before 1990 are about 20% of the total, and those created after 1996
drastically increase, especially after 2000. The analyzed statistical results are
shown in Figure 3-3.
Figure 3-3: Number of UBIs vs. developed years

(B) Within Taiwan
In Taiwan, all UBIs were developed after 1997, which is much later than in
western countries. Until the end of 2003, there had been 60 UBIs on the entire
island. Under the encouragement of government policy, half of them have been
established for more than 5 years. The growth rate of incubators slowed after
2000, as shown in Figure 3-3. This phenomenon is quite different from the
world trend. More than 150 universities have been established on this small
island, a very high academic density; and half of them were upgraded from
polytechnic institutes after 2000. It can be imagined that most campuses are
much smaller compared to other oversea universities. Universities that could
afford to allocate incubation space established incubators rapidly, while
smaller universities, mostly private ones, found it difficult to squeeze in
Page 81
incubation space. This is the reason why the growth rate decreased after 2000.
3.4.1.2 Size of UBIs
The definition of size is judged in terms of the number of staff, the floor space
and the number of tenants. The sizes of surveyed worldwide university
incubators are shown in Figure 3-4. It was found that the majority of UBIs
employ about five full-time staffs (89%), own floor space less than 50,000
square feet (89%) and incubate start-ups below 15 (68%). Overall, most UBIs
are small or medium in size.
c) Size by staff
a) Size by tenant
b) Size by space
Figure 3-4: Size of UBIs

Universities in Taiwan, except some public and longstanding ones, tolerate
smaller space. On average less than 15,000 square feet (80%), as shown in
Figure 3-5. Figures 3-4 and 3-5 reflect that the income from space rental is
limited, especially in Taiwan.
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Figure 3-5: Rental space of Taiwan UBIs

3.4.1.3 Types of UBIs
Of the total 117 respondents, 90 (77%) are public universities and 27 (23%)
are private universities. In addition, 101 UBIs (86%) are of the non-profit type
and 16 (14%) are for-profit. It can be seen that UBIs of public universities are
playing the role of a service provider, rather than a profit center.
3.4.1.4 UBIs Annual Budget Sponsors
Based on the answers to this survey, most UBIs are still strongly dependent on
the sponsorship of their affiliated universities (33%), regional governments
(64%), private sectors (13%) and non-profit foundations (18%). Only 8% (9 out
of 117) of the UBIs are operating in a self-sustaining mode. An analysis chart
is shown in Figure 3-6.
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Figure 3-6: Sources of UBIs annual budget support

In Taiwan, all UBIs strongly rely on financial support from the government. As
shown in Figure 3-7, most UBIs receive support of around 3 to 4 million NTD
(New Taiwan Dollar), or approximately 100,000 US dollars. It has to be pointed
out that most universities do not provide any financial support to the
incubator other than intangible assets.
15
10
5
> 5000
4 0 0 0 ~5 0 0 0
3 0 0 0 ~4 0 0 0
2 0 0 0 ~3 0 0 0
1 0 0 0 ~2 0 0 0
0
0 ~1 0 0 0
Nu mber of Incu bators
20
NT dollars (unit: thousand)
Figure 3-7: UBIs annual financial support by the Government in Taiwan
Page 84
3.4.1.5 UBIs annual revenue sources

Figure 3-8 shows the revenue sources of the surveyed UBIs. It indicates that
91% of UBIs have income source from rent, 45% charge incubation service
fees, 14% have seminar and workshop income, and 9% have industrial
services.
Other
incomes
include
royalty,
licensing,
technology
commercialization, and donations. This figure shows that different UBIs have
different revenue sources, different scales (as mentioned in Section 3.4.1.2),
different budget sponsors as well as equity return (indicated respectively in
sections 3.4.1.4 and 3.1.4.7). This finding confirms the fifth hypothesis of this
research: different universities have different resources.
Figure 3-8: Sources of UBI revenues

Figure 3-9 shows the amount of annual revenue of UBIs in Taiwan. They vary
from 1 to 4 million NTD with the average around 2 to 3 million NTD. Compared
to Figure 3-10, this figure reflects the fact that more than half of the UBIs in
Taiwan rely on government support for nearly 70% of their total annual
revenue. Further investigation shows that the accumulated surplus over the
years is quite limited, and without government support, most could not
remain in operation for more than three months, as shown in Figure 3-11.
Page 85
Number of Incubators
14
12
10
8
6
4
2
0
0~1000
1000~2000
2000~3000
3000~4000
> 4000
NT dollars (unit: thousand)
Figure 3-9: Annual revenue from UBI business in Taiwan
Number of Incubators
25
20
15
10
5
0
0~19
20~49
50~59
Percentage
60~79
>80
Figure 3-10: Percentage of government support in total annual revenue
Page 86
Figure 3-11: Accumulated surplus of UBIs

This survey also shows that most UBIs collect the revenue in cash. Even
though some UBIs hold tenants equities in stocks; the liquidating rate is still
low. It is clearly shown that in order to maintain a sustainable operation the
space rent must be sufficient and the occupancy rate must be high enough to
balance the cost of operation. This is the typical mode of short-term
sustainability.
3.4.1.6 Strategy of sustainability plan
The definition of sustainability may not be the same for different UBI directors.
Although surveyed results in Figure 3-12 show that 55% of UBIs have plans
for financial sustainability, which is a good indication, most UBIs regard their
current practices as a sustainable type. In other words, the condition of
sustainability is based on the continued financial support and current
revenue incomes. They enjoy their role as a public economic helper.
Page 87
45%
yes
no
55%
Figure 3-12: Plan for financial sustainability

As to the possible income strategies for sustainable operation from data
analysis, the major sources are ranked as follows: (1) obtaining more space to
get more rent, (2) more royalty and equity liquidation from stock, (3) more
financial support from government/university or other organizations, (4) more
service income, (5) raising more funds from outside non-profit organizations or
private sectors in order to gain more interest, (6) more IP licensing and
commercializing, and (7) taking more investments in potential tenants or IP
development/commercialization activities, as listed in Table 3-1.
Table 3-1: Strategies of income sources for financial sustainability
(Phase I)
Sources
Weighting
1. More space with more rent
29%
2. More royalty and equity liquidation
22%
3. More financial supports
16%
4. More service income
10%
5. Raise more funds to gain interest
10%
6. More IP licensing or commercializing
6%
7. Take more investment in tenants, IP
6%
development/commercialization activities
Due to the reduction of government funds, some large, private and
research-oriented universities are seeking more industrial collaboration and
technology transfer to increase income to support the university (Slaughter,
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1997; Trachtenberg, 2003). In Taiwan, it was found that universities and

government have simultaneously put pressure on the UBIs to consider
sustainability management in the future, as shown in Figure 3-13. This figure
evidently proves the first hypothesis of this research: most universities have
faced financial pressure due to government budget cuts, and they have to
seek more incomes from outreaches. UBI is one of the university windows to
the industry. To this role, UBI bears the same pressure as the university.
Figure 3-13: Pressure from support entities for self-sufficient

incubation management in Taiwan (MOE: Ministry of Education)
In-depth investigation with respect to the possibility to become sustainable
indicates that most respondents are still uncertain, although half of UBIs
intend to be self-sustainable. In terms of the development of a sustainability
plan,
many
strategies
are
considered,
such
as
the
BOT
(Build-Operation-Transfer) mode, university investment mode (only applicable

to private universities), and management by private sectors. In fact, 56% of
UBIs have not yet given thought to this hard issue, as shown in Figure 3-14,
which also confirms the fifth hypothesis of this research: different UBIs have
Page 89
different incubation strategies.
To be decided
by the
university
18%
still under
evaluation
20%
not
considered
yet
36%
to be
managed by
the university
15%
to be
managed by
private sector
4%
to be
managed by
BOT
7%
Figure 3-14: Possible modes of self-sustainability in Taiwan UBIs

There is a unique case in Taiwan in which only the National Taiwan University
(NTU) has established an incubation company in 2001. Since then, many
incubators are trying to learn its business plan and privatization process.
Details will be given in later chapters.
3.4.1.7 UBIs funds and equity status
In the worldwide survey, it was found that 54% of UBIs have neither founding
fund/capital nor tenants equity. Only 23% of UBIs have founding funds and
23% have charged the equity in stocks from the tenants, as shown in Figure
3-15. Most of the equity charges are within 3% shares of the company.
However, most start-ups have not yet issued stocks so the actual cash will not
be available before 5-10 years. With regard to the founding funds, these only
helped to generate saving interests. Most UBI directors have not yet been
actively involved in taking investments as have directors of private incubators.
Another in-depth question shows that only 11% of UBIs have investment
funds, among which only 25% have gained returns from their investments.
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This implies that UBI directors are not keen on investment. It has also been
found that whether the UBI has investment funds or invested in potential
tenants has nothing to do with the size of the UBI.
23%
54%
23%
founding fund or capital
equity stocks
none
Figure 3-15: Sources of UBI funds and equity status

3.4.1.8 Summary of phase I survey
The phase I survey has achieved the goals to gather significant and practical
data of the current status, budget structure, and the plan for sustainability
from 117 UBIs. Some important findings are summarized as follows:
z
Most UBI directors deem themselves as university staff and accordingly

their UBIs inherit academic traits, i.e. a service provider for non-profit.
Some directors are even involved in the course program and get service
credits.
Most UBIs are enjoying current breakeven operation. Earning more money
to contribute to the university is not their top interest or current mission.
Strictly speaking, their current vision of sustainability is rather short. The
condition of sustainability is based on continued financial support and
current revenue incomes. This research refers to this condition as
short-term sustainability.
Current incomes are mostly cash based. Taking equity in 1~3% share
requires time until the stocks become valuable when the tenants grow. In
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other words, the essence of long-term profitability has not yet been
realized.
z
UBI directors are not keen on investment. The proposal of taking

investments is not appreciated at this stage as it is deemed to be too close
to commercial behavior.
Apart from the above findings, some more particular features were found in
Taiwan UBIs. These can be listed as follows:
z
The history of UBIs in Taiwan is still young, starting 1997. On average,

the space for incubation is much smaller than for other regions, yielding
limited main cash income from rentals.
More than half of UBIs rely on government support, which is close to 70%
of total revenue. The accumulated surplus over the years is quite limited,
not sufficient to remain in operation for three months without
government support.
UBIs have sensed the pressure for sustainability applied by the

sponsoring universities and the government. However, government
support is still continuing. It is obvious that sustainability plans have not
been developed except at NTU whose management and incubation model
will be particularly analyzed in the case study of Chapter 6.
From survey results of phase I, the current profile and future tendency of
worldwide UBIs can be clearly seen. The most significant information obtained
is that the majority of UBIs has considered the necessity of future sustainable
operation but do not know what to do and how to do. As the key point the
phase II survey provides guidance and direction to those UBIs with a
sustainability plan. The questionnaire and survey results are presented in the
following section 3.4.2.
3.4.2 PHASE II: FUTURE SUSTAINABILITY PLAN FOR UBIs
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3.4.2.1 Questionnaire Design

This plan is based on the viewpoint that in order to become a sustainable
operation a UBI has to be self-sufficient in financial status. One possible way
is to transform its role from a service center to a profit center. From the survey
results in phase I, current income is mostly in the form of cash income from
rent and services. Cash income, however, can only assure short-term
sustainability, which is still far from the optimal goal of long-term
sustainability and profitability. It is acknowledged that it is still too early to
explore the exact sustainability plan of the current UBIs, as they are not yet
ready to change their current status. The phase II survey therefore attempted
to bring the respondents into a presumed, yet expected, status in order to see
their reactions. Ten questions were designed in a logical and sequential way,
as listed in Table 3-2. The first part, questions 1 to 5, was designed to bring
respondents attention to the idea that by investing in potential tenants at
their early stage, the UBI could possibly gain a good profit return. For instance,
if Stanford University had had the chance to invest in Yahoo while the
founders were still studying at the university, Stanford might have become the
richest university in the world now. Following this point of view, question 6 is
repeated from Phase I. The purpose is to see if the value of their potential
tenants has attracted UBI directors notice.
The last part, from questions 7 to 10, then provides a feasible approach, i.e. to
privatize, raise investment funds. The purpose is to see if any UBI directors are
in favor of this proposed approach and wish to own flexible investment funds
to invest in their promising tenants. Except item 6, all answers have three
choices: not possible, possible, or very possible. The data collected is analyzed
in the following sections.
Page 93
Table 3-2: Questionnaire design for the phase II survey

Items
Questions
Do you agree that the UBI tenants can have higher success
rate than outside companies?
In your UBI, do you have chance to nurture very potential

and successful tenants?
If your UBI has investment fund, will you take investment on

those very good tenants at their early stage?
If your answer is Yes, do you have confidence your

investment will get profitable return?
As the UBI policy maker, do you think the UBI shall consider
financial sustainability in the near future?
Which action do you think will generate more income? (select

maximum two)
(1) expand space to increase rent, (2) provide more services,
(3) charge more royalty, (4) liquidate equity stock, (5) raise
fund so as to get interest, (6) take returnable investment.
Will you persuade the university policy makers to permit you

to raise investment fund for your UBI?
If you are in a public university, can the university funds be

used for investment?
Do you think that going privatization UBI will be better for

operation and fund raising?
10
Do you think that your University will accept to form a UBI

Company if you submit a good business plan?
3.4.2.2 UBI advantages (Q1, Q2)

It is unanimously agreed that tenants in UBIs have a higher success rate than
outside start-ups. In addition, UBIs have the opportunity and capability to
nurture potential and successful tenants, because the university has
abundant resources (faculty, students, technologies, library, facility, etc.) to
Page 94
help start-ups, and being one of the organisations, the incubator can closely
link with the campus activities. These survey results confirm this second
hypothesis of the research, outlined in Chapter 1.
Due to the success of some UBI tenants, many outside investors keep their eye
on them as potential targets for investment. Therefore, this research raises the
question of Why cant UBIs also take early investments?, and further How
do UBIs go for that?
3.4.2.3 Can UBIs take investment? (Q3, Q4)
The data gathered show that only 11% of current UBIs have founding funds
and among these only 30% have used those for investments and only 25%
have received return of their investments. It reflects the current fact that very
few UBIs have experience in investment. However, under the assumption of
knowing the tenants future value:
(1) If UBIs had funds, 45% would take investment in their potential tenants.
(2) If UBIs could take investment in their potential tenants, 42% have
confidence that they would get a profitable return.
This part of the survey result significantly inspires and confirms the
postulation of this research that the value of potential tenants should never be
ignored, and taking investment action is a way for UBIs to grasp a profitable
opportunity.
3.4.2.4 Future sustainability plan of UBIs (Q5)
This is a repeated investigation as in 3.4.1.6. The purpose is to see if, after
answering the first four questions, the UBI has been encouraged to inject a
more entrepreneurial mind into the business model. Compared to their earlier
selections in phase I, more respondents (86%, up from 55%) were ascertained
to now support this goal. Most UBIs, however, still consider the continued
sponsorship from universities or government as the main funding source for
reaching a sustainable level of operation. It can be realized that most UBI
Page 95
directors satisfy current operational mode. However, if they were requested to

be self-sufficient, they would be under great pressure.
3.4.2.5 Possible actions to generate more income (Q6)
Six options were listed for selection with a maximum of two choices. Many UBI
directors have accepted the concept that possessing a long-term profit source
is an essential factor of sustainability. Table 3-3 shows the level of importance
with respect to each source of income.
Table 3-3: Actions of income sources for financial sustainability (phase II)
Sources
Weighting
1. Expanding space to increase
29%
rent
2. Providing more services
21%
3. Taking returnable investment
19%
4. Charging royalty through
12%
licensing
5. Raising fund so as to get interest
11%
6. Liquidating equity stock
8%
An obvious change is that the source of investment return has been upgraded
from rank 7 of phase I survey to rank 3. This is a valuable finding that proves
the sixth hypothesis of this research: In order to generate more income; the
UBI should invest potential tenants and get profit from investment
return, rather than only collecting the rent. After detailed explanation and
persuasive encouragement, UBI managers or directors have become conscious
of investing in their potential tenants. By doing so, investment return could
become a major source of long-term profitable income.
3.4.2.6 Plan for investment and privatization (Q7 to Q10)
Following the choices in Table 3-3, UBIs must create a channel through which
investment funds can be raised and operated. This research proposes that the
Page 96
privatization of UBIs is the most straightforward way to raise funds. Table 3-4
lists the surveyed results indicating that most UBI directors are aware of the
significance of this approach.
Although there is still about one quarter to one third of respondents opposing
change of their current mode, the majority of UBI directors eventually
considered that the plans of investment and privatization for sustainable
operation could be possible if they were permitted to privatize. This part of the
questionnaire survey result shows 78% of UBI directors agreed that UBIs
should run as an enterprise, which conforms to the fourth hypothesis of this
research.
Table 3-4: Actions for raising investment fund and privatizing UBI
Actions
Not Possible
Possible
Very Possible
If permitted, plan of raising
36%
41%
23%
32%
46%
22%
24%
38%
38%
fund for investment

If go to privatize, UBI will
be better in operation and
fund raising
If submit a good Business
Plan, the university will
accept to form a UBI
Company
3.4.2.7 Summary of Phase II survey

In phase II, a new concept of taking investment to potential tenants could
very possibly generate long-term profit was heuristically fed into the minds of
respondents to see the degree of agreement. At this stage, the respondents
could be brought into such a presumed scenario. The next concept,
privatizing a UBI is an active way to raise investment funds as it is no longer
restricted by current university regulations was then followed to see if anyone
consented to it. The questionnaire for phase II survey was designed in a more
Page 97
heuristic and gradual way that contains the merits of the modified Delphi
method and Scenario method. The selected survey targets those who replied to
the first questionnaire except respondents from Taiwan. Through the phase II
survey, the following significant findings were obtained:
z
It is positive that UBIs could nurture tenants at a high success rate.
So far, only a limited number of UBIs can invest in their potential

tenants due to university rules and lack of VC experience.
z The majority of UBI policy makers have considered future sustainable

(although not really self-sufficient) operation. At the current stage,
however, they still regard financial subsidization as necessary income.
Therefore, they stay in the state of short-term sustainability.
z
If the UBIs had investment funds, 45% of them would try to invest in
their potential tenants, and 42% of these are confident of making
profit.
After becoming aware of the value of their potential tenants, UBI

directors recognized that investment return would be a good income
source. The priority on investment income moved up from 7th rank in
the phase I survey to 3rd rank after the phase II survey.
As for the goal of long-term sustainability, most UBIs would consider

privatization and investment in the future.
3.5 CONCLUSION
Results of the two questionnaire surveys have been discussed in detail in this
chapter, and the results have proved research hypotheses 1, 2, 4, 5 and 6 as
given in Chapter 1. The two phases of the survey have received promising
response rates and the analyzed data possess high reliability to support this
survey report. Also, much encouragement and assistance has been received
from UBI directors. The majority of them is in favor of the proposal and
interested in future development of this project.
Page 98
From the findings of this chapter, a list of conclusions in good order and with
reasoning can be summarized as follows:
z
Current operational budgets of UBIs rely on the incomes from rent and
services, which most directors admit is only enough for breakeven
operation, labelled short-term sustainability by this research.
A long-term sustainability plan for each UBI is deemed necessary, not

only for self-sufficient operation but also for generating profit to the
university.
In order to overcome the current breakeven condition, a challenging

for-profit model could be direct investment to some potential tenants as
their success rate is high.
In order to own the flexibility in investment, UBIs must be privatized and

own investment funds. A reform of non-profit UBI to for-profit UBI is
possible if the university allows.
Based on the background information of these surveys, developing a new

profit model for UBIs is an essential. It will establish the roadmap toward the
entrepreneurial university incubator (EUI). In the next step, developing an
integrative framework that integrates the merits of UBIs and private
incubators will be proposed to help reform the current non-profit UBI to a
for-profit EUI.
Page 99
Chapter 4 An Integrative Framework for Entrepreneurial University Incubator
C
CH
HA
AP
PT
TE
ER
R4
4
AN INTEGRATIVE FRAMEWORK FOR

ENTREPRENEURIAL UNIVERSITY INCUBATOR
From the survey results in Chapter 3, there are two major findings. One is
that currently most UBIs lack the vision for self-sufficient operation, and the
majority of UBIs have agreed that sustainability (self-sufficient) operation is
essential in the future. Another important finding is that most UBI directors
have recognized that investment return could be a good income source. In
order to generate more income, most UBIs agreed that taking investment to
some
potential
tenants
could
generate
profit.
The
concept
of
the
entrepreneurial university, one that seeks more income for the university
operation from industrial cooperation and technology transfer, shall also be
taken into account by UBIs. Developing an entrepreneurial university
incubator (EUI) could also create more income not only for the university but
also for the EUI. So far, UBIs have not given attention to increasing their
income. The creation of an integrative model to overcome the above
mentioned weakness of current UBIs has become necessary. However, due to
the restriction of the current accounting system, most public universities
cannot directly include investment as a part of their annual budget. The
question is how to overcome this problem. The next step is to develop an
integrative model of EUI. This innovative EUI model shall overcome this
bottleneck.
A flowchart of this chapter is illustrated in Figure 4-1.The first part of the
chapter includes an introduction in Section 4.1 and the need and motivation
of entrepreneurship in Section 4.2. In the second part, Section 4.3 presents
various incubation models that are currently in operation, and Section 4.4
summarizes the threat factors and the sustainable factors of current UBIs. A
new integrative incubation framework to help universities break through
Page 100
current accounting barriers will be proposed and analyzed in Section 4-5.

This proposed model integrates the merits of a private incubator into the
current UBI system to form a new integrative model possessing more
functions including incubation, investment and service functions. Such a
system could be more flexible for future self-sufficient operation. The SWOT
analysis this EUI model and a comparison of this model with other existing
models will be discussed in Section 4-6.
Page 101
Introduction
(Section 4.1)
The Needs and Motivation of Entrepreneurship

(Section 4.2)
Incubation model
(Section 4.3)
Traditional
For-profit
Model
(Section 4.3.1)
Modern
For-profit
Model
(Section 4.3.2)
Private
For-profit
Model
(Section 4.3.3)
UBI Model
Hybrid Model
(Section 4.3.4)
(Section 4.3.5)
Sustainability Factors of UBI

(Section 4.4)
A New Integrative Framework for

Entrepreneurial University Incubator
(Section 4.5)
The Integrative
Framework
(Section 4.5.1)
Organization
Structure
(Section 4.5.2)
The Financial
Mode of EUI
(Section 4.5.3)
Discussion
(Section 4.6)
Figure 4-1: Outline flowchart of Chapter 4
Page 102
4.1 INTRODUCTION
Business incubation is a dynamic process of business development in small
and medium enterprises (SMEs) during its startup period, under the
management of an incubator. A business incubator is a body providing space,
services, and hands-on management assistance in order to nurture young
firms, helping them to survive and grow during the start-up period when they
are most vulnerable [NBIA, 2003]. They provide a facility with a number of
new or young businesses in which these businesses have access to shared
staff and services and receive a pro-active incubation program of advice,
training, introductions, and access to resources that may not otherwise be
available to them [Harley, 2001].
Ever since the first incarnation at Batavia town in New York State in 1959, the
number of incubators gradually increased around the world. By the end of
2005 some reports estimated that the statistical number of worldwide
incubators was around 4000, as shown in Table 4-1 (Barrow, 2001; Harley,
2002; Bollingtoft, 2005; NBIA, 2006).
Table 4-1: Incubator estimate statistics up to 2005
Type
In US
Outside US
Year
2002
2005
2002
2005
Government based non-profit
650
700
2200
2700
For-profit private
300
300
300
300
Total
950
1000
2500
3000
Some reports have stated that universities should be infused with more
entrepreneurial spirit (Degroof, 2004). Taking equity in university spin-off
companies can generate much more in financial return than just collecting
the traditional standard licensing fees (Bray, 2000). Interviews conducted
with 128 UTTO (university technology transfer office) directors have shown
that for-profit UTTOs are directly related to the formation of new ventures,
Page 103
while traditional non-profit UTTOs are more likely to be associated with

university-based business incubators (Markman, 2005). A content analysis of
UTTO mission statements also revealed an overemphasis on royalty income
and a lack of emphasis on entrepreneurship. The above example emphasizes
the importance of building an entrepreneurial culture in continuing the trend
toward the entrepreneurial university.
Faced by the current era of the knowledge-based economy, many universities
have begun to feel the pressure to generate more income to help with campus
development. An integrated business model is needed in order to turn
customer service (expense) centers into new business (profit) centers (Axelrod,
2002). In addition to the existing Technology Transfer Office (TTO) that can
receive revenue, Can University Business Incubators (UBIs) also generate
income for the university?. Research by the author has yielded a feasible
model for long-term sustainability, i.e. to reform the UBI into a private
company so that it is allowed to take more investments (Hsiao, 2001). This
concept coincides with the new incubation model; a model that integrates
venture capital funding into the incubation process so that an incubator can
invest in potential startups (Grimaldi, 2005).
In general, incubators can be categorized into two types: the non-profit and
the for-profit. As indicated in Chapter 2, to the end of 2005 there were about
4000 incubators in the world. Most (about 90%) of the incubators are
non-profit (APEC, 2003).
Currently, UBIs function mostly as non-profit organizations. In addition to
the most basic goals of government-developed incubators, UBIs do possess
some special features such as:
z
Developed by universities and funded by government.
Page 104
Professorial involvement as consultant, student involvement by way of

internships, university involvement in lab and facility utilization and
entrepreneurial program.
Campus technology commercialization and academic team

corporatization as a new start-up.
Channel for the linkage between university and industry.
Although its contribution to the society is significant, behind the glowing

records most of the UBIs cannot be financially freestanding if financial
support from the university or government is cut. In addition, their
contributions to the universities are still not satisfactory in terms of equity
return. Since the last decade, some countries have launched a new policy to
permit the corporatization of public universities, and for-profit UBIs have
been introduced in countries such as China (Tsuo, 2000; Harwit, 2002),
USAINS of Malaysia (USAINS, 2004) and ITEX of Australia (ITEK, 2003).
Although the business model is more multi-directional and flexible, the
history of for-profit UBIs is still young. So far, there are no significant
statistics to judge their success in term of financial sustainability.
Nevertheless, it is the appropriate trend for UBIs to follow in order to reach a
state of long-term viability.
4.2 NEEDS AND MOTIVATION OF ENTREPRENEURSHIP

4.2.1 NATURE OF THE UNIVERSITY INCUBATOR
The most common type of incubators developed by public universities is the
non-profit incubator. The university provides space, facilities, and faculty and
student assistance. From the sustainability survey in Chapter 3, the main
annual income for all UBIs is the rent paid by the tenants. The co-founders
raise the initial funds. The incubator brings together valuable business,
government and academic resources to catalyze business development of
high-growth technology-based companies. The governance system is usually
Page 105
composed of three hierarchical levels, namely the university policy-making

council (e.g. senate, deans council, etc. headed by the president), the
industrial relations committee (a university wide organization in charge of
outreach affairs, headed by a vice president or a dean), and the incubator
(headed by a director appointed by the university). The non-profit mission
focuses on three main factors: regional economic development, job creation,
and university spinout companies.
4.2.2 ADVANTAGES OF THE UNIVERSITY INCUBATOR
University incubators possess university-related benefits that overcome the
weaknesses of general business incubators, such as access to laboratories
and equipment, to scientific and technological knowledge and to networks of
key contacts, as well as the reputation that accrues from affiliation with a
university (Grimaldi, 2001). Most university incubators are in collaboration
with their business schools to offer entrepreneurship programs to benefit the
students, being positioned themselves as an office of the university system.
The university and the government will normally provide some funds to assist
the UBIs operational cost. It results in a sustainable, but mostly breakeven,
condition in the current status.
4.2.3 WEAKNESSES OF THE UNIVERSITY INCUBATOR
Despite the fact that many advantages of the university incubator transcend
those of a general public incubator, it has some inherent shortages due to the
nature of the academic system, such as:
1. Inadequate access to funding capital
2. The lack of management and financial skills in its tenant companies
3. Lack of entrepreneurial experience of the incubators director
4. Lack of comprehensive e-coaching programs for standard start-up
nurturing processes
5. Dependence on financial support from university or government
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In contrast to the weaknesses of the university incubator, some successful

private for-profit incubators possess the following characteristics (Patwardan,
2003):
1. Entrepreneurial experience of the founder
2. Visionary leadership of the CEO
3. Advantageous location
4. Milestone-based e-monitoring (a tool that guides tenant
companies
through various stages of their start-up process), which is the same as

e-coaching
5. Access to Venture Funding for tenants.
4.2.4 NEEDS OF ENTREPRENEURSHIP
Commercialization of matured technologies can be realized by spinout
companies from the research teams. These new startups have to adjust their
goals from research focus to entrepreneurial pursuit. Many success stories
have shown their entrepreneurial strength, visionary leadership, and growing
profits several years later (Wright, 2004). While the entrepreneurial university
has become a trend, privatization of the outreaching offices is also important,
as they are in the front line and in the first priority to build the
entrepreneurial infrastructure. The incubators can expand their functions in
such way that they do not have a clearly defined boundary (Lockett, 2002).
Although the contribution of the university incubators to society is significant,
most of them cannot be freestanding if the financial support from the
university or government is cut. In addition, their contributions to the
universities are still not satisfactory in terms of cash return. In view of the
weaknesses of the current university incubator and strengths of the
successful private incubator, the entrepreneurial formation of the university
incubator is urgently needed not only to sweep away the images of service for
nonprofit and office of spending money, but also to build up new images of
entrepreneurial paradigm and profit center on the campus.
Page 107
4.3 INCUBATION MODELS

Although all incubators bear the same mission of nurturing startups for
regional economy development and job creation, the incubation models can
be diversified according to their respective internal and external
environments. From the profit point of view, models can be divided into the
non-profit type and the for-profit type. Current incubation models can be
summarized in five types with respect to the profit requirement. In order to
bring the concept of EUI to reform the current UBI model, the merits of all
current incubation models shall be adopted. This section thus presents the
current incubation models.
4.3.1 TRADITIONAL NON-PROFIT MODEL
During the early stage, from 1960 to 1990, the main goal in most places was
to recover from economic recession by means of job creation, regional
economic revitalization, and the fostering of new types of local business.
Smilors profile of the incubation model as it has thus developed (Smilor, 1987)
can be seen in Figure 4-2. The incubator is developed by four types of
affiliations, namely the government, non-profit foundation, university, and
private
company.
The
management
team
supports
secretarial
and
administrative works, common facilities, and business consultation. Mentor

assistance comes from external entrepreneurs. All tenants start up their
businesses in the incubator building. The incubator does not look for any
profit from the tenants.
Page 108
Figure 4-2: Incubation system before 1990 (Smilor, 1987)

4.3.2 MODERN NON-PROFIT MODEL
After 1990 the business of venture capitalists (VC) started to influence the
market environment. Possessing extensive funds, VCs have begun seeking
potential companies to invest in, rather than trying to establish a brand
new company. Parts of the funds are focused on the early stage
investments in some potential SMEs. The business incubator builds up a
strategic alliance with investors to provide investment funds to tenant
companies during their growing stage. A modified incubation model has
thus been formed, as shown in Figure 4-3 (Hsiao, 2001). The mentors
expand from entrepreneurs to IP experts and investors. The growth of
tenants will directly benefit the investors.
Page 109
Figure 4-3: The modern incubation system after 1990

4.3.3 THE FOR-PROFIT PRIVATE INCUBATION MODEL
As indicated in Section 2.1.7 of Chapter 2, most for-profit private incubators
are developed by corporations or VC firms. In addition to the mature
companies, they also select potential start-ups and own significant amounts
of stake through investment before starting to incubate these hi-tech
companies (Acorn, 2003). Incubators mainly provide rooms for consultation.
Once an incubator becomes the primary shareholder of a company in which it
has invested, the company and the incubator become bound to one another
for their mutual benefit. This particular incubation business model can
expand via e-service to anywhere as a typical virtual incubation without the
boundary. Since incubation is a venture business, its success rate largely
depends upon which target companies are selected for investment. The
incubator could gain substantial investment return if the chosen companies
grow rapidly. In Taiwan, this is a new incubation business encouraged by the
government. By the end of 2002, there were only six for-profit private
incubators (Chang, 2003). This type of incubation model can be represented
by Figure 4-4. In this figure, investors establish the private incubator. Each
tenant company (Ti, i = 1 to n) is invested in by the incubator. Therefore, they
are closely linked to the incubator in all aspects. The incubator would
consider the tenants to be part of its assets.
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Investors
Incubator
T1
T2
Tn
Figure 4-4: Private incubator model (Ti means the ith tenant)
4.3.4 UNIVERSITY BUSINESS INCUBATOR MODEL
Figure 4-5 illustrates the relationship of a normal university-based incubator
in which the university, incubator, and tenants are independent entities. The
degree of interconnection in this particular relationship is fairly low. The
incubator, in this case, would not consider the tenants to be part of its assets.
Rather, the tenants would be treated as clients only. Therefore, if a tenant
should happen to fail, the impact to the incubator and the university would
not be as significant. Due to the low operating costs involved with running
tenant companies at their start-up stage, a success rate of 80%, compared to
other independent start-ups which average a 50% success rate, is certainly
high (NBIA, 2003). How many graduates can eventually enter into the stock
market? Although, as of yet, there has been no data reported on this subject,
numbers recorded in Taiwan over a span of eight years are extremely low. It
has been noted that a university incubator only holds 1% to 5% (normally 1%)
of a tenants stock. This fact allows one to assume that the incubator would
not make a significant profit in the end. Most university incubators only make
enough to cover expenses with a financial subsidy from the university
involved or the government. If this subsidy were cut, then the sustainability of
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such an incubator would become questionable.
U niversity
Incubator
T1
Tn
T2
Figure 4-5: University business incubator model
4.3.5 THE HYBRID MODEL

Another incubation model that imports venture capital funding into the
incubation process so that an incubator can invest in potential startups is
being carried out at the North Carolina Technology Development Authority in
the USA (NCTDA). This particular incubation model is shown in Figure 4-6
(Grimaldi, 2005). The TDA accomplishes this by utilizing three primary
business sectors: entrepreneurial support, including the development of
business incubators, capital formation for emerging companies through
direct investments, and research commercialization that moves research from
university laboratories into companies (Brotherton, 2000). In this model, the
NCTDA, a government based incubator, plays the key role and the university
is only one of the co-organizers. UBI only recommends potential tenants to
NCTDA for the possibility of investment. This model, however, demonstrates
the advantage of merging resources from corporate private incubator (CPI),
independent private incubator (IPI) and UBI.
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UBI
BIC
CPI IPI
Figure 4-6: Merging merits of UBI, CPI and IPI into BIC
Based on the operation of the above current incubator models, the next
section will examine the threats and sustainability factors of the university
incubators in particular. An integrative EUI framework will be proposed in
Section 4.5, which possesses all merits of the above models. A comparison of
all models will be summarized in Section 4.6.
4.4 THREAT AND SUSTAINABILITY FACTORS OF UBIs

In previous research (Fan, 2000), it was pointed out that the possible
weaknesses of current UBIs could be summarized as follows:
z Incubator directors do not have adequate entrepreneurial experience
z
Incubators cannot be treated simply as a university/industry

cooperation program
A universitys mentor system does not work closely enough with the
tenant companies due to lack of incentive
The incubator itself does not have a well planned strategy for sustainable
management
An incubators profit return to the sponsoring university is not significant

enough.
In addition, some recent reports have depicted some failure and success
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factors for a sustainable incubator [Finer, 2002; Harley, 2001; Lalkaka, 2001;
and Chinsomboon, 2000]. According to these reports, an incubator should
possess the following characteristics of sustainability:
z
Sustainable revenue generating businesses
Quality expertise
Adequate due diligence of their stake owned SMEs
Sufficient VC/professional/university linkage
Adequate government policies, initial funding and support
Recognized name brand in their industry
A large meaningful database of contacts.
4.5 A NEW INTEGRATIVE FRAMEWARK FOR

ENTREPRENEURIAL UNIVERSITY INCUBATOR
In order to break through the above-mentioned barriers, a new integrative
framework of incubation model for the university will inject the desired
entrepreneurship and investment characteristics into the UBI. This research
names it the Entrepreneurial University Incubator (EUI). This EUI model is a
closely linked incubation system between investors, university, incubator and
tenants. Its organization; integrative framework and internal flow system are
detailed in the following sub-sections.
4.5.1 THE INTEGRATIVE FRAMEWORK
In the current UBI system, all parties are independent, e.g. university, UBI
and tenants. The degree of relationship among them is not significant, as
mentioned in Section 4.3.4.
A feasible course of action would be to form closer ties among those within the
development body, the funding body, the incubator and the tenant companies.
What does closer ties mean? This research proposes that the incubator
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should form a partnership with each potential tenant company so that the
incubation team could become involved in the companys business, rather
than just nurturing the company. On the other hand, the affiliated university
should also become a share owner of the incubator. A conceptual diagram of
this kind of model is illustrated in Figure 4-7, in which the university and
investors jointly establish and operate the incubator, T1 and T2 being tenants
only under pure incubation and Tm to Tn are those potential tenants being
invested in by the incubator. This new integrative UBI system differs from the
current non-profit UBI system (Figure 4-5) in that some potential tenants
would be invested by the incubator. This system also differs from the current
for-profit private incubator system (Figure 4-4) in which not all tenants would
be invested in. This concept is based on the findings from the worldwide
survey in Chapter 3 that the value of potential tenants is recognized and
investing in them would generate a good income source for sustainable
incubator management. In addition, in order to own adequate investment
fund the incubator must be privatized by receiving the resources (money,
experience, knowledge, connection, etc.) of investors. Apparently, under such
an innovative system, the incubator would be no more just a service center
on the campus but become a profit center and reform to an Incubation
Company.
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Figure 4-7: Closely linked incubation system

Base on the concept above, the incubator must form an integrative framework
that would increase its involvement and allow for the sharing of duties with
each potential tenant company, development body and the funding body. This
research calls this model the mutual life body, which is also referred to as
an entrepreneurial university incubator (EUI) in this research.
An incubators funds can be collected from investors and universities. Most
public universities, however, cannot invest in companies with cash. In order
to overcome this problem; the cash investment shall then be totally borne by
the investors. The university only invests the intangible assets.
The special feature of this model is that all closely linked entities are
responsible for one another. While retaining the normal incubation service,
the incubator can also make investments in its potential tenants. The best
watchdog must be the incubator itself. The success rate should be higher
than general VCs that only invest outside SMEs. Any investment reward
could potentially come back to the investors and the university.
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Similar to the startups, a new UBI could come in the form of an incubator
company which operates not only in the field of business incubation, but also
in business investment so as to persuade potential investors, including
venture capitalists, angels, private corporations, alumni and staff, to invest in
the company. Some universities are allowed to own 100% of an incubation
company (ITEK, 2003) or partially cash investment (USAINS, 2004), but most
public universities are not allowed to make investments using academic
funds. Since the university has already fed in intangible assets to the
incubator, theses intangible assets can be counted as part of capital, under
the category of technology share or equity of the incubation company.
Therefore, the investment restrictions placed upon many public universities
could be avoided.
In order to realize the incubation company, the privatisation process of the
UBI must be implemented. The idea of this integrative framework is solely
initiated by the university incubator itself. In order for the affiliated university
and investors to be in favor of this cooperative model, a thorough business
plan must be considered. The business plan must be detailed since it is a
critical strategy planning for the sustainable incubation system and the
incentive of the university. It should consider the markets needs, core
competence, required capital, sources of income, financial prediction, and the
rights and obligations among the company and the university. Possible
privatization process and appropriate business plan will be studied and
discussed in Chapter 5.
The proposed integrative framework is shown in Figure 4-8. This framework
integrates the merits of private incubator, university resources, government
support, industrial expertise and investor funds into the current UBI system
to form an Entrepreneurial University Incubator (EUI). This framework
includes two major parts: one is the existing UBI, another is the incubation
company. Current UBIs only provide the primary incubation to tenants. It
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does not include the parts of the incubation company, investors and all
outside sectors of the proposed integrative framework. Due to the restriction
of university regulation; most universities could not use the academic fund
for the investment, as confirmed through the questionnaire survey in section
3.4.1.7. In order to overcome this barrier, it is necessary to form an
incubation company so as to build the entrepreneurship and to make
investment.
The incubation company must be authorised by the university to run the
incubation, investment and service business. The companys incubation
business differs from the UBI that it only provides intensive incubation to the
potential tenants to be invested in. The investment business focuses on the
target search and investment evaluation which include in-house tenants and
outside companies. Service business provides value-added services to the
government and industry. The original UBI still exists to play the role of
bridging the gap between government and the incubation company. It helps
the company to find the resources from the campus and also takes shares
from the company. The government still sponsors the UBI, and this budget
could feed into the company as they are two entities in one system. The
capital funds of the company are all from the investors and the invested
shares have a limited amount for the investors to buy.
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EUI
Investors
Service
All Sectors
Incubation Company
Investment
Incubation
UBI
Tenant Companies
Government Offices
University
Figure 4-8: The proposed integrative framework of EUI

From the above interpretation, it is obvious that this system not only
overcomes the university restrictions on making investment and raising
funds but also possesses better flexibility in operation and provides more
functions. It is likely that the new model could create benefits far beyond the
current UBI system. The operation of the internal flow system of a EUI is
described in the next sub-section.
4.5.2 THE ORGANIZATION STRUCTURE
4.5.2.1 Structure
Most current organizations of public UBIs belong to the university system.
Their organization will be interpreted in Chapter 7 as they are similar to the
NTUs existing incubator.
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An incubation company similar to a general SME is led by the board of

directors, above which is the shareholders general assembly, and below it is
the CEO office and functional departments, as shown in Figure 4-9. The
shareholders comprise the university and investors. The university is an
independent entity that receives stock donation from the company. It holds a
certain proportion of the company share. Investors can be composed of the
VCs, private companies, angels, and individuals that have bought the
companys stocks.
The main functions of the company are incubation
business, investment business, and service business.
Figure 4-9: The proposed incubation company organization
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4.5.2.2 Team and Missions

Board of directors and controllers. The board of directors is the decision
making group and the controllers monitor the performance of the board on
behalf of the shareholders. The strategic planning of the company should
always be in cooperation with the universitys development. Therefore, a
certain proportion of the members from the university are necessary, say
one-third. These university representatives are assigned by the president of
the university, such as the current center director, and faculty from business
and engineering colleges.
President. The president of the company must be a successful businessman
and an alumnus of the university. With his social influence, more investors
will be confident to join the company. In addition, with his personal
inclination toward the university, the strategy will be in the right direction. At
the start-up stage the president must be invited by the university to serve this
position, also as a feedback mission to the university.
CEO. The main income of the company must be the investment return for the
long sustainable run. Therefore, the chief executive officer must be an
experienced and successful venture capitalist. The only functional change for
him is to adjust from the short-term investment in matured companies to the
long-term investment in early stage companies. This position is recruited
from open market on a competition basis. Although this CEO is probably
unfamiliar with the incubation business, this weakness can be compensated
for by the center director through his excellent expertise.
Investment consultants. review committee, and mentors. These are all
part-time jobs to assist the CEO and the board to achieve better incubation
and investment performance. Investment consultants provide expertise in the
target selection and evaluation for the investment department. Mentors
provide the expertise in business management and technical advice to the
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startups in the incubation department. The review committee forms up a

formal incubation meeting whenever it is necessary, to process the evaluation
of tenant companies for their entry application, or annual performance review
and advisory workshop, or a graduation review.
On the request by the
manager of the investment department, evaluation of a potential tenant by a

formal investment review meeting of the review committee will take place.
These part-time members are either of active industry-related professors from
the university or entrepreneurs in the region. They are selected and
nominated by the company CEO and the center director, and invited by the
university president (for incubation members) and the company president (for
investment members).
Administration office. Headed by a manager, this office consists of one to
two staff members and takes charge of general administrative works such as
the personnel, general affairs, finance, common secretarial works, and
administration
support
for
the
incubation
investment
and
service
departments.
Incubation division. Headed by an incubation manager, this division
consists of two to three staff and takes charge of general incubation business,
including the in-house nurturing services and market promotion programs.
This division shall generate cash income for the companys short-term
operation, such as rent, equity, incubation service fee, etc.
Investment division. Headed by an investment manager (can be the CEO),
this division consists of one to two staff and conducts the investment
business to the potential tenants and outside companies. The staff for the
target search must be constantly alert and enthusiastic to search for good
business plans, and the investment evaluation staff shall collect and edit
plans into a complete investment proposal for the review committee. This
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division shall generate investment income for the companys long-term

sustainable operation.
Service division. Headed by a service manager, this division consists of one
to two staff to provide value-adding services to all sectors, such as to help
technology commercialization for university professors, assist spin-off
preparation for university teams, assist business plan writing for regional
startups, run seminars and workshops in entrepreneurship, obtain some
government contracts in incubation or technology venturing planning, etc.
This division shall generate some cash income for the short-term operation of
the company.
4.5.3 THE FINANCIAL MODEL OF EUI
The financial model of the EUI system among the university, the Incubation
Company and tenant companies is depicted in Figure 4-10 with clear internal
flow.
Those start-ups established through technology transfer from the university,
also called spin-off companies or TLO start-ups [Gregorio and Shane, 2003],
pay additional licensing fees to the university. The company collects rental
and service fees, and equity and licensing charges from tenants. The company
also pays the university normal rental fees plus a significant percentage of its
share of annual profits. It is clear that the sponsoring university provides only
the intangible assets, rather than the funding capital. The link between the
parties involved in this particular model is quite close, in that if the tenants
succeed, the incubator company makes a profit, and consequently the
sponsoring university participates in those profits. This is the essence of
mutual life body as emphasized in this report, and it is a win-win strategy. It
should be emphasized that alumni and mentor related investors are major
partners due to their closer relationship with the university.
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Figure 4-10: Internal financial flow of the EUI system
4.6 DISCUSSION
An integrative framework of the entrepreneurial university incubator (EUI) is
proposed
in
this
chapter.
This
system
integrates
the
merits
of
government-based UBIs and for-profit private incubators. Owing to the

constraints on public universities in regard to direct investment, this model
also proposes the sharing of technology by the incubation company, which
cooperates closely with the original UBI. Therefore, potential profits, after
several years, could be realized from the return on investments. The full
utilization of the immense resources that a university has to offer will become
the key success factor for an incubator. Transforming the non-profit system
to a for-profit system is the first step toward the EUI.
The pros and cons of this integrative framework are discussed by the
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following SWOT analysis.

Strengths
Combining resources from experts, venture capitals, government and

university makes for an invincible group.
Under the strong resource support from the University and the
responsibility of long-term sustainability, the Incubator (or so-called
Incubation Company) can be managed in an entrepreneurial operation.
The merging of strategies and shared profits of University, Incubation

Company and tenant companies would make one mutual life body, and
enhance their confidence in each another.
From the optimistic point of view, most investors are university alumni,
which can assure the team of more consolidated support and less conflict
of interest.
Weaknesses
The CEO of Incubation Company was good at VC business, which selects

only matured enterprises as investment targets. But to run an incubation
company, the investment actions are mostly targeted at those start-up
companies in their early stage. The culture and environment are different
from the CEOs experience.
The combination of academic and business experts in one firm is a new

model. How to absorb skills from both and overcome personal
shortcomings for the best cooperation in the shortest time is a challenging
task. Both parties shall try to adjust their characters to achieve a good fit.
Opportunities
Many potential SMEs need incubation and investment.
Government policy strongly supports the incubation business.
With a higher success rate, contributions to the sponsoring University

can be more significant.
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This is a new type of incubation business. Competitors are still rare.
Threats
Investment in start-up companies is a high risk business. Any new

company is subject to change during its growth stage.
The Companys investment business faces competition because many VCs

have partial funds and shift their interests to other long-term investment.
The Company may put more effort into investment than incubation. Like
most VCs, the Company CEOs past experience could be investment to
mature companies. This incubation Company has the mission to invest in
more start-up companies. It is difficult to select potential start-up
companies.
From the above SWOT analysis it can be seen that the major problems to be
encountered by the Company will be in the investment business. Special care
should be taken during its operation when making any investment decision.
In contrast to other for-profit UBIs, this integrative framework possesses the
following features:
z
The new for-profit incubation company is established for the missions of

investment, off-campus contact, and intensive incubation to the tenants
they invested.
The original non-profit incubator still exists for the missions of general
incubation, in-campus contact, and government sponsoring.
These two organizations shall be closely connected by the win-win

strategy.
The model is based on the strong belief that incomes from rent and
services can only breakeven the cost, while the investment return is the
main source of long-term sustainability.
In this chapter, current various incubator models have been presented and
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the integrative framework for EUI proposed. The proposed EUI model has the
potential to overcome the weakness of current UBI models. A comparison of
features of all six models is summarized in Table 4-2.
Table 4-2: Proposed EUI model vs. current various incubator models
Traditional
non-profit
model
Modern
non-profit
model
Private for-profit
model
UBI model
Government, Government,
VC fund, Angels, University,
Founding Non-profit Non-profit
Private corporation Government
organization. organization.
Mentor
Entrepreneurs
Entrepreneurs
Investors,
Experts,
Experts*
Experts
Investors
Incubation In-house
Tenants
All kind
regional
start-ups
Investment N/A
Professors,
Entrepreneurs,
Experts
Hybrid
model
Proposed
EUI model
VC funds,
Angels,
Non-profit
Private
organization,
corporation,
VC fund
University,
Staff, Alumni,
Entrepreneurs Entrepreneurs,
Investors,
Investors,
Professors,
Professors,
Experts
Experts
In-house,
Virtual
In-house,
Virtual
In-house
In-house
(campus),
Virtual
All kind
regional
start-ups
University
Hi-Tech companies
Potential
spin-offs,
(including mature &
regional
Regional Hi-Tech
potential start-ups)
start-ups
start-ups
University
spin-offs,
Regional
Hi-Tech
start-ups
Investors
Incubator
In-house
(campus)
Investors
Investors
Incubator,
Investors
Equity return
to university,
Investment
return to
incubator
investors and
university
University,
Non-profit
Government,
organization,
Incubator
Government
investors.
Benefit
return
Equity return
to incubator, Equity and
Equity return
Investment investment return to
to incubator
return to
incubator.
Investors
Equity return
Equity return to
to incubator,
university,
Investment
Investment return
return to
to investors
Investors
Resource
Government, Government,
Non-profit
Non-profit
Incubator
organization organization.
Government,
University
* Experts: Lawyers, Bankers, IP Analysts, Engineers, etc.

** Investors: VC funds, angels, corporations, etc.
How to implement this model is also essential in this research. Three major
steps will be discussed in the following chapters. The first step, a transition
process from UBI to EUI, will be proposed and the second step, a
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comprehensive business plan of this incubation company will be prepared in

chapter 5. The last step, the integrative model will be validated by three
selected case studies in chapter 6.
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Chapter 5 The Implementation framework for the Model: Development of A Transition Plan and A
Business Plan for privatization
THE IMPLEMENTATION FRAMEWORK FOR
C
CH
HA
AP
PT
TE
ER
R5
5
THE MODEL: DEVELOPMENT OF A

TRANSITION PLAN AND A BUSINESS PLAN
FOR PRIVATIZATION
In Chapter 4, a new integrative framework of EUI system has been proposed.

This system integrates the merits of the general non-profit incubation
management (the service center) and the for-profit operation (the profit center).
The service center can still exist in the campus, but the profit center must
spin-off to its own authority and independence.
Therefore, in order to
implement this integrative model, a transition process from current UBI to a

EUI system is indispensable. As the first step, the university must give birth to
this private incubation company which is shared or owned by the university.
This chapter considers the needs and processes of privatizing the UBI. With
reference to examples of top-down and bottom-up approaches, a feasible
transition process for public universities that are burdened by administrative
and financial inflexibility is proposed. An example of business plan for
bottom-up approach is also proposed in order to provide a guideline to realize
the sustainability of this integrative model.
5.1
INTRODUCTION
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Many outreaching offices are hindered in operational flexibility by rigid

regulations of the university. Privatization of some campus business offices
and leverage with external resources are feasible ways to break through the
restrictions. In the United States, formal university-industry technology
transfer took off after the passage of the Bayh-Dole Act in 1980 (Public Law
96-517) (Shane, 2004). Due to the decrease in government funds, some large,
private,
research-oriented
universities
are
seeking
more
industrial
collaboration and technology transfer to get more money to support the

operation of the university. Because of the new strategy of regional
development and industrial cooperation, the traditional teaching/research
mission of the universities has been extended, resulting in a new concept of
entrepreneurial university. Since 1990, many world-class universities, such
as MIT, Stanford, Penn State University and RPI have adjusted their
positioning and strategy to that of an entrepreneurial university (Powers, 2000;
Slaughter, 1997; Trachtenberg, 2003). Major actions toward this form include
technology transfer/licensing, industrial cooperation projects, industry
training and services, spinout companies, establishment of a technology park,
and business incubation. The development of entrepreneurial infrastructure
is a primary factor to ensure success (Degroof, 2004; Druilhe, 2004; De Coster;
2005). There have been a number of reports dealing with the formation
process and selection factors of campus spinouts (Csaszar, 2006; Wright,
2004; Rasmussena, 2006; Rowe, 2004). Equally important is that the
privatization of some business related offices from the campus could provide
more entrepreneurial infrastructure to build a competitive advantage for the
Page 130
university. It was pointed out that the academic incubator, for its financial
sustainability, cannot be managed directly by either the university or the local
or regional government, but by a private management company (Corti, 2004).
An integrated business model is to turn customer service (expense) centers
into new business (profit) centers (Axelrod, 2002). A university business
incubator is a typical service center to the tenant companies. The university
and the government will normally provide some funds to assist its operational
cost. It results in a sustainable, but mostly breakeven, condition in the
current status. An improper management scheme could even run out its
initial funds (Martinez, 2002). However, it has the potential to reform to a
profit center (Fan, 2004). The formation process of a for-profit university
incubator has rarely been addressed. Under the rigid constraints of university
budget and administration, some breakthroughs have to be accomplished
inside and outside the campus. This chapter considers the needs of privatizing
the UBI. A feasible transition process for public universities that are bound in
administration and financial flexibility is proposed, with reference to examples
of top-down and bottom-up approaches. An example of business plan for
bottom-up approach is also proposed in order to provide a guideline to realize
the sustainability of this integrative model.
Section 5.2 introduces the motivations for privatizing the UBI. Section 5.3
presents two examples of top-down and bottom-up approaches. Section 5.4
proposes a model of the bottom-up privatizing process within the campus for a
public university. Section 5.5 addresses the follow up fund raising process
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from the public sectors. Section 5.6 proposes an example of business plan for
the incubation company. Section 5.7 presents the concluding remarks. A
flowchart of chapter 5 is shown in Figure 5-1.
Introduction
(Section 5.1)
Motivations for
privatization
(Section 5.2)
Examples of Transition
approach of privatization
(Section 5.3)
TDA of Privatization
(Section 5.3.1)
BUA of Privatization
(Section 5.3.2)
Proposed BUA Formation Process within the Campus

(Section 5.4)
Initiation Stage
(Section 5.4.1)
Draft of BP
(Section 5.4.2)
Uni. Promotion Stage

(Section 5.4.3)
Uni. Approval Stage

(Section 5.4.4)
Formation Process in Public

(Section 5.5)
An example of Business Plan
(Section 5.6)
Conclusions (Section 5.7)
Figure 5-1: Flowchart of Chapter 5

Page 132
5.2
MOTIVATIONS FOR PRIVATIZATION
Successful entrepreneurs have the ability and willingness to recognize and

capitalize on opportunities. In some countries, the formation of a
university-owned incubation company is motivated by government policy
which permits the corporatization of public universities. For-profit university
incubators have been inaugurated in those countries, such as China (Tuso,
2000; Harwit, 2002), Malaysia (USAINS, 2004) and Australia (ITEK, 2003). In
Taiwan, the Ministry of Education launched an incentive program in 2004 to
encourage university incubators to be joint-ventured with private sectors.
Before that, the National Taiwan University had already inaugurated a
university shared incubation company in 2002, as it would be more flexible
and profitable if this service office could be spun out from the campus (Fan,
2004). The motivations and business models of different universities are
different. The history of for-profit university incubators is still young. So far,
there are no significant statistics to judge their success in terms of financial
sustainability (Corti, 2004). Nevertheless, for-profit is the correct trend for UBI
long-term viability.
5.3
EXAMPLES OF A TRANSITION APPROACH TO

PRIVATIZATION
The Presidential Parastatal Sector Reform Commission (PSRC, 2006) is an
Page 133
autonomous organ of the Tanzanian Government and a body corporate

established under the Public Corporations Act. It was created to drive the
process of privatisation in order to create a competitive economy, one which
will operate successfully domestically, regionally and internationally. The first
privatization program for the industrial estate was adopted in 1994 in Armenia.
A new law on privatization and the government's new privatization program
were adopted in December 1997. Through 1999, about 1500 medium- and
large-sized enterprises (65% of total) and 6700 small enterprises (90% of total)
were privatized, and the privatization revenues exceeded 60 billion drams
(Armenia, 2006). The government has put an emphasis on the privatization of
large enterprises by attracting strategic investors and has actively encouraged
foreign investors. The goals and objectives of the current privatization program
are:
z to increase the share of privatized enterprises in the economy
z to improve the efficiency of the privatized companies
z to encourage investments by promoting privatization through tender, and
z to increase budget revenues from the privatization process.
The privatisation process can be considered in three stages: feasibility,
preparation and implementation of divestiture (PSRC, 2006). The PSRC
normally suggests standard processes for each type of transaction in order to
ensure systematic and smooth decisions.
Although they are still rare, there have been some existing incubation
companies fully or partially owned by the affiliated university. Although their
formation motivations and processes are quite different, they can be
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summarized into two categories: one is initiated by government policy

(top-down approach), and the other one is initiated by university policy
(bottom-up approach). Examples are given in the following.
5.3.1
TOP-DOWN APPROACH TO PRIVATIZATION
The program of the National University Science Park was launched by the
Chinese Government under the Ministry of Science & Technology and Ministry
of Education in 1999 during the summit in Shenyang city (Zhang, 2005). The
government announced this national program and set up rules and
application forms. The first move was to set up fifteen experimental sites
among national key universities throughout the country. The state
government allocated budget funds for investing seed money to each site while
the provincial government took the responsibility to input matching funds and
invite the university to develop an incubation company, in the name of
National University Science Park Development Co., Ltd. Each application was
to be jointly submitted by the certified key university and the regional
government. Up to now, there have been 43 of this kind of Incubation
Company in China.
As one of the first fifteen sites, Hefei National University Science Park
Development Co., Ltd. (HFUSP) was established in May 2001, joined by three
local universities in Hefei city of Anhui province. It has floor space of 21,000 sq.
meters, capital of 18 Million RMB, and about 100 SME tenants. Due to the
incentive package, the space is always fully occupied and many applicants are
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on the waiting list. The company can maintain its operation just from the rent
income. The amount of payback to the governments invested funds can be
retained as future development funds. Therefore, HFUSP bears no financial
pressure. One of their missions is to make investments in their potential
tenant companies. The formation process of HFUSP belongs to the top-down
approach. Figure 5-2 illustrates its flow chart, which can be summarized as
the following stages:
1. Idea initiated by the state government with budget allocated and rules set.
2. Provincial government, in association with the selected university, writes
the concise business plan and submits the proposal.
3. After the proposal is approved, the core organizing team consisting of
members from the regional government and the university representatives
is formed.
4. A detailed business plan is furnished, funding capital collected, and the
company registered.
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Figure 5-2: Process of top-down privatization
5.3.2
BOTTOM-UP APPROACH TO PRIVATIZATION
Most of the current university incubators formed into private companies did
not receive such an incentive package as in the Chinese case. In some
countries the government permits the corporatization of the public university,
such as in Malaysia, Australia and Singapore. Some university incubators
have been structured as private corporations, including the University of
South Australia (ITEK, 2003), Universiti Sains Malaysia (USAINS, 2004), and
MSC Incubator of Multimedia University (Technopreneur, 2004). Although the
Taiwan Government has not permitted the public university to form a 100%
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university-owned company, National Taiwan University has used public funds

to establish a university-shared incubation company, NTUIIC (Fan, 2004). The
idea of privatization was solely initiated by the university itself. The business
plan was drafted by a core team of the university incubator. Having been
approved by the university council, the organizing committee then started to
raise initial capital (also called startup capital). Different universities have
different policies. The funding capital could be 100% invested by the
university, such as at ITEK, from the past savings of technology transfer
income; or it could be co-invested by the university and public funds, such as
at USAINS and Multimedia University of Malaysia (MSC); or it could be 100%
invested by public funds, such as at NTUIIC. The transition process in these
cases was bottom-up, as shown in Figure 5-3.
Figure 5-3: Process of bottom-up privatization
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5.4 PROPOSED BOTTOM-UP TRANSITION PROCESS WITHIN

THE CAMPUS
This research studies the feasibility of the transition process, based on the
NTU experience, for the public university to privatize the incubator even
without any university fund for direct investment. It has been indicated in
Section 5.2.1 that the governance system in the university normally has three
levels, namely the incubator office, the industrial relations office, and the
policy-making council. Each level has its own committee to approve the
proposals. This chapter proposes a generalized transition process for the
privatization of a UBI based on a regular bottom-up approach. The entire flow
chart of the transition process, as shown in Figure 5-4, together with the
specified stages and offices in charge is illustrated in the following sections.
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Flow process
Stage
Office in charge
Idea initiation
Initiation
Incubator
Proposal writing
Revise
Steering
Committee
Review
Planning
N
Business plan
draft
Organizing
Revise
Developing
Committee
Review
University
Project
Office
Revise
University
Strategy
Committee
Review
Revise
N
Approving
University
President
Office
Marketing
Incubator
Commercial
Promotion
Capital Raise
Investors
Negotiation
Company Formation
Figure 5-4: Proposed process of privatizing a university incubation company
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5.4.1
IDEA INITIATION STAGE
The privatization initiatives must be proposed by the incubator director. The

proposed strategic plan has to be submitted to the steering committee of the
incubator for review. The committee is composed of faculty members
representing different colleges to help plan some strategies, such as mentoring
systems, strategic alliance, and market promotion. Since the steering
committee members mostly have closer ties with industries related to their
own expertise, the concept of entrepreneurship would be more easily accepted
by them. Once the committee approves this idea, the incubator staff can then
draft the business plan for the higher-level committee.
5.4.2
DRAFT OF BUSINESS PLAN STAGE
Similar to any other spinout company, the proposed incubation company has
to develop a comprehensive business plan, which is the white paper of the
company strategy. The plan should include the organization, market needs,
core competence, required capital, sources of income, financial prediction,
and the rights and obligation between the company and the university. This
business plan will be evaluated by the industrial relations office, the university
council, and even the potential investors in the following stages. A detailed
business plan will be presented in the next chapter.
5.4.3
UNIVERSITY PROMOTION STAGE
The privatization of a university incubator is not a matter of student affairs, so

the formation process will not go through the provost office. The controller
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would be the industrial relations office at the university level. This office is in
the charge of a dean or a vice president, depending on the university
organization. Any proposal submitted to this office is to be approved by a
committee (say, the Developing Committee in this paper). The committee takes
charge of vital issues in relation to the outreach development of the university,
such as the patent office, technology transfer office, international relations
office, incubator, and Research Park. Committee members are composed of
senior and prominent professors from various colleges. These members are
concerned about the benefits to the university. The proposed business plan
will be discussed in this committee with regard to the possible resources that
could be provided by the university and its corresponding valuation methods,
the share the university should take from the company, the contract details
between the university and the company, and the kinds of investors the
university should invite. Negotiation and revision of the business plan could
be repeated several times before approval by this office.
5.4.4
UNIVERSITY POLICY APPROVAL STAGE
Any vital strategy of the university must pass through the policy-making
council (deans council or the senate council), which is composed of the deans
and provosts and chaired by the president of the university. The dean of the
industrial relations office should submit the business plan of the university
incubation company to this council for final approval. As the university will
endorse this company, the social impact and the success rate of the company
will influence the reputation of the university. This council would consider
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whether the legal affairs conform to the educational laws, the sustainability of
the company, as well as the equity return that could benefit the university.
Most deans would know very little about the university incubator. The
discussion time may not be sufficient as there are always many issues to be
resolved in the meeting. If the majority of the council members are not
convinced, the business plan could be rejected, or revised for re-submission.
The incubator director must present the entire scheme and the advantages of
this strategy in a very clear way within a limited time to convince the council.
Once this council approves the proposed business plan, the internal flow of
the formation process is finished. It is then ready to promote the business plan
to the public to call for investments.
5.5 TRANSITION PROCESS IN PUBLIC
The final goal of forming an incubation company is to raise the required

startup capital. A feasible new university incubator could be in the form of an
incubator company, which operates not only in the field of business
incubation but also in business investment so as to attract investors,
including venture capitalists, angels, private corporations, alumni and staff,
to invest this company. Any university, especially a public university, has
rigorous restrictions regarding cash investment to a private company. It is,
however, legal to receive donations from any outside entities. Since the
university has already committed itself to feed in intangible assets to the
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incubator, these intangible assets can be counted as part of capital in the

name of technology share or equity of the incubator company. In other
words, the investors should donate part of their shares to the university. In
this way the bottleneck of investment regulation which restricts many public
universities could be broken through.
It is known that investors would most likely want to understand the strength
of the team members and the products of any company before they decide to
take action. The proposed incubation company, although strongly endorsed
by the university, has no defined team members and products at the time of
calling for investment. Its profits will be the investment return from the
potential tenant companies to be invested, and its team members will be
recruited after the necessary capital is raised. It could be a hard time to
convince the potential investors to trust the universitys perspective. In the
meantime, the university would not like the investors to be too diversified, or
randomly collected, which might interfere with the universitys strategy for the
incubation company. This is a controversial trade-off issue. One possible
solution could be to invite a successful and reputable alumnus to be the
president of the company. Under his influence, more investors with business
integrity could be invited in. In addition, this president could assign a
trustworthy and experienced entrepreneur to be the general manager of the
company. The formation of the incubation company is then completed. It is
noted that even to the last stage the business plan could be challenged, and
some negotiations should be made in order to reach compromise. The revised
business plan should be again approved by all the above-mentioned university
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committees. This iterative process has to be patiently continued until final

agreement is reached among all parties.
5.6 ESTABLISHMENT OF A BUSINESS PLAN FOR A

UNIVERSITY INCUBATION COMPANY
In the previous sections, a feasible transition process has been proposed for a
public university to reform a UBI to an EUI. In order for the affiliated
university and investors to be in favor of this plan, the business plan must be
thorough and detailed since it is the white paper of the companys strategy. It
should consider the market needs, core competence, required capital, sources
of income, financial prediction, and the rights and obligations between the
company and the university. In addition, the business plan is a critical
approach to a companys success; a good business plan can assist the
incubation company to achieve a solid performance.
During the 1980s and into the 1990s, the business plan became primarily a
financing tool as well as an implementation tool (Siegel, 1993). A sound plan
based upon assumptions about the future will be valid for as long as the
assumptions are valid (Hussey, 1984). It can be used to test theories of how
the company should run (Richardson, 1989) and to calculate possible
outcomes, and it can be checked as those ideas are implemented to see if the
projections were accurate. A business plan usually serves three functions
(Friend, 2004). First, and foremost, it is a plan that can be used to develop
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ideas about how business should be conducted. Second, a business plan is a

retrospective tool, against which a businessperson can assess a companys
actual performance over time. For example, the financial part of a business
plan can be used as the basis for an operating budget and can be monitored
carefully to see how closely the business is sticking to that budget. The third
reason for writing a business plan is the one most people think of first, that is,
to raise money.
Depending on the circumstances, no two businesses are identical and no two

business plans are ever exactly the same (Siegel, 1993; Friend, 2004), though
some basic content will be the same. The business plan will be read by people
both inside and outside the company. Inside readers will usually be limited to
the management team and the board of directors. Outside readers will mostly
be the investors and lenders who are sources of funding. Any investor or
lender can insist on seeing a business plan before they approve an investment.
The business plan, besides being a prerequisite for gaining access to finance,
also provides the blueprint for successfully creating and running the new
venture (Friend, 2004; Holtz, 1994). This section provides a template that can
be tailored to the specific needs of the incubation company for a public
university.
5.6.1 INTRODUCTION TO THE COMPANY

(A) Background Overview
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A-University Incubation Inc. (hereafter called the Company) is an authorized

agency by the A-University (hereafter called the University) to provide
investment funds and intensive incubation services to the potential tenants
sited in the A-University Incubation Center (hereafter called the Center). It
combines the resources from the University and the regional society, and the
merits of the non-profit university incubator and the for-profit private
incubator, to develop an integrative framework for a new incubation business
that will inject aggressive entrepreneurship not only into the fostered tenant
companies but also into the Company itself.
The Center was established by the University. In order to have the opportunity
to share some active companies of the Center at their early stage and expect to
receive profitable return when they are mature and valuable, the inauguration
of the Company was thus generated by the Center and proposed to the
University. The University approved this plan and committed to feed in as
many resources as possible, in terms of the faculty, facility, student, and
market demanded technologies, to help the Company efficiently operate the
incubation business in cooperation with the Center. In return, owing to the
right to use the Universitys name and intangible assets, the Company shall
donate 20% share (an assumed amount which can be negotiable) to the
University in the name of equity. Under such a relationship, the Company,
University and Center are closely linked up as a mutual life body, as shown
in Figure 4-7 of Chapter 4. The University will no longer bear the burden to
financially sponsor the Center. On the contrary, the Center will help the
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Company to expand more technology and personnel mining on the campus.

Using the Companys funds for precise investment to potential tenants, the
goal of for-profit business can be realized. Part of the profit can feed back to
the University for the Future Development Fund. This is a win-win strategy.
(B) Company Objectives
The objectives of the Company are:
a. Fostering the development of an entrepreneurial culture within
University faculty and students.
b. Conducting the incubation business of the University as a for-profit
entity.
c. Advocating and supporting the commercialization of the campus
research outcomes.
d. Taking investment to potential tenants in order to share their companies
at their early stage.
e. Managing in a sustainable way and feeding back the profits to the
investors and the University.
(C) Company Profile
a. Company name: A-University Incubation Inc. (the Company), to be
established in 2006.
b. Registration address: In the vicinity of A-University (the University).
c. Authorization: The Company will be authorized by the University to obtain
the right of management of the Universitys incubation business in
cooperation with the Universitys Incubation Center (the Center). The
Phase I contract will be valid for 8 years.
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d. Operational space: Provided by the University with a favorable rental

package, the total floor space is about 10 000 square meters.
e. Registered capital: The expected registered capital of the Company is four
million United State dollars (USD 4M).
f. Founding capital: For the start-up operation the initial founding capital is
aimed at one million United State dollars (USD 1M). The capital will be
aggregated to its full scale at the third year.
g. Equity to the University: As a partner and intangible-assets provider to
the Company, the Company shall donate 20% of its total share to the
University in the name of equity return. This commitment shall be borne
by all investors.
h. Target of investors: University faculty, alumni, angels, venture capitals,
and reputable enterprises (under a screening process).
(D) Business Scope
a. Provide services to the creation of new startups and support their
adoption of good business practices.
b. Provide general incubation services to tenant companies, such as space,
common facility, access to the University faculty and facility, accounting,
finance, patent application, marketing, strategic alliance, etc.
c. Search and take cash investment to some potential companies, either of
in-house tenants or external startups. Long-term investment is the
primary goal. However, for quick return to balance the cost, some
short-term investments in bonds and stocks are permitted. All
investment actions shall be approved by the Company Board.
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d. Provide mentoring and consulting services in technology, management,

marketing, IP laws, and key personnel hunting to those companies being
invested. This is called the intensive incubation.
e. Provide services to the government offices and private companies.
5.6.2 COMPANY ORGANIZATION

This incubation company, like a general SME, is led by the Board of Directors.
The incubation company could have more functions similar to those of general
enterprises. A simplified organization chart is shown in Figure 5-5.
Figure 5-5: Proposed Incubation Company organization
The main functions include incubation, investment and service business.

Incubation business provides intensive incubation to the invested tenants.
Investment business can raise funds for investment, and the Company is
assigned by the University to provide services to the campus as well as to all
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sectors outside the campus. The missions of each department have been
described in details in 4.5.2.
5.6.3 BUSINESS MODEL

As described in Section 5.6.1, the proposed Company features an integrative
framework that takes merits from the public university, government and
private incubator. This business model needs close links among the Company,
University and the tenant, as shown in Figure 4-9 of Chapter 4.
The University authorizes the incubation task to the Company, puts forward
as many resources as possible to help the success of the Company, and,
accordingly, takes the share of the Company as the equity return. As the
incubation has changed from a service center to a profit center, the University
does not need to financially sponsor the incubation task. Yet, in order to get
profit return, the University still remains the Center to assist the Company to
find useful resources from the campus. In addition, in the name of the
University, the Center has the right to apply for government sponsorship
because the government policy still supports the incubation business. This
extra budget can feed into the Company, since the Center and the Company
are integrated as two entities in the one system.
The Company is an independent entity. It has advantages over other private

incubation companies as they dont have the university support. The
Company will focus on the investment business and remain the primary
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incubation business to the Center. In addition, to optimize the function, the

Company can create some value-added services to the University, the
government, and the regional society.
The tenant companies enjoy the low start-up cost compared with outside
start-up companies. Also, under the primary and intensive incubation by the
Center and the Company, its competitiveness must be high. When the tenants
need to raise the capital, the Company has the first priority to evaluate and
take investment if the review result is positive. The Company will also
introduce some VCs to invest the tenants.
In summary, this business model has close links among the Company,
University and tenants. Due to the parties involved in this particular model,
the relationship is quite close in that if the tenants succeed, the Company
makes a profit, and consequently the sponsoring University shares in those
profits. This is the essence of mutual life body and it is a win-win strategy. It
should be emphasized that alumni and mentors are major investors due to
their closer relationship with the university.
5.6.4 SWOT ANALYSIS

SWOT analysis aims to achieve the optimum match of a firms resources with
the environment in order to gain sustainable competitive advantage. A SWOT
analysis should be short and simple, since it is then easily understood and
communicated and can be used to carry out a quick strategic review.
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Complexity and over-analysis are to be avoided (Friend, 2004).

During the formation of a company resource plan, it is necessary to make the
best use of the existing and future resources in a changing and competitive
environment. The SWOT analysis method for developing a university affiliated
modern incubator management system can help us understand the strengths
and weaknesses of the firms resources, the opportunity of the market and the
threats from competitors.
Detailed SWOT analysis is similar to that proposed for the integrative

framework system as described in Chapter 4, Section 4.5.1.
5.6.5 FINANACIL PREDICTION

The financial forecast is a fundamental element of any business plan. It allows
the reader to understand better the economics (Friend, 2004) and drivers of
the business, and helps in the assessment of risk. The purpose of the financial
section of a business plan is to formulate a credible, comprehensive set of
projections reflecting the companys anticipated financial performance (Siegel,
1993). Here, the investor discovers what sort of return one should anticipate,
and the lenders learn about the borrowers capacity to service debt. The
figures are based on assumptions that the business will grow at a steady rate
and reach a level of maturity. The length of the forecast is usually 3-5 years.
For large companies considering major investments, the payback period may
extend many years. The business plan should extend no more than five years
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because it is difficult to plan with any real certainty beyond that (Birt, 1997).
The complete financial projections are clearly and concisely presented below.
5.6.5.1 RESOURCE PLANNING

The following Table 5-1 shows the resource planning for the Company from
2007 to 2011 in terms of personnel headcount, tenant count, and occupation
rate of available rental space.
Table 5-1: Predicted resource planning

Item
2007
2008
2009
2010
2011
CEO
Manager
Staff
25
26
27
28
30
75%
78%
80%
85%
90%
Tenant number
Space
occupation rate
The exact figure is subject to change according to business development

status, product development status, funding status, and market condition.
This section predicts the annual revenue and expenditure. Again, the exact
figure is subject to change according to business development status, product
development status, funding status, and market condition.
5.6.5.2
ESTIMATION OF REVENUE
The estimate of revenue is based on the assumed statistical data of the

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Company, as follows:
(A) Cash income sources
The cash income sources include rental space income, incubation service
income,
seminar
and
workshop
income,
industrial
service
income,
government sponsorship and other incomes, as shown in Table 5-2.
Table 5-2: Predicted annual cash income (in US$)

Item
2007
2008
2009
2010
2011
Rent
144,000 149,760 168,960
179,520
190,080
Incubation service
150,000 156,000 162,000
168,000
180,000
Seminar and
20,000
20,000
20,000
20,000
20,000
20,000
22,000
24,200
26,620
29,282
120,000
100,000
30,000
30,000
544,140
549,362
workshop
Industrial and
technology service
Government sponsor 150,000 150,000 120,000
Others (interests,
30,000
30,000
30,000
facility rental, etc.)

Total
514,000 527,760 525,160
(1) Space income:

Total floor space 10,000 m2
Common facility space, including common rooms and the Company office:
2000 m2.
Total rental space: 8,000 m2.
Average occupation rate of each year is shown in Table 5-1.
Actual rental space is (in m2): 6000 (2007), 6240 (2008), 6400 (2009), 6800
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(2010), 7200 (2011).

Unit Rent: US$ 2 per square meter per month, and increases to US$2.2
after 2009. For example, the calculation of 2007 rental income is US$2 x
6000 x 12 = US$ 144,000.
(2) Incubation service incomes:
US$ 500 per tenant per month, for example, the calculation of 2007
incubation service income is US$500 x 25 x 12 = US$ 150,000.
(3) Seminar and workshop income per year: US$20,000
(4) Industrial service income per year: US$20,000 (subject to annual increase
in 10%)
(5) Government sponsorship: US$150,000 (2007 to 2008), US$120,000 (2009
to 2010), US$100,000 (2011).
This anticipates a gradual budget cut.
(6) Other incomes: US$ 30,000 such as interests, facility rental etc.
(B) Income from investment return

Investment return income has two categories: long-term investment return
and short-term investment return. The predictions of investment returns are
presented below:
Long-term investment
The investment plan is based on the assumption that only 50% of the tenants
are active, as shown in Table 5-3. The value increases of the active tenants are
different. Each investment case shall be liquidated at the end of the fourth
year. Assume that each investment case is in the order of US$ 150,000 in
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average, and the profit rates are the following distribution. The expected profit
will be: 20*5%+10*10%+3*35%=3.05 times. Since 3.05 = (1+0.45)3, the IRR
(internal return rate) will be about 45%.
Table 5-3: Predicted long-term investment profit rate

Profit times (include initial
20
10
10
35
50
capital)
% of total investment cases
Assume the Company has the mission to take investment with gradually
increased number of cases. It is also assumed that the profit return starts
from the fourth year after investment, with the above estimated IRR of 45%.
The estimated cases, invested money and profit income are listed in Table 5-4.
Table 5-4: Predicted long-term investment income

Item
Investment
2007
2008
2009
2010
2011
cases
Invested money $300,000 $450,000 $750,000 $900,000 $1,050,000
Profit return
$915,000 $1,372,500
Short-term investment
As indicated in the business model, the Company can also select short-term
investment similar to general VC funds. The policy of target selection shall be
as safe as possible. This is to secure the value of the capital and seek profit
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higher than the bank interest. Estimated scale will be 60% of the cash balance
after long-term investment. Expected return rate will be 10% per year. The
estimated income is shown in Table 5-5.
Table 5-5: Predicted short-term investment income (in US$)

Item
Capital
2007
2008
2009
2010
2011
1,000,000 1,000,000 4,000,000 4,000,000 4,000,000
Long-term
investment
money
300,000
450,000
750,000
900,000
1,050,000
Cash balance
700,000
250,000 2,500,000 1,600,000
550,000
420,000
150,000 1,500,000
960,000
330,000
150,000
96,000
Short-term
Investment
money
Profit return
42,000
15,000
From the above estimated data of Table 5-2, Table 5-4 and Table 5-5, a
predicted annual revenue statement of the Company can be obtained, as
shown in Table 5-6.
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Table 5-6: Predicted annual revenue (in US$)

Item
Cash income
2007
2008
2009
2010
2011
514,000
527,760
525,160
544,140
549,362
915,000
1,372,500
42,000
15,000
150,000
96,000
514,000
569,760
Long-term
investment
income
Short-term
investment
income
Total
540,160 1,609,140 2,017,862
The next section will predict the expenditures of the Incubation Company so
that a financial statement for the company can be created.
5.6.5.3
ESTIMATION OF EXPENDITURES
The expenditures estimation includes salary and other expenses, including

space rental fee, renovation fee, consultant fee, activity fee and other fees,
which will be listed as follows:
(A) Salary planning
This is subject to about 5% increase due to inflation. The headcount is referred
to in Section 5.6.3. Table 5-7 is based on the initial annual salary of the CEO
as US$ 70,000, each manager as US$50,000, and each staff as US$36,000.
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Table 5-7: Predicted annual salary (in US$)

Item
2007
2008
2009
2010
2011
CEO
70,000
73,500
77,200
81,100
86,000
Managers
100,000
105,000
110,300
173,800
182,500
Staff
144,000
189,000
198,500
250,100
262,600
Total
314,000
367,500
386,000
505,000
531,100
(B) Other expenses

Besides the primary cost of salary, other costs can also be estimated as below.
Table 5-8 lists the total annual costs.
Table 5-8: Predicted annual cost (in US$)
Item
2007
2008
2009
2010
2011
Salary
314,000
367,500
386,000
505,000
531,100
Rent
100,800
104,832
118,272
125,664
133,056
Renovation
100,000
100,000
50,000
50,000
20,000
Consultant fees
50,000
60,000
60,000
70,000
70,000
Activity
20,000
20,000
20,000
20,000
20,000
Others
30,000
40,000
50,000
60,000
70,000
614,800
692,332
684.272
830,664
844,156
Total
Space rental fees to the University. Since the Company is a registered

independent entity, its use of University space should be paid in a reasonable
rent on the same basis as other space rental companies on the campus, such
as caf, restaurant, bars, etc. The condition of payment can be included in the
contract between the University and the Company. Assume the amount is
70% of the rent income of the Company. The balance can be treated as the
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maintenance and utility fees.
Renovation fees. The incubation building could be an old one. The interior
decoration has to be renovated to fit the needs of the tenant companies and
incubation space. Therefore, the Company has to allocate some budget to
repair the interior part of the building. As in a rental basis, the University has
the responsibility to repair the exterior defects of the building. The cost of
renovation fees can be decreased annually.
Consultant fees. The Company has to allocate some budget to pay the
part-time consultant fees and some mentoring fees.
Activity costs. These include the review committee meeting, promotion events,
seminar and workshop costs.
Other costs. These are costs such as utilities, cleaning, stationery, mailing,
traveling.
5.6.5.4 FINANCIAL STATEMENT

According to Table 5-6 and Table 5-8, a profit and loss statement can be
created, as shown in Table 5-9. The tax laws regarding corporations are
complex, and a corporation may be subject to the individual income taxes of
the corporations domicile state. The effective tax rate never exceeds 30%
(Siegel, 1993). Based on the local tax regulation, this Company has to pay tax
at 25% of annual surplus. The EPS (earnings per share) is defined as the ratio
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of the profit after tax divided by the number of shares. (Friend and Zehle, 2004)
Here, it is assumed that one share is one US dollar.
Table 5-9: Profit and Loss Statement

Item
Unit: US dollars
2007
2008
2009
2010
2011
Revenue
514,000
569,760
540,160
1,609,140 2,017,862
Expense
(614,800)
(692,332)
(684.272)
(830,664)
(844,156)
(100,800)
(122,572)
(144,112)
778,476
1,173,706
(102,748)
(293,427)
675,728
880,280
(134,732)
(176,056)
(100,800)
(122,572)
(144,112)
538,926
704,224
-0.1
-0.123
-0.036
0.135
0.176
Surplus or
(loss)
Tax (25%)
Profit after
tax
To Univ.
(20%)
Net profit
EPS
The above financial forecast statement shows that the positive EPS of 0.135
could happen in the fourth year, and increase to 0.176 in the fifth year.
Therefore, the investment profit return could be realized in the fourth year if
the Company invested in the right potential companies. In addition to raising
adequate capital funds for the incubation company, key factors are how to
select and evaluate the potential company to make investment and how to
reduce risk to get the investment profit. The selected companies are usually in
the
following
fields:
science,
engineering,
medical,
bio-tech,
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telecommunication, information communication. The evaluation of the

business plan needs comprehensive analysis, since it determines the success
of the Incubation Company.
5.7 CONCLUSIONS
Privatization of an academic service office into a business office can inject a

new entrepreneurial concept into the campus. Not only can a potential
research team be spun out to a startup company, but also the UBI can be
privatized, if this value added plan can be recognized and supported by the
internal policy council and the external venture capitalists. The first part of
this chapter analyzed the needs and motivations of managing the incubation
business by a private company. The second part described both transition
processes of top-down and bottom-up approaches. Particular attention was
focused on the privatization of the incubator in the public university, which is
based on the bottom-up approach. The transition process of formatting an
incubation company within the university may pass through three stages: the
incubator committee, the industrial relations committee, and the university
council.
Having completed the internal process within the university, the business
plan can then be released to the public for the follow-up process of calling for
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investment. The next section elucidated the success of capital raise which may
largely depend upon a reputable alumnus who is willing to lead the company.
Under his public influence, the required startup capital can be obtained. The
university should bear in mind that even to the last stage the business plan
could be challenged and revised in order to meet the requirements between the
university and the investors.
This chapter has dealt with the process of an incubator company formation
within a campus in the most difficult environment, i.e. a public university with
no investment fund. If the university can 100% invest its incubation company
as the startup capital (such as ITEK of the University of South Australia), or
can partially make cash investment (such as the USAINS of Malaysia), or
have100% invested by the government (such as the HFUST of China), the
capital raising process could be easier. Whatever the difficulty of privatizing
the incubation company, it is only the first step toward entrepreneurship.
Future success is still dependent upon the company itself.
The last part of this chapter has proposed an example of a complete business
plan for presentation to a public university for reviewing. Actual results will
differ, and such differences will be material. The projections and other
forward-looking data should only be viewed as representations of the results
that may be achieved should the Company's assumptions materialize. Here it
should be emphasized that this business plan is submitted on a confidential
basis (Friend, 2004; Birt, 1997) and contains proprietary information. No part
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of it may be circulated, quoted, or reproduced or distributed without prior

written approval. The projections and other forward-looking data contained in
this business plan are based on the Company's assumptions regarding future
events. Through a comprehensive analysis the calculated financial statement
shows that the Company can begin to get profit from the fourth year of its
inauguration.
Implementation of the business plan is essential to the business of the

Company, as it is a blueprint for the future business operation. Once the
direction has been set, the Company should not only keep the business
running on the right track, but should also regularly review and revise the
Companys business plan in order to achieve the goal of financial projections.
The next chapter will conduct some case studies of UBIs and their financial
status to assess if they are sustainable.
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Chapter 6 Case Studies
C
CH
HA
AP
PT
TE
ER
R6
6
CASE STUDIES
This research has developed an integrative framework of the incubation model.

A specific transition process for public UBI privatization and a concrete
business plan for the incubation company have been proposed in Chapter 5.
In order to validate the feasibility of the proposed integrative incubation model
for UBIs, this chapter will conduct some case studies of UBIs on their
operations and financial status. A comparison table of similarities among the
studied cases and the proposed model will be evaluated at the end.
6.1 INTRODUCTION
6.1.1
THE NEED OF CASE STUDY
A case study is a particular method of qualitative research. This method

involves an in-depth, longitudinal examination of a single case. It provides a
systematic way of looking at events, collecting data, analyzing information,
and reporting the results. As a result the researcher may gain a sharpened
understanding of why the instance happened as it did, and what might
become important to look at more extensively in future research. Case studies
lend themselves to both generating and testing hypotheses (Flyvbjerg, 2006).
Yin (2003) also addressed the case study as one essential strategy of social
science research. Other ways include experiments, surveys or analysis of
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archival information. Each strategy has its own peculiar advantages and
disadvantages. The methodology of case study has been used as a research
tool (Hamel, 1992; Perry, 1986), as an investigator would like to know how to
conduct single or multiple case studies to investigate a research issue. Each
strategy can be used for three purposes, and so there may be exploratory case
studies, descriptive case studies or explanatory case studies (Yin, 1981a,
1981b). In the latter part of the 20th century, case studies became an integral
part of evaluation research. Case studies, therefore, have been associated with
process evaluations. The method can be used to document and analyze the
outcomes. The screening and selection of case studies should consider (Yin,
2003):
z
Selection of sites or individuals who will serve as the researchers case

studies.
Collection of relevant data in the required pool (e.g. databases about

individual schools or companies).
Avoidance of selection procedures which become too extensive or

expensive.
Base on the above factors, this chapter selects three UBIs from different
countries to compare and analyze their financial statuses and determine if
they are sustainable.
In order to corroborate the overall quality and the essential facts of the case
studies, all the drafted reports have been reviewed by the informants in each
case, as some recognizable version of the draft reports has to be shared with
the case study informants. During the review process, for any differences
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which emerged, the author of this research has modified the draft so as to
obtain the informants agreement with the interpretations and conclusions.
6.1.2
TARGET SELECTION
The targets for on-site visits were selected based on the representation of the
region, the relevance to this research, and the convenience of approach. For
the first factor, this research selected three regions, namely Singapore, China
and Taiwan. For the second factor, this research selected one general purpose
UBI, one top-down privatised UBI, and one bottom-up privatised UBI. For the
third factor, this research selected only sites in Asia due to allowable
transportation cost. Appointments were made through local professors who
are friends of the author. The three selected case studies are: (1) National
University of Singapore Business Incubator (NUS) in Singapore, which is a
good practice public university UBI; (2) National Hefei University Science Park
Development Co., Ltd. (HFUSP) in China, which belongs to a top-down
privatization incubator (TDPI); and (3) National Taiwan University Innovation
and Incubation Company (NTUIIC) in Taiwan, which is a bottom-up
privatization incubator (BUPI). A comparison list is shown in Table 6-1. The
three case studies are elucidated in the following sections.
Page 168
Table 6-1: Incubator selection for on-site case studies

Factors
NUS
HFUSP
NTUIIC
Region
Singapore
China
Taiwan
Type
UBI
TDPI
BUPI
Approach
Through a NUS
Through a
Through a NTU
professor
HFUT professor
professor
6.2 CASE 1: BUSINESS INCUBATOR OF NATIONAL

UNIVERSITY OF SINGAPORE (NUS)
Time of visit: April 22, 2006
Singapore HOTSpots, http://www.singaporehotspots.com/facilities/nus.htm
6.2.1
BASIC DATA OF NUS
Establishment: 2002
Current Head: Mr. Hui Kwok Leong (full-time staff)
Total floor space: 9000 square feet, Rental space: 7200 square feet
Current incubatees: 24, including engineering (3), IT (18), life sciences related
(2), others (0)
Graduates: 12, including engineering (2), IT (9), life sciences (1), others (0)
Incubation term: 18 months, renewable for 6 months
Main tenants: spinouts
Full-time staff: 5
Space rent: SG$3 per square feet per month (approximate to US$23/square
Page 169
meter per month)

Rent paid to university: SG$1.25 per square feet
Maximum revenue kept from rent: SG$ 1.75x7200x12= SG$ 151,200
Other revenue from service: approx. SG$ 108,800
Total revenue from tenants: approximately SG$260K. (NUS provided)
Annual sponsored budget/from: approximately SG$ 700K/NUS
Total annual revenue: SG$ 960K.
(NUS provided the above data)
6.2.2
INTRODUCTION TO NUS
The NUS Business Incubator (NBI), a branch of the NUS Venture Support
(NVS), responsible for incubating the new companies, provides start-ups with
physical facilities and infrastructure such as office space and equipment, as
well as access to a wide network of professional resources which includes
mentors, advisors and consultants to assist companies in business
development and networking opportunities.
Situated at the NUS Kent Ridge campus, start-ups will be able to tap into the
expertise and research network of the university. In addition, NBI incubatees
can benefit from the close proximity to the other incubatee companies in terms
of networking and mutual learning.
Incubation plays a critical role in supporting and growing small firms,
particularly those with an entrepreneurial flair and an ambition for growth. By
generating wealth, creating jobs, and encouraging innovation, such firms can
help to build a vibrant future Singapore economy. Incubation is a dynamic
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process of business enterprise development. Incubators nurture young firms

and help them to survive and grow during the start-up period when they are
most vulnerable. Incubators provide hands-on management assistance,
access to financing, and orchestrate exposure to critical business or technical
support services. Incubators also offer shared office services, access to
equipment, flexible leases, and expandable space all under one roof.
The objective of incubation is to give vulnerable new businesses an
opportunity to fly (on the merits of their products or services). Businesses that
do well can outgrow and compete freely in the open market. For businesses
that flop, it is not the end of the world. They can learn from their mistakes and
try again. Most of the businesses that are in incubators around the world
today are at the forefront of developing new and innovative technologies,
creating innovative products and services that improve the quality of our lives.
The NBI is also responsible for developing an incubator network, both locally
and internationally, where start-ups can enjoy reciprocal support when
needed.
6.2.3 NUS VENTURE SUPPORT (NVS) SYSTEM

Prior to the operation of NUS Business Incubator, NUS had a Venture Support
System. Its mission is to develop a venture support eco-system in NUS that
will facilitate the formation of spin-offs and start-ups by NUS staff, students
and alumni based on NUS derived intellectual property and to nurture them
into significant global companies. Thus its business activities are new venture
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creation and business incubation.

The NUS fund has two categories, FUSE (Fund for University Student
Entrepreneurs) and NVSF (NUS Venture Support Fund). They are described as
follows.
FUSE
The NUS Fund for University Student Entrepreneurs (FUSE) is a NUS Venture
Support (NVS) initiative towards the NUS vision of developing entrepreneurial
talents among the NUS community, realizing their full potential and preparing
them for an increasingly seamless and innovation-driven global economy.
Launched in September 2004, FUSE helps aspiring entrepreneurs from NUS

to realize their dreams by providing much needed pre-seed funds, up to SG$
60K, used to set up a basic infrastructure for the business to achieve
operational status quickly and easily.
FUSE is open to all full-time students in the NUS community. NUS alumni can
also benefit from the program, even though they have left NUS, if they are: (1)
within 12 months from graduation, and (2) the business venture was initiated
or conceived while at NUS.
Structure of Funding
In return for the funds, NUS will hold a certain amount of shares in the new
start-up. This will be in the form of Redeemable Convertible Preference Shares
(RCPS) with an option or warrant to be exercised at a later date.
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Divestment of NUS Interests in Student Venture

Within five years, once the Student Venture is able to secure the next round of
funding or become commercially successful, NUS will convert the investment
into equity by selling the shares it owns in the start-up.
Any gains from the selling of the shares NUS owns (whether in the form of
capital gains, dividends, distributions or other benefits) will be further shared
between NUS and the Student Venture in the following proportions:
1/3 of the gains will be channeled back to the Student Venture
2/3 of the gains will go to NUS
NVSF
The NUS Venture Support Fund (NVSF) is the seed fund to help fund and
incubate technology based company spinoffs by the NUS staff, students and
alumni so that they a) become viable candidates for significant external
funding by a venture capitalist, angel investor or corporate investor, or b)
achieve significant organic growth.
Priority is given to businesses, which commercializes NUS technology. Subject

to its scope and nature, each successful business proposal may be granted up
to SG$ 300K seed fund. The amount will be determined by the Venture
Support Steering Committee (VSSC) on a case-by-case basis, based on the
funding requirements to reach specific milestones outlined in the business
proposal. The NVSF could be structured as a direct equity investment in the
form of Convertible Preference Share (CPS) or Convertible Loan (CL).
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6.2.4
INCUBATION FRAMEWORK of NUS
The incubation framework of NUS possesses a comprehensive network on

campus as well as off campus. It is described in the following sections.
6.2.4.1 Campus Incubation Network

The campus incubation network includes the School of Engineering and the
School of Computing.
(A) School of Engineering--the Technopreneurship & Incubation Program (TIP)
This is an optional program primarily for students to begin in their second
year. However, entrepreneurial students in other stages, who have the
business acumen and can add value to the projects, may also be considered
for enrolment. Some special features are:
The "incubation" part of the program allows students to start up and

run their own companies in the NBI.
To qualify for the incubation phase, students will normally be required

to participate in the preparatory activities, i.e. TIP workshops and
seminars, and to submit a business plan for consideration.
The length of the TIP program can be for the duration of the degree
course.
(B) School of Computingthe SoC Incubation Centre

In line with the government's drive to promote technopreneurship and to
nurture a future generation of technopreneurs from the students, the School
of Computing (SoC) Incubation Centre was set up to help bring ideas through
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development to commercial fruition. By providing much needed space for

young innovative students, it is hoped that technopreneurs will emerge.
Three companies are currently hosted, and NUS staff, students and alumni
are eligible to apply; however priority will be given to startups with SoC staff,
students or alumni as partners. Each incoming company is granted a license
to use the Centre for a period of six months or one year. Upon expiry, this
license is renewable for another six months.
The School of Computing believes in the unlimited capacity of the fertile mind,
that human intellectual capital is our most valuable asset and that students
have the capacity to innovate and invent. The School believes that creativity
and innovation should be encouraged and nurtured.
The SoC Incubation Centre is pleased to offer infrastructure and management
support to foster an entrepreneurial climate and help bring ideas through
development to commercial fruition. The goal is to nurture young businesses
and help them to survive and grow during the start-up period when they are
most vulnerable. The School of Computing hopes that applicants will leverage
on this support, embrace the challenge, and transform their ideas into
successful commercial enterprises.
6.2.4.2
Off-shore Incubation Network
The off-shore incubation network comprises the NUS enterprise centre in

Silicon USA and in Shanghai, China.
(A) The NUS Enterprise Centre in Silicon Valley, USA

As part of its mission to nurture successful NUS startups, NUS Enterprise (the
Page 175
head
office
of
NVS)
has
established
comprehensive
program
of
entrepreneurship education, licensing, incubators and venture support. Its

scope is to expand the support for enterprises entering the US market,
leveraging on the existing NUS infrastructure in Silicon Valley.
This Centre was launched in May 30, 2003 under the NUS Overseas College
(NOC). It will be a "Hub of Entrepreneurial Activity" for Singapore hi-tech
start-ups in Silicon Valley. It has recently become home to three companies
founded by Singaporeans operating in the valley.
(B) The NUS Enterprise Centre in Shanghai, China

In spring 2006, NUS established an enterprise centre based in Shanghai,
China. The scope is to extend the support for Singaporean enterprises
entering the China market. Due to the fast growth of Chinese business, this
Centre will play a key role in fostering new startups in this big territory.
6.2.5 ANALYSIS OF NUS SYSTEM

From the above description, the incubation framework of NUS, its SWOT, and
its sustainability can be analyzed in the following sub-sections.
6.2.5.1
NUS Incubation Framework
The NUS is used to receiving strong financial support from the government.
Under the strong financial support in venture funds and operating budget
from the NUS Enterprise, a branch of NUS administration, the NUS
incubation system has established an incubation framework, both locally and
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internationally, where startups can enjoy reciprocal support when needed.

Within the campus, the College of Engineering offers the Technopreneurship
& Incubation Program (TIP) for students to learn entrepreneurship and skills,
and the College of Computing even set up its own SoC Incubation Centre to
provide needed space, infrastructure and management support to startups in
computer hardware and software businesses. The university level NUS
Incubator plays the role of the core to network the on-campus and overseas
incubation branches. Owing to the attractive venture funds provided by the
NUS Enterprise, many NUS staff, students and alumni have established
startups from laboratory technologies. A special feature shows that most
tenants in these two on-campus incubators are NUS spinouts sharing the
benefit of the university venture funds. Of these funds, FUSE is for the student
startups and NVSF is mainly for the staff startups. Another special feature is
that the normal incubation term of eighteen months is shorter than the three
years of other worldwide university incubators. This is a typical system of an
accelerator.
The nation of Singapore is small in area and has a small domestic business
market. Many new enterprises will seek overseas markets to survive. The NUS
has also established an incubation network to expand support to Singaporean
new enterprises for entering into overseas markets. The enterprise centers in
Silicon Valley and Shanghai were thus set up recently and directly linked with
the NUS incubator. This worldwide integrative framework of the NUS
incubation system can be constructed as shown in Figure 6-1.
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National University of Singapore

(NUS)
Colleges
Computing
Engineering
NUS Enterprise
Others
NVS
Overseas Colleges
FUNDS
TIP
SV
SoC
Incubator
NUS
INCUBATOR
SH
Figure 6-1: NUS incubation framework

(NVS: NUS Venture Support, TIP: Technopreneurship & Incubation Program, SV: Enterprise
Center in Silicon Valley USA, SH: Enterprise Center in Shanghai China)
6.2.5.2
SWOT Analysis of NUS
Although the NUS spinouts started in the late eighties, the NUS Business
Incubator, NUS Venture Support, and NUS Enterprise were established after
2001. The history of its incubation network system is still young. During the
formation of a new strategic plan, it is necessary to make the best use of the
existing and future resources in a changing and competitive environment. The
SWOT analysis method for developing a university affiliated modern incubator
management system can help us understand the strengths and weaknesses of
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the incubation resources, the opportunities of the market and the threats from
competitors.
After the on-site visit and data collection, this research
summarized the SWOT analysis for the NUS Incubator Centre as follows.
Strengths:
z
Possessing strong campus facility, budget and infrastructure support

from the university.
Possessing venture funds from the university to attract staff, students,

and alumni to commercialize their matured laboratory technologies.
Establishing overseas enterprise centers to expand support to startups to

enter into overseas markets.
Providing incubation network to exchange experiences among tenants.
Providing entrepreneurship programs to pre-incubate new startups.
Establishing the technology transfer and investment scheme by the

university, so that the equity and return of venture funds will flow back to
the NVS as a circulating fund.
Weaknesses:
z
The incubation space is small at the current stage, forcing each tenant to
graduate more quickly.
The Incubation Center is under the university organization which causes

the management to be tied up by university rules and therefore less
flexible and independent.
The annual budget relies largely on university support. Even the

incubatees or graduates gain profits, and the return of venture funds goes
directly to the NVS. The Incubation Center has no circulating fund for
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financial
freestanding,
which
blocks
potential
for
future
self-sustainability.
z
The management team plays the role of a service provider, rather than an
entrepreneurial and profit center. Even with good performance there is no
attractive incentive for the team.
Many founders of startups are technology based individuals who lack

knowledge in business and marketing.
Opportunities:
z
The demanding markets in IT, bio-tech, and micro/nano technology are

high. Most of the NUS startups and spinouts belong to these categories.
Venture capitals have shifted their attention to the potential new hi-tech
companies. It makes it easier for these companies to raise funds for
development.
The university has strong support to help tenants entering into overseas
markets.
The integrative framework of the incubation system could demonstrate its

overseas functions and performances in a shorter time than other
university incubators.
Threats:
z
It is difficult for young startups to produce unique or world leading

products within a short incubation period. Competitors are usually bigger
in scale. Startups have to find their own positions to survive in the
markets.
Singapore has a small domestic market, and so most startups have to find
overseas markets. This particular phenomenon will challenge the
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capability of the incubators management.

z
The incubator should promote cooperation between the technical and

management people to form a startup. Otherwise, the technology-based
core team will be weak in company governance.
Too much venture funding from the NUS incubation system will mislead
campus people to set up new companies too early and too easily. This
threat to the startups is higher than for startups of other university
incubators. The Incubator may need stricter application rules.
6.2.5.3
Evaluation of Sustainability of NUS Incubator
From the basic data listed in Sec. 6.2.1, we could approximately evaluate the
financial status of the NUS Incubator. Due to the higher salaries in Singapore,
let us assume the average salary of the incubator staff is 1.5 times that of most
western countries. The annual cost of the NUS Incubator could be estimated
as follows.
(a) Personnel Salary
Director (1): USD 100,000.
Manager (2): USD 75,000 x 2 = USD 150,000.
Assistant (2): USD 54,000 x 2 = USD 108,000.
Total: USD 358,000 (approximate to SG$ 563,000)
(This is not too far from reality. As the rental revenue is insufficient to cover
the costs, the remainder will be from the shares owned in the company and
also from fundraising fees that will be collected from the startups. It is
expected that in 3-5 years time, the incubator should be self-sustaining
given the pipeline of startups that NVS will be investing in)
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(b) Other costs

Renovation, decoration and facility: USD 30,000 (The incubation space is
not old; facility cost refers to the common facility and office related
equipment).
Consulting fees: USD 40,000 (paid to the external mentors and campus
consultants)
Activity fees: USD 20,000 (assumed the same as other incubators, such as
the review committee meeting, promotion events, seminar and workshop
costs, etc).
Others: USD 30,000 (assumed the same as other incubators, such as
utility cost, cleaning, stationery, mailing, traveling, etc.)
Total: USD 120,000 (approximate to SG$ 189,000)
(c) Total annual cost: SG$ 752,000
(d) Total annual revenue: SG$ 960,000 (NBI provided, see Section 7.2.1).
Annual surplus: SG$ 208,000.
(e) Without the NUS sponsored SG$ 700,000 the incubator cannot maintain
self-sufficient operation.
6.2.6
SUMMARY of NBI
(A) Summary
In addition to the similar goals, missions, and functions of a normal incubator
system, the NUS Business Incubator (NBI) possesses many special features:
z
Local and international incubation network.
Strong university policy support in the formation of the incubation

framework.
Page 182
University venture funds to attract and invest campus spinouts.
Circulated venture funds from the profit return of invested startups.
However, due to the small local market, shorter incubation period and too
much incentive funding, the tenants will face more threats in the early growing
stage. The incubator thus takes higher responsibility to foster the tenants.
(B) Comments
This study assumes that the NBI is currently enjoying financially sponsored
status and puts forward more effort in planning its incubation scheme, as it is
still young. During the visit the author introduced her proposed integrative
model and the current operating status of NTUIIC that has employed this
model. The director agreed that so far NBI has no financial pressure because
of the universitys policy to fully support its incubation system. Nurturing
on-incubator start-up companies, especially those spin-off companies, is their
current responsibility to generate good record. It is also the government policy
at the moment. Nevertheless, the director also agreed that long term
sustainability would be their future concern. However, this decision should be
made by his supervisor, i.e. the head of NUS Enterprise. It is because that he
is just a hired managing people in charge of the incubator operation. The head
of NUS Enterprise is a professor of NUS who has the authority to make the
strategic plan for the university. It shows the difference of the proposed EUI
model of this study in that the incubator director is a professor appointed by
the university. The director can propose the strategic plan to the university
and then implement the plan, such as the establishment of Incubation
Company.
Page 183
6.3 CASE 2: HEFEI NATIONAL UNIVERSITY SCIENCE PARK

DEVELOPMENT CO., LTD. (HFUSP)
Date of visit: August 8, 2004

Website: http://www.hfusp.com
6.3.1
BASIC DATA OF HFUSP
Establishment: November 2002

Capital: RMB 18 million (equivalent to USD 2.25 million)
Current General Manager: Dr. Daming Zhang (Full-time staff)
Total floor space: 21300 square meters, rental space: 16500 square meters
2006 tenants: 65, including engineering (30), IT (20), biotech & life science
related (12), service (3).
Graduates: 17, including engineering (8), IT (8), life sciences (1)
Incubation duration: 2 to 3 years
Main tenants: spinouts from three sponsoring universities.
Full-time staff: 14
Space rent: RMB $20 per square meter per month (approximate to US$2.5 per
square meter per month)
Main income: rent, services, sponsored by Hefei High-Tech Park (HFHTP)
2005 revenue from rent: =RMB$ 2,900,000
Other revenue (from service, interests, etc.) approx. RMB$ 300,000
Annual sponsored budget from HFHTP: approximately RMB$ 300,000
Total 2005 annual revenue: approximately RMB 3,500,000.
(HFUSP provided the above data.)
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6.3.2
GENERAL DESCRIPTION OF HFUSP
6.3.2.1
Process of Establishment of HFUSP
In China, the university used to be an isolated, independent and complete

system, more than just an ivory tower. Such a system is so complete that it
includes almost all organizations for the people living inside, from young to old,
such as the education system from kindergarten to university, the food system
from open market to supermarket and restaurant, hospital, postal office, bank,
accommodation, library, gymnasium, etc. People inside the university were
naturally very conservative and separated by a big gap from industry. It is
known that the university owns abundant tangible and intangible assets that,
in China, are all invested by the state and regional governments. Leaving these
immense resources unused by industries is a waste of knowledge economy.
Starting from 1980 the state government geared some national programs to
link the university and industry. In 1985 the government announced the
policy of establishing science parks throughout the country.
Under this
scheme the Hefei New and High Tech Development Zone (HNHTDZ) was
established in March 1991 by Anhui Provincial Government. Many
universities followed by bringing the concept of the science park into the
campus.
The China Torch program was launched in 1988 to encourage
universities to generate industrial cooperation programs and to allow the

university to spin off companies and to own companies (China Torch, 1988).
Further in 1999, the state government launched the program of National
University Science Park (NUSP), which supports the development of the
science park by the key university (Zhou, 2004). Anhui Provincial Government
thus proposed the project of Hefei National University Science Park (HFUSP) in
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association with three local famous universities: University of Science and

Technology of China (USTC), Hefei University of Technology (HFUT), and
Anhui University (AHU). The proposal was approved in December 1999 by the
state government as one of the first fifteen test sites. After one years planning,
HFUSP registered as a corporation limited in December 2000. The State
government provided initial funding. The Anhui government invested real
estate budget of RMB 30 million. Three universities, the Anhui government,
and the Hefei VC Company (government invested) raised together the founding
capital of RMB 18 million. It is situated at and supervised by the HNHTDZ.
HFUSP was formally recognized by the state government in May 2001, and
started business operation in November 2002.
The privatization process of HFUSP belongs to the top-down approach, which

has been described in Chapter 5. Its timetable of establishment process is
summarized in Table 6-2.
Page 186
Table 6-2: Timetable of Establishment Process of HFUSP

Time
Event
August 1999
State Government announced NUSP Program.
September 1999
Anhui Provincial Government proposed the setup

of HFUSP.
December 1999
The HFUSP proposal was approved by the State

Government. The organization committee was
formed up and the Business Plan was drafted.
December 2000
HFUSP company was registered with capital RMB

18 Million.
May 2001
HFUSP passed the review and was formally

recognized by the State Government. Building and
Infrastructure construction began.
November 2002
Moved in to the building, inauguration ceremony,

formal operation.
6.3.2.2
Organizations and Mission of HFUSP
The Anhui Provincial Government is the largest investor of HFUSP, followed by

the Hefei VC Company and three local universities. The board of the company
is formed by these investors. The president of HFUSP is assigned by the Hefei
VC Company, the general manager is dispatched by the CSTU, and two deputy
general managers are assigned by HFUT and AHU respectively. The
organization is composed of four divisions, as seen in Figure 6-2.
(1) The Incubation Division provides two service platforms:
(A) Mentoring Service Platform
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This is to collaborate with some external resources to provide a variety of

mentoring
consultancies
to
the
incubatees,
such
as
technology
commercialization, accounting, finance, banking, business planning,

management, IP law, labor law, taxation.
(B) Network Service Platform

This is to build up internal information flow among incubatees for
experience and knowledge sharing. This Platform also arranges annual
tenant
meetings,
releases
statistical
data,
promotes
international
cooperation, and sponsors sports tournaments, etc.
(2) The Finance Division provides a Finance Service Platform that establishes
cooperative relationships with banks and guarantee organizations to
provide a safe channel of bank loan platforms for the tenant companies. It
solves the bottleneck problem of raising capital when the enterprise is
growing.
(3) The Project Division provides a Strategy Support Platform that helps
tenants to apply subsidies of various government supportive projects, such
as SBIR fund (Small Business Innovation and Research), Rental Subsidy
Fund and Tax Reduction Policy for companies in the High Tech Park, and
the Enterprise Awards.
(4) The General Affairs Division provides adequate common facilities and
services for the tenants.
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Board
General
Manager
Incubation
Division
Finance
Division
Project
Division
General
Affairs
Figure 6-2: Organizational structure of HFUSP
HFUSP is responsible for incubating the new companies, providing startups

with physical facilities and infrastructure such as office space and equipment,
as well as providing access to a wide network of professional resources, which
includes mentors, advisors and consultants, to assist companies in business
development and networking opportunities.
6.3.3
DEVELOPMENT FUND
As an independent entity HFUSP is permitted to use its capital to do any

investment activity. Because the provincial government is the biggest investor,
it must agree with all decision-making. At the early establishing stage, as
mentioned previously, the provincial government invested RMB 30 million for
the construction fees of the buildings and infrastructures. It is treated as a
no-interest loan which HFUSP has to repay to the provincial government from
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the annual revenue in the amount of about RMB 1.1 million per year. The
provincial government does not really take this money back, but leaves it with
HFUSP as a future development fund.
6.3.4
ANALYSIS OF HFUSP
From the above description, the incubation framework of HFUSP, its SWOT,
and its sustainability can be analyzed in the following sub-sections.
6.3.4.1
HFUSP Incubation Framework
HFUSP provides incubation services to three sponsoring universities and local

start-ups. It is independent of the university system. Because it is supervised
by the Hefei New High Tech Development Zone (HNHTDZ), its incubation
framework is directly linked to the HFHTP system. Tenants are mostly
spin-offs from three universities (USTC, HFUT and AHU). Some local potential
start-ups are also allowed to apply. Graduated tenants have the choice to
move into the HNHTDZ to enjoy further benefits for expanding the companies.
All policy support programs are given by the provincial government via the
HNHTDZ system. An integrative framework of this type is illustrated in Figure
6-3. As this is a top-down system, all important decisions are still to be
approved by the provincial government.
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Anhui Provincial
Government
HNHTDZ
Graduate
Tenants
HFUSP
USTC
Tenants
Local
AHU
HFUT
Figure 6-3: Incubation framework of HFSUP
6.3.4.2
SWOT Analysis of HFUSP
Before 2001, three universities had separate incubation systems. The

establishment of HFUSP unified these three groups with the driving force from
the provincial government, and certainly under the policy of the state
government. The working team is a combination of various organizations
under this strategy with a common mission and interest. The top-down
support is strong, yet the experience is short. Obvious SWOT conditions can
be seen as follows.
Strengths:
z
It is in the form of a corporation limited. Operational flexibility is high. The
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Incubation Centre has a circulated fund for financial freestanding.

z
Possesses strong government support with sufficient space, common

facility, budget and infrastructure.
Possesses strong policy support from the sponsoring universities.
Directly supervised by the HNHTDZ system, the tenants enjoy the same
benefits as other companies in the park, such as low rent, low tax, low
bank loan, and other government subsidy programs.
With so many beneficial incentives, this place is the first priority to be

selected by most start-ups. HFUSP has the opportunity to select tenants
with great potential. The space occupancy is always full.
Weaknesses:
z
The management team is from government and universities. Previous

experience in incubation and entrepreneurship is weak. They are still in
the learning stage of operation.
The management team plays the role of a service provider, being in a

short-term sustainable operation.
There is a lack of VC expertise in the management team.
Many founders of startups are technology based individuals who lack

knowledge in business and marketing.
Opportunities:
z
Owing to the strong government policy for fast economic and technological
advancement, the growth rate of start-ups is high. Incubation is a
meaningful business in China.
Venture capitals have moved to the China market, providing more

opportunity for small companies to raise funds for development.
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The domestic market is large. Success rate of the start-ups is high.
Threats:
z

products within a short incubation period. Competitors are usually bigger
in scale. Startups have to find their own positions to survive in the
markets.
The incubator should promote cooperation between the technical and

management people to form a startup. Otherwise, the technology based
core team will be weak in company governance.
There have been fifty national university science parks around the country.
Competition among them is high in order to get continued support from
the state government.
6.3.4.3
Evaluation of Sustainability of HFUSP
From the basic data listed in Section 6.3.1, an approximate evaluation of the
financial status of the HFUSP can be given.
Total 2005 annual revenue: approximately RMB 3.5 million.
Annual cost for 2005 (data provided by HFUSP):
z
Operational cost: RMB 1.3 million
Pay back of developing fund: RMB 1.1 million
Tax: RMB 0.5 million
Total 2005 cost: RMB 2.9 million
Total annual surplus: RMB 0.6 million
6.3.5
Summary of HFUSP
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(A) Summary
HFUSP is a private university incubator corporatized in 2001 under the policy
of the state government and the investment of the provincial government and
three local universities. This is a typical top-down company type formation of
UBI. The space is relatively large compared to other UBIs, which makes it
easier to collect sufficient rental fees. Current business focuses on the services
to the tenants, as with most other UBIs. The annual revenue just balances the
cost.
From its current financial status, this organization has the ability to maintain
its normal operation. However, since the key personnel are assigned from their
original organizations, their salaries are still paid by those organizations. The
cost of these salaries, about RMB 0.4 million, was not taken into account by
the HFUSP. From 2006, this cost will be paid by the HFUSP itself, resulting in
a condition of near balance.
(B) Comments
This case clearly proves that receiving income from the rent and services can
only break even the financial status. This is called short-term sustainability.
During the visit, the general manager indicated his worry about long-term
sustainability with profit returned to the universities. He admitted the
necessity of taking investment to potential tenants as a profit model in the
long run. The author introduced her proposed EUI model, the structure
framework and the current operating status of NTUIIC that has employed this
model. The general manger showed great interest in this new idea. After this
visit, through the bridge of the author, NTUIIC management team has visited
HFUSP and signed cooperation agreements in October 2005. Under this
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Agreement, the former Director of NTUIIC has been invited as a consultant

and given a lecture to HFUSP on the incubation management strategy in July
2007. The following actions are planning for the visit of HFUSP team to NTUIIC
and the visit of NTUIIC CEO to HFUSP to give seminar on the investment
strategy. It shows the desire of HFUSP general manager to lead his team
toward long-term sustainability in the future.
6.4 CASE 3: NATIONAL TAIWAN UNIVERSITY

INNOVATION INCUBATION CENTER &
NATIONAL TAIWAN UNIVERSITY INNOVATION
INCUBATION COMPANY (NTUIIC)
Dates of visit: November 15, 2003 to January 15, 2004; July 2005.
Website: http://www.ntuiic.com
6.4.1
BASIC DATA OF NTUIIC
Center establishment: January 1997

Current Center Director: Professor J. F. Jiang (part-time, College of
Engineering)
Associate Directors: Prof. K. C. Fan (English), Prof. Y. T. Shyu (Bio), Prof. C. C.
Yang (Management)
Company establishment: January 2002
Company General Manager: Mr. Michael Liu (full-time)
Full-time staff: 8 (4 hired by the Center and 4 hired by the Company)
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Total floor space: 9000 square meters, Rental space: 5037 square meters
2006 Incubatees: 24, including engineering (4), IT (7), biotech & life science
related (6), service (4), and virtual incubation (3).
Graduates: 31, including engineering (14), IT (13), life sciences (4)
Incubation duration: 2 to 3 years
Main tenants: spinouts from National Taiwan University.
Space rent: NTD $300 per square meter per month (approximate to US $9 per
square meter per month). Because the company rents the space from the
university, NTD $240 of the received NTD $300 has to be paid to the
university.
2005 revenue from rent: = NTD$ 2,252,964

2005 incubation revenue = NTD$ 3,803,962
2005 other revenue = NTD $2,517,381
Total 2005 operational revenue: approximately NTD$ 8,574,307.
6.4.2
GENERAL DESCRIPTION OF NTUIIC
The NTU Incubation Center was established in 1997. Influenced by the fame
and active working attitude of the university, the Center won the National Best
Practice Incubator Awards in 2000, 2002 and 2004. Up to the end of 2005,
there were 31 startups graduated from the Incubation Center, among which
two very successful companies have entered into the stock market. In addition,
more than 50% of the graduates are still active in their respective market
sectors. In view of the opportunity to share with those active tenants at their
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early stages and the expectation of receiving profitable returns when they are
mature and valuable, the establishment of NTUIIC was thus initiated by the
Incubation Center and proposed to the university.
6.4.2.1
Process of establishment of NTUIIC
The government of Taiwan launched a national incubation program in 1996,

encouraging public and private institutions to set up incubation centers to
assist the development of small- and medium-sized businesses. In
conjunction with that program, the Ministry of Economic Affairs (MOEA) offers
subsidies for companies that pass muster (Lu, 2004). With such incentives,
incubators have sprung up all over the island, increasing from less than ten in
the first year of the program to currently about eighty.
In 1995, National Taiwan University (NTU) was invited by the Small & Medium
Enterprise Administration (SMEA) of MOEA to join the strategic planning of
the above mentioned national incubation program. A planning report on the
strategy of establishing university incubators in Taiwan was submitted to
SMEA (Fan, 1996). This report provided a feasible model of UBI, which was
designated as a guideline by SMEA to all universities in Taiwan. The first UBI
in Taiwan was the NTU incubator established in 1997, operated by the Tjing
Ling
Industrial
Research
Institute
which
is
an
industry/university
cooperation office under the College of Engineering. In its early stage, all
tenants were engineering related startups. Until 1999, the number of UBIs
around the island had rapidly increased to around forty. All UBIs were
established by the university serving all areas of startups. However, the
president of NTU decided to upgrade the incubator to the university level. In
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August 2000 the incubator was renamed as the National Taiwan University
Incubator operated by the Incubation Division under the R & D Commission
Office of NTU. The original incubator team was expanded to cover services to
all colleges, and the tenant types expanded to more areas, mainly engineering,
biotech, and services. The number of full time staff was increased from 3 to 5,
and more professors from various colleges were invited to get involved in the
steering committee of NTU incubator.
All UBIs are project-based in Taiwan. The university treats its UBI as a project
sponsored by the government. In other words, the university only provides a
space to UBI to operate the project and encourages professors to get involved
in this project. The UBI annual budget has to rely on the subsidy from the
government. The UBI director is a professor who is assigned as the principal
investigator of this UBI project. However, this director still has his main duty
of teaching and research as do other professors on the campus. It is obvious
that the director can only take the responsibility in UBI as one of his projects.
Thus, the main management task of UBI relies on a full time manager and
staff, which are hired by the UBI project. This status significantly reveals a
weakness and a threat to current UBIs in Taiwan. If the government budget is
cut or the government incubation program is allowed to expire, all UBIs will
face risk for long-term sustainable operation.
The NTU Incubator sensed the above-mentioned risk in 2000. After discussion
with the university president and the head of the R & D Commission Office,
the incubator director started to initiate the privatization plan of the incubator.
The main goal is to reform the incubator from a service center to a service and
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profit center. In order to retain the service image, the qualification of

continued subsidy from the government and the connection with university
offices, professors and the company, the original UBI still exists. The company
possesses the function of flexible investment to potential tenants. After
investing to the start-up companies, the company can provide intensive
incubation to them with its own resources. Having passed through one years
(2001) sophisticated internal review and external capital raising processes, the
NTU Innovation & Incubation Company (NTUIIC) was eventually established
in January 2002. Up to now, this has been the only incubation company
founded by the university in Taiwan. The privatizing task is indeed not easy
because all capital must come from investors (NTUIIC, 2003). The incubation
company is authorized to run the universitys incubation business and to
invest potential tenants. In return, the NTU takes 20% share from the
company as the donation. As the NTU incubation system, NTU owns the
incubator and the incubation company, and each has its respective function.
In other words, under the same roof, the incubator is responsible for general
incubation services, and the incubation company is responsible for the
investment activity and intensive incubation of its potential tenants.
The privatization process of NTUIIC belongs to the bottom-up approach, which
has been illustrated in Chapter 5. The timetable of the establishment process
of NTUIIC is summarized in Table 6-3.
Table 6-3: Timetable of Establishment Process of NTUIIC

Time
Event
1997, August
Establishment of NTU Tjing Ling Incubator
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2000, August
Reform to NTU Incubator
2000, November
Initiative of privatization plan
2001 all year
Privatization process
2002, January
Establishment of NTUIIC with founding capital

NTD $37,500,000
2003, March
6.4.2.2
Capital increased to NTD $127,500,000
Organization and Mission of NTU IIC
The NTUIIC incubation framework consists of the NTU Incubator and the
NTUIIC. It is obvious that the two organizations are under the same umbrella.
The NTU Incubator, similar to general public UBIs, belongs to the university
system under the office of R & D Commission. Its organization can be
expressed by Figure 6-4.
Figure 6-4: Organization of NTU Incubator
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The director is a professor assigned by the university to take charge of the

NTU incubation project. He is responsible for the strategic plan and
supervision of the incubator. Since NTU is a large and general public
university with eleven colleges, the directors expertise cannot cover all areas.
Therefore, the university also invites three professors from three different
colleges to take part as associate directors to assist the director. The director
and three associate directors are all full-time professors of NTU, and thus they
can only contribute part time to the incubator.
The manager is a full-time staff member employed by the director. He has to
take charge of the daily incubation business in all aspects.
The incubation division provides general service to the tenants in regard to
their business development.
The facility division takes care of the building renovation and common
facility maintenance.
The steering committee is composed of industrial experts and university
professors to help the director to review the tenant application process and
attend the annual review meeting.
The mentors are individual experts from different fields invited by the
manager to consult to the tenants whenever they request. These mentors
could be from a bank, lawyers office, the IP agent, a private company, or the
campus.
The NTUIIC is a registered private incubation company focusing on investment
and intensive incubation and collaboration with the NTU Incubator. Its
organizational chart is shown in Figure 6- 5.
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Figure 6-5: Organization chart of NTUIIC
The board of NTUIIC is composed of directors from investor representatives

and the NTU representatives. The president of the board is a famous NTU
alumnus. The directors from NTU are assigned by the NTU president to
supervise the company in accordance with the universitys guidelines for the
incubation business. The directors from the investors shall look after the
investors interests in terms of overseeing the financial status. The board
meeting takes place every quarter.
The CEO is appointed by the board. He must have industrial working
experience and VC experience. He is responsible for the investment case
selection and intensive incubation after the investment to the selected tenants.
He has to report to the board during the meeting.
The investment division ordinarily searches potential cases and evaluates
the possibility for investment.
The incubation division normally cooperates with the incubation division of
the NTU Incubator, and shares the duty of intensive incubation to the tenants
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that NTUIIC has invested.
6.4.3
ANALYSIS of NTUIIC
From the above description, the incubation framework of NTUIIC, its SWOT,
and its sustainability can be analyzed in the following sub-sections.
6.4.3.1
NTUIIC Incubation Framework
NTUIIC (National Taiwan University Innovation & Incubation Company) was

founded by NTU in 2002 with investor-based capital only. This company is
authorized to run the universitys incubation business and to invest in
potential tenants. In return, the NTU takes a 20% share of the company as a
donation.
The companys business plan and guidelines were initially drafted by the
university in a way that would encourage investment. After the company was
established, the business plan could be revised by the board, all changes
being subject to university approval, which is formed by the major investors
and university representatives. Here it should be pointed out that, due to the
educational culture in Taiwan, most academic people do not willingly deal with
private sectors. Even though the NTUIIC was spun out from the university, it
is a private company by its nature. In order to maintain the good contact with
the campus as it was before, the original university incubator must still exist
and continue to play the role of primary incubation to all new tenants. This
incubator is responsible for the interface of the company with the campus
offices as well as with the government offices. The companys focus, therefore,
is on investment and intensive incubation. The framework of NTU incubation
is shown in Figure 6-6.
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Investors
Entrepreneurs
Government
NTUIIC
Investment & Intensive
Incubation
NTU Incubator
Primary Incubation
Tenants
Potential
Tenants
Other Tenants
University
Figure 6-6: NTUIIC incubation framework
This particular incubation framework can be analyzed in terms of the

following viewpoints:
z From the management point of view, the NTU incubation system actually is
a parallel leadership system. The NTU incubator and the NTU incubation
company, respectively, have clearly defined roles. However, the campus
culture is fairly academic and conservative; therefore, it would not easily
accept the fact that an entrepreneur, such as a spinout or incubation
company, is a member of their society. Moreover, government policy
usually benefits the university rather than the private sector. Before the
concept of an entrepreneurial university inserts itself into the academic
or government communitys thinking, the NTU incubator has to play the
role of bridging the gap. This is a feasible solution during this transition
period. Nevertheless this kind of dual-leadership system has some
inevitable problems, such as conflicting interests, personnel management
issues, fringe benefit and social security system issues, etc. It is logical to
assume that once the current problems are solved, a merged and unified
organization can be created, which should take the form of an incubation
company.
z
From the profit point of view, the major role of the NTUIIC is to select
potential tenants in which to invest. In practice, there are only a limited
number of tenants whose results could be evaluated. By the end of 2005
NTUIIC had only invested in five tenants with an amount totaling less than
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20% of its available capital. This financial operation is not efficient from a
company point of view. Therefore, the investment scheme has to be
revised to allow searching for external SMEs. One market in which to
search could be the tenants of other incubators, since there are more than
one thousand tenants throughout the country.
z
From the internal interaction point of view, the relationship between NTU,
its Incubation Company and tenants can be illustrated by Figure 6-7. NTU
provides intangible assets to NTU Incubation Company, such as the space,
facility, technology, faculty and students. The company provides capital
for investment. If there is any profit from investment return, NTU can
automatically receive 20% based on its share. If the company has no profit,
the university has nothing to gain. Therefore, NTU has the responsibility
to help NTU Incubation Company to succeed. This is a win-win strategic
alliance. In addition, the tenants pay the rent to NTU Incubation Company
for using the space that NTU provides. The company shall also pay part of
the collected rent to NTU in the order of about 80%. For those tenants
spun off from the campus, they have to pay additional royalty fees to NTU
because their core technologies are licensed by it.
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Figure 6-7: Internal interaction of NTUIIC
6.4.3.2
SWOT Analysis of NTUIIC
The NTU incubation system is quite a unique model in the world. It integrates
the merits of UBI and private incubator. Owing to the campus culture, there
are still some drawbacks. Following is the SWOT analysis of NTUIIC, which
includes the incubation center and the incubation company.
Strengths:
z
Possessing strong facility, manpower and infrastructure supports from the

university.
Possessing venture capital from NTU Incubation Company searching for

investment to potential tenants.
CEO has excellent experience in investment and information technology

(IT) background.
Providing incubation network to exchange experiences among tenants.
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Weaknesses:
z There are only a limited number of tenants whose results can be evaluated.
The CEO has to pay more attention to look for outside investment.
z The university is lacking in entrepreneurship. Its incubation guidelines
may more or less contain campus culture that could hinder the CEOs
decisions. This is the weakness of dual leadership.
z The largest market for Taiwan companies is China. However, the incubator
is not keen to use that market. The incubation service to this sector is not
enough.
Opportunities:
z
Taiwan is a small island with limited natural resources. More than 90% of
companies are SMEs. NTU is located in the capital city and is the biggest
university in Taiwan. The incubator has more opportunity than other
universities to nurture potential tenants. Accordingly, the NTUIIC has
more chances to seek for investment.
Venture capitals have shifted their attention to Asian hi-tech companies,

making it easier for NTUIIC tenants to raise fund for growing.
The government still provides support to help SMEs if they are incubated
in the incubators.
VCs are much favored to cooperate with famous universities. Accordingly,

NTUIIC has the chance to absorb experience from them.
Threats:
z

products within a short incubation period. As the local market is small
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and competitive, startups have to find their own positions to survive in the
domestic market.
z
The nation has a small domestic market. Most startups have to find
overseas markets, especially the Chinese market. This particular
phenomenon will challenge the capability of the incubators management.
More and more large Taiwanese companies and SMEs are moving to China.
Thus, incubatees have gradually lost their potential customers.
6.4.3.3 Evaluation of Sustainability of NTUIIC

From the basic data listed in Section 6.4.1 and the detailed financial report
provided by NTUIIC, the evaluation of its financial status can be shown as
follows.
According to the past financial reports, the summarized asset and debt
statement and profit and loss statement are shown in Table 6-4 and Table 6-5.
Table 6-4: Asset and Debt Statement
Item
Total Asset
Total Debt
2002
2003
(unit in NTD)
2004
2005
37,850,130 129,080,687 133,047,041 137,587,649

1,138,261
2,501,329
4,283,600
4,750,711
Net Value
36,711,869 126,579,358 128,763,441 132,836,938
Capital
37,500,000 127,500,000 127,500,000 127,500,000
Annual Surplus
after Tax
(788,131)
(132,511)
2,184,083
4,073,497
(788,131)
(920,642)
1,263,441
5,210,594*
Accumulated
Surplus
*This value is after the deduction of accumulation fund from 10% of 2004
accumulated surplus.
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Table 6-5: Profit and Loss Statement

Item
Operational
(unit in NTD)
2002
2003
2004
2005
4,054,122
5,945,097
9,205,646
8,574,307
598,154
3,478,828
5,998,304
4,054,122
6,543,251
12,684,474
14,572,61
income
Other income*
Total income
1
Operational cost
4,842,253
6,473,698
Other cost
189,860
Total cost
4,842,253
6,663,558
10,487,141
10,409,349
(788,131)
(120,307)
2,197,333
4,163,262
(788,131)
(132,511)
2,184,083
4,073,497
Net
income
income
1,177
10,330,183
79,166
or
(loss) before tax

Net
10,485,964
or
(loss) after tax
* Mainly from investment profit.

After observing these statements in depth, the financial status can be
analyzed as below:
z
The operational income of NTUIIC is mainly from the incubation service to

the tenants. Although there is rent income from tenants, after paying back
to the university (80%), the net income from rent is not significant.
The main operational costs are the personnel cost and the building
maintenance cost.
From the profit and loss statement, it can be seen that the operational
incomes from rent and incubation services are not enough to cover
operational costs.
The income from investment return is the major profit to contribute to

NTUIIC. Since 2004 this part of net income significantly dominates the
annual net income.
6.4.4
SUMMARY OF NTUIIC
Page 209
(A) Summary
The NTU incubator started in 1997 and is a typical project-based incubator in
Taiwan. Its annual budget has to partially rely on government subsidy.
The scope of operation depended on the amount of budget in breakeven
condition. This is the same situation as all other UBIs. Nevertheless, the NTU
incubator was alerted to this bottleneck and initiated the idea of privatization
in 2000. The process to overcome many barriers from the campus and the
investors was difficult, even with strong support from the university president
and the alumni. A typical bottom-up formation of the university incubation
company (in this research, called the EUI) was successfully established in
2002. This company, NTUIIC, takes the name of NTU which fully reflects the
strong policy support from the university. Since then, the NTU incubation
system has been formatted under the parallel leaderships of NTU Incubator
and NTUIIC. Therefore, each party has its main role in cooperation with the
other. The NTU incubator serves the duty of primary incubation and the bridge
to the campus and the government. The company is responsible for the
investment and intensive incubation to the invested tenants. NTUIIC has
demonstrated its clear role in getting profit from investment return. Starting
from the third year after its operation, NTUIIC has gained a net profit, which
was returned to the investors and the university in 2005. This proves the
win-win strategy of this NTUIIC framework system.
(B) Comments
Although the positive impact of the NTU case is clear, such a dual-leadership
system still inherits some inevitable problems due to the different cultures
between the campus and the incubation company. It is regarded only as a
transition period toward the real entrepreneurial university incubator (EUI).
Future development will be an interesting subject of research.
As this research pointed out in Sec. 6.4.3.1, NTUIIC should expand the
investment targets to other UBIs and external SMEs. This suggestion was
accepted by NTUIIC. In order to achieve these investment targets, a new
Page 210
general manager was appointed in May 2005 who has started to seek external
markets. Up to now, NTUIIC has invested three outside hi-tech companies.
However, time is still required for the general manager to prove his capability
in investment, although he was vice president in a VC company for 10 years
before he came to NTUIIC.
In view of the fact that the Taiwanese market has flowed to the mainland of
China in recent years, this researcher also suggested during the earlier visit
that NTUIIC should build strategic alliances with incubators in China. NTUIIC
has accepted this idea and has started to find collaborative partners in China.
In 2005 NTUIIC visited and signed cooperation agreements with two university
incubators in China, namely the Zhejiang University National Science Park
and the HFUSP.
6.5
EVALUATION OF CASE STUDIES
In this chapter, this research has studied three cases of university incubators.
During the visits to these UBIs, a cross information flow was facilitated by the
author. Each incubator head has learned about the experience of the other
two incubators during the dialogue with the author. In order to validate the
proposed EUI model of this research, a cross evaluation of some performance
indices is necessary, as shown in Table 6-6.
It is seen from Table 6-6 that since NBI is a normal UBI, its financial status
can only break even. Its head, who is not a university professor, indicated
Page 211
during the visit that although NBIs contribution to the region is significant, it
can
only
remain
in
the
short-term
sustainability
stage.
Long-term
sustainability will be his future concern. During the discourse, he expressed a

great interest in the HFUSP and NTUIIC models of privatization. If permitted
by the university, he would like to try this approach.
Although the HFUSP is a privatized incubator, its head is a university

professor appointed to full-time work for the incubator. His entrepreneurial
knowledge is limited. Fortunately, due to the large space and attractive
government policy, the space is always fully occupied by the tenants. Its
current rent income can be adequate for ordinary operation. Without
investment income, however, it still remains in the stage of short-term
sustainability.
During the visit, the head of HFUSP showed a great desire to learn the
investment experience of NTUIIC. This is the reason why the author intended
to promote the strategic alliance between HFUSP and NTUIIC, as NTUIIC has
the model closest to the proposed EUI model of this research. In fact, the idea
of the NTUIIC model was first proposed in the authors Masters thesis
research during 1999 to 2001. This idea was accepted by NTU, and in 2002
the NTUIIC system was established. In its early stage, NTUIIC did not find an
experienced entrepreneur to be the head. This is why its investment progress
was rather slow in the beginning. Having accepted this research suggestion,
NTUIIC appointed an entrepreneur with abundant VC experience as a new
general manager in May 2005. He started to look for more investment cases
Page 212
from other UBIs and external SMEs. The current trend of NTUIIC is quite
similar to the proposed EUI model, which is more comprehensive in its
business plan. Up to now, the work has been quite smooth, and thus this
organization is most suitable to validate the proposed model of this research.
Table 6-6: Evaluation of performance indices

Index
NUS
HFUSP
NTUIIC
Proposed Model
Major income
University
Rent
Investment
Investment
Services
Rent, services,
Rent, services,
equity
equity
sources
Other income
Rent, services
sources
Type of
UBI
Company
UBI+ company
UBI+ company
Appointed staff
Appointed
Appointed
Appointed
professor
professor +
professor +
appointed
appointed Venture
entrepreneur
capitalist
incubator
Head of
incubator
Can take
No
Yes/Nil
Yes/few
Yes/ many
investment?/No.
(only invest in
of case
In-house tenants) UBIs & SMEs)
Financial
Breakeven
Minor surplus
Medium surplus
(expand to external
Significant surplus
status
6.6
CONCLUSIONS
The methodology of case study can provide a tool to investigate a research

issue by using some relevant and selected cases. This chapter has reported
three comprehensive case studies of university incubators through on-site
visits and in-depth analyses of their organizations, incubation framework,
Page 213
SWOT, and financial sustainability. All case reports have been read and
approved by the respective heads of the incubators. Major findings related to
this research can be summarized as follows.
z
The UBI of non-profit type, such as the studied case of NBI of Singapore,
has to strongly rely on the university budget to maintain operation. This is
a typical short-term sustainable case.
The UBI of top-down privatization type, such as the studied case of NFUSP,
has to strongly rely on the governments attractive policy to build up large
space and subsidize tenants. Just the rental income can be enough for
maintaining the operational cost. So far, NFUSP has not made any
investment in their tenants, since it is still lacking the investment
expertise. The current financial status has a minor surplus but not
significant. Therefore, it is still a short-term sustainable case.
The UBI of bottom-up privatization type, such as the studied case of

NTUIIC, is under pressure to be self-sufficient financially. It possesses the
spirit of EUI and is similar to the goal of this research. However, the
potential cases of investment are not adequate within a particular
incubator. Although NTUIIC has started to gain profit from investment
return, its net income can be increased by looking for outside investment.
This conforms to the business plan proposed by this research.
All studied incubator heads agree with the point that investment can
generate more income for long-term sustainability if the selection and
evaluation are on the right targets. This point coincides with the strategy
proposed by this research.
Page 214
Chapter 7 Conclusions and Future Works
C
CH
HA
AP
PT
TE
ER
R7
7
C
CO
ON
NC
CLLU
US
SIIO
ON
NS
SA
AN
ND
DF
FU
UT
TU
UR
RE
EW
WO
OR
RK
KS
S
7.1 CONCLUSIONS
This thesis reports the investigation of current management status of

worldwide university business incubators (UBI). A comprehensive literature
review has found that most UBIs still enjoy the role of a service provider. The
goal of this research is to bring the entrepreneurship concept to UBI for future
long-term sustainability. The methods of approach are in the following
sequence: (1) to make a survey to introduce this concept and to see the
agreement of UBI directors;
(2) to propose a new integrative model that integrates the merits of private
incubator into the current UBI model so that the UBI is able to take
investment
in
their
potential
incubates
and
the
goal
of
long-term
sustainability could be expected from investment return;

(3) to propose a bottom-up privatization process for the UBI of public
universities so that they could take investment and a business plan is drafted
to predict the financial status of the incubation company;
(4) to visit three UBIs and compare their management types.
From this research the need of long-term sustainability has been validated
from the worldwide survey. The proposed integrative framework has been
validated by the current renewed model of NTUIIC.
Page 215
In Chapter 2, the current worldwide business incubators, especially the

university business incubators (UBI), have been thoroughly reviewed. Most
papers focus on the strategies, practices, success factors, missions, impacts,
etc. of current incubators. Only a limited number of papers have noticed the
importance of sustainable operation, but without explicit plans or models to
implement. Therefore, this research regards the necessity of proposing an
integrative model for UBIs and the investigation of current UBI practice in the
world.
In Chapter 3, the questionnaires to investigate the awareness of sustainable

operation of UBIs and the implementation of the proposed EUI concept have
been designed. Surveyed results have shown a high response rate with high
percentage of agreement to the proposed entrepreneurial university incubator
(EUI) idea. Current operational budgets of UBIs rely on the incomes from rent
and services, which most directors admit is only enough for breakeven
operation, called short-term sustainability by this research. A long-term
sustainability plan for each UBI is deemed necessary, not only for
self-sufficient operation but also for generating profit to the university. More
importantly, most UBI directors confirm that a reform of non-profit UBI to
for-profit UBI is possible if the university allows. This outcome stimulates this
research the necessity of developing a new framework of EUI model to assist
the current UBI model.
In Chapter 4, a detailed integrative framework that integrates the merits of
Page 216
UBI and private incubator has been proposed to help reform the current
non-profit UBI to a for-profit EUI. This new model integrates incubation
company and university incubator into one system, cooperating closely to
expand the scope of incubation business in investment and value-added
services. This model is based on a strong belief that incomes from rent and
services can only breakeven the cost, while the investment return is the main
source of long-term sustainability. In order to implement this integrative
model, a transition process from current UBI to a EUI system is deemed
indispensable.
In Chapter 5, the privatization process of both the top-down and bottom-up

approaches of UBI has been studied. Particular attention has been focused on
the privatization of the incubator in the public university, which is based on
the bottom-up approach. The transition process of formatting an incubation
company within the university may pass through three stages: the incubator
committee, the industrial relations committee, and the university council. In
addition, in order to analyze the financial sustainability, a comprehensive
business plan, which guides a current non-profit UBI toward a for-profit EUI,
has been proposed.
Through a comprehensive analysis the calculated
financial statement shows that the EUI can begin to get profit from the fourth
year of its inauguration. This research points out that whatever the difficulty
of privatizing the incubation company it is only the first step toward
entrepreneurship. Future success is still dependent upon the company itself.
Page 217
In Chapter 6, three case studies relating to a typical UBI (National University

of Singapore, NUS), a typical top-down privatized EUI (Hefei University Science
Park, HFUSP), and a bottom-up privatized EUI (National Taiwan University,
NTU) have been presented. During the course of this research work, the NTU
Business Incubator remained in close cooperation and gradually transited to a
company type, which can be seen to validate the proposed EUI integrative
framework model of this research. Up to now, it has worked smoothly and
successfully.
In summary, the major contributions of this research can be listed as follows:

z
A thorough literature review and two phases of worldwide survey have

been conducted. Only a limited number of papers have noticed the
importance of sustainable operation, but without explicit plans or models
to implement. Surveyed results show that the majority of worldwide UBI
directors accepted the proposed long-term sustainability concept.
The proposed EUI integrative model absorbs the merits of the private
incubator while retaining the mission of UBI. It can generate more
business opportunities to increase incomes, especially from long-term
investment return and value-added services. By generating self-sufficient
profit, the EUI can not only be sustainable itself but can also feed back to
the university. This will be a significant contribution to help develop the
competitive entrepreneurial university.
The proposed formatting procedure provides a guideline to reform the

current non-profit UBI to a for-profit EUI, either from top-down or
Page 218
bottom-up approach.
z
The drafted business plan for a EUI proves the feasibility by financial
analysis and provides a template to current non-profit UBIs to design their
own plans.
Three university cases have been comprehensively studied. Comparing

the pros and cons of each case, the NTUIIC can best validate the proposed
EUI model.
7.2 FUTURE WORK
Current work has proposed the EUI model and validated its feasibility.
However, this concept is still new to most UBIs and only a limited number of
EUIs have been reformed thus far. Long-term investigation of their future
development is still necessary. A successful EUI is not only dependent on its
system development, but also relies on the modes of operation, such as the
CEOs capability, personnel management, tenants potentiality, university
cooperation, government policy, etc. In other words, whatever the difficulty of
privatizing the incubation company, it is only the first step toward
entrepreneurship. Future success is still dependent upon the company itself.
It is recognized that the venture capital (VC) business started around late
1980s to early 1990s and was quite successful for almost 10 years. After 2000,
the internet crisis impacted the VC business quite seriously and the
Page 219
globalization of enterprises became the trend of worldwide business. VC funds

have changed their attitude to become more conservative in investing small
business, such as start-ups, because of high risk and many uncertain factors.
Therefore, the investment of potential tenants becomes more responsible for
the EUI. More intensive incubation of this proposed integrative model will be
the key factor to the future success. These can all be good research topics in
the future.
Page 220
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Page 237
Appendices
APPENDICES
Page 237
Appendices
APPENDIX I - The respondents of questionnaire surveys

Part I: Worldwide region
Alabama Birmingham University, Office for the Advancement of
Developing Industries (OADI)
Adelaide University, John Hodges, john.hodges@adelaide.edu.au,
http://www.adelaide.edu.au/OIL/thebarton/
Arizona University, Arizona Technology Incubator, Nidus Centre
Robert J.
Calcaterra, robert.j.calcaterra@niduscenter.com http://main.uab.edu/oadi/sho
w.asp?durki=29483
Arkansas University, Medical Sciences Biotechnology Centre (UAMS)
Mr. Charles Cook, CACook@uams.edu, http://www.uamsbiotech.com/contact/
Ball State University, Innovation Connector
Morris Windhorst, mwindhorst@bsu.edu, www.innovationconnector.org
Beijing Aviation University Science Park
Dr. Wong, mewan@buaa.edu.cn, www.buaa.edu.cn
Ben Franklin Business Incubator Centre
Wayne Barz, wbarz@nep.benfranklin.org, http://www.nep.benfranklin.org
Bilkent University, Ankara Cyberpark Incubation
Ozgur
Sar, Ozgur.sar@cyberpark.com.tr, http://www.cyberpark.com.tr/eng/?id=4
Page 238
Appendices
Boise State University, West Technology & Entrepreneurial Centre
John Glerum, jglerum@boisestate.edu, www.idahosbdc.org
Brunel University, Brunel Science ParkChristine
TerMeulen, Christine.TerMeulen@brunel.ac.uk, www.brunel.ac.uk/scipark
California University, Marina Small Business Incubator
Susan
Barich, Susan.Barich@BarichBiz.com, http://www.prnewswire.com/gh/cnoc/c
omp/910922.html
Canterbury University, Canterbury Innovation Incubator
Rashne Nariman, r.nariman@cii.co.nz, http://www.cii.co.nz/contactingus.html
Central Florida University Technology Incubator
Carol Ann
Dykes, cdykes@mail.ucf.edu, http://www.incubator.ucf.edu/frameset.html
Cleveland State Community College, Cleveland-Bradley Business Incubator
Hurley Buff, hurleyb@cbbi.net, http://www.cbbi.net
Colorado State University, Fort Collins Virtual Business Incubator
Kathy Kregel, kkregel@FortCollinsIncubator.org, www.FortCollinsIncubator.org
Colorado University, Bard Centre for Entrepreneurship
Beth
Polizzotto, beth.polizzotto@cudenver.edu, http://thunder1.cudenver.edu/bard/
index.php
Columbus State University, Columbus Regional Technology Centre
Page 239
Appendices
Blair
Carnahan, blair.carnahan@atdc.org, http://208.62.83.218/ED/BizClimate/tec
hincubator.cfm
Connecticut University, technology incubation center
Ian
Hart, ian.hart@uconn.edu, http://www.sp.uconn.edu/~webdev/smallbusiness
/farmington.html
Cornell University, Cornell virtual Incubator
Andrew Scirri, ajs98@cornell.edu, http://bri.cornell.edu/aboutus.php
Cranfield University Technology Park
Richard
Last, rlast@lsh.co.uk, http://www.cranfieldtechnologypark.cranfield.ac.uk/intr
oduction.htm
Dublin University, Innovation and Technology Transfer Centre
Dr Pat Frain, pat.frain@ucd.ie , http://www.ucd.ie/uip
Edinburgh University Research and innovation Edinburgh Pre-incubator
Scheme (EPIS)
Adrian Smith, Adrian.Smith@ed.ac.uk, www.ec2.edu
Edinburgh University, Edinburgh Technology Transfer Centre (ETTC)
Andrew.Sijan, Andrew.Sijan@ed.ac.uk, www.ettc.co.uk
Emory University, Emtech Bio Incubator
Connie Snipes, csnipes@emory.edu, http://www.emtechbio.com/
Page 240
Appendices
Florida University, Sid Martin Biotechnology Incubator

Patti Breedlove, patti@biotech.ufl.edu, http://www.biotech.ufl.org/
Georgia Medical College, Business Incubator
Dr. Michael G.
Gabridge, mgabridge@mail.mcg.edu, http://www.mcg.edu/research/techtransf
er/staffing.htm
Georgia University BioBusiness Centre
Margaret Wagner
Dahl, mwd@ovpr.uga.edu, http://www.synergy.uga.edu/contact/index.html
Georgia University Science School, Life Sciences Business Development
Centre
Stephen
Henderson, SHENDERSON@mail.mcg.edu, http://www.mcg.edu/research/tech
transfer/staffing.htm
Hagerstown Community College, Technical Innovation Center (TIC)
Chris Marschner, marschnerc@hagerstowncc.edu,
http://www.hagerstowncc.edu/
Hawaii Manoa Innovation Centre
Philip J. Bossert, pbossert@htdc.org, www.HiTechHawaii.com
Hefei National University Science Park
Zhang Hui, zhanghui@mail.hf.ah.cn,
http://www.hfusp.com/english/index.asp
Page 241
Appendices
HeNan agriculture University Incubation Centre
www.henau.edu.cn/english/about.htm
Honolulu, Hawaii High Technology Development Corporation
Philip J. Bossert, pbossert@htdc.org, http://www.htdc.org
Houston Entrepreneurial Development Centre
C. Dean
Kring, cdkring@servicesca.org, http://www.servicesca.org/entrepreneurial_deve
lopment_center.htm
Idaho University, North Idaho's Research Park
Doug
McQueen, dmcqueen@uirp.com, http://www.uirp.com/default.aspx?pid=29255
Indiana University, Small Business Development
Centre, http://www.eberly.iup.edu/sbdc/
Indiana Pennsylvania University, Eberly College of business and Information
Technology, small business incubator
Cathy Smith, crsmith@iup.edu, http://www.eberly.iup.edu
Indiana University, Muncie Innovation Centre
Morris Windhorst, mwindhorst@bsu.edu,
http://www.muncieinnovationconnector.com/Features/features.php
Iowa University, Technology Innovation Centre
Tom Bauer, thomas-bauer@uiowa.edu,
http://research.uiowa.edu/techtransfer/tic_main.htm
Page 242
Appendices
Kentucky University, Advanced Science Technology Commercial Centre
Joseph L. Fink III, jfink@uky.edu, http://www.rgs.uky.edu/ASTECC/
Kingston University, Innovation Centre
Christopher Fogg, chrisfogg@kingstoninnovation.org, http://www.kingstoninno
vation.com/services_technology.asp?navID=1
Loughborough University, Innovation Centre
Pollyanna Multon, p.r.multon@lboro.ac.uk,
www.loughborough-innovation.co.uk
Louisiana State University, The Louisiana Business & Technology Centre (LBTC)
Charles F. D'Agostino, cdag@LSU.edu, www.bus.LSU.edu/LBTC
Louisville University, Information Technology Resource Centre (ITRC)
Andrew Steen, asteen@metacyte.biz, http://www.theitrc.com/index.html
Maine University, Greenville Business Incubator
John
Simko, John@GreenvilleME.com, http://www.greenvilleme.com/woodcomposit
es/
Manchester University, Manchester innovation LTD
Ian Jackson, ian.jackson@maninv.com, http://www.maninv.com
Maryland University, Dingman Entrepreneurship Centre
David Barbe, dbarbe@umd.edu,
http://dingman.rhsmith.umd.edu/ApplicationFiles/web/WebFrame.cfm?web_id=1
0
Page 243
Appendices
Maryland University, Eng. Research Centre
Edward M. Sybert, es49@umail.umd.edu, www.mtech.umd.edu
Maryland University, Maryland Technology Development Center
Duc Duong, dduong@mdhitech.org,
http://www.choosemaryland.org/AboutDBED/Contacts/Incubators/page1438.htm
l
Maui Hawaii Research & Technology Centre
Phil Bossert, pbossert@htdc.org, www.htdc.org & www.HiTechHawaii.com
Missouri University --Columbia, Office Tech. Special Project (OTSP)
Terry Nixon, nixont@missouri.edu, http://otsp.missouri.edu/about/Staff.asp
Montanan State University, TechRanch centre
John O'Donnell, jodonnell@techranch.org,
http://www.techranch.org/cgi-bin/techranch/aboutus_management.html
Montgomery Area Small Business Incubator
Douglas Jones, jones@montgomerychamber.com, ww.montgomeryincubator.org
Nebraska University, Technoloy Park
Steve
Frayser, sfrayser@foundation.nebraska.edu, http://www.unebtechpark.com/T
DC.asp
New Orleans University, Research and Technology Park
Alexandra Wesley-Smith, awesleys@uno.edu, www.uno.edu/~rtp
North Carolina University, The Ben Craig Centre
Page 244
Appendices
Ed Sanz, esanz@bencraigcenter.com
http://www.bencraigcenter.com/site/nav.cfm?cat=2&subcat=72&subsub=30
Northwestern Oklahoma State University, Centre for Business
Development
Patti Wilbe, plwilber@nwosu.edu, http://www.nwalva.edu/CBD/binc.html
Ohio University Innovation Centre
Linda J. Clark, clark@ohio.edu, http://www.innovationcenter.ohiou.edu/
Parkway University, Babcock Demon Incubator
Paul
Briggs, paul.briggs@mba.wfu.edu, http://www.mba.wfu.edu/incubator/inccont
act.html
Purdue University, Purdue Technology Centre
Robert J. Wichlinski, rjwichlinski@purdueresearchfoundation.org
http://www.purdueresearchpark.com/PTCNI.html
Rensselaer Polytechnic Institute, Rensselaers incubator Program
Ron
Kudla, kudlar@rpi.edu, http://www.rpi.edu/dept/incubator/homepage/history
.html
Rutgers University, Food Innovation Research and Extension Centre
Lou Cooperhouse, Cooperhouse@aesop.rutgers.edu, www.fire.rutgers.edu
San Francisco University, USF Entrepreneurship
Larry Louie, louie@usfca.edu, http://www.usfca.edu/sobam/nvc/history.htm
Page 245
Appendices
San Jose State University, San Jose Bioscience Incubator and Innovation
Centre
Suzanne Murphy, smurphy@foundation.sjsu.edu, www.sjsitefinder.com
South Florida University, Tampa Bay Technology Incubator
Wayne Brass, wbrass@research.usf.edu, http://www.ce.usf.edu/ce_Staff.html
Southampton University, Southampton Enterprise Hub
Steve Davis, steve@sdavis68.fsnet.co.uk
http://www.invest-in-southampton.co.uk/display.asp?navID=5&ID=268
Southern Illinois University, Dunn-Richmond Economic Development
Centre, Business Incubator Program
Kyle Harfst, harfst@siu.edu, http://www.southerntech.org/contact.html
Southwest Michigan University, Innovation Centre
Sandra
Cochrane, scochrane@kazoosmic.com, http://www6.semo.edu/news/nr/archiv
e/2003-08-05a.asp
SUNY at Stony Brook, Long Island High Technology Incubator
James J. Finkle, jfinkle@lihti.org, http://www.lihti.org/about.html
State Univ. of New York at Buffalo, Centre for Multisource Information
Fusion (CMIF)
Woody Maggard, wmaggard@buffalo.edu, http://www.infofusion.buffalo.edu/
Texas Austin University, IC2 (Innovation, Creativity & Capital) Institute,
Austin Technology Incubator
Joel Wiggins, jwiggins@ati.utexas.edu, www.ati.utexas.edu
Page 246
Appendices
Turin University Bioindustry Park

Fabrizio
Conicella, conicella@bioindustrypark.it, http://www.bioindustrypark.it/
University of South Australia, ITEK Pty Ltd
Shane Cheek, shane.cheek@itek.com.au, http://www.itek.com.au/index.asp
Wake Forest University, Babcock School, Babcock Demon Incubator
Paul
Briggs, paul.briggs@mba.wfu.edu, http://www.mba.wfu.edu/incubator/inccont
act.html
Warwick University Science Park
David Rowe, David.Rowe@uwsp.co.uk, http://www.warwick.ac.uk/
Wisconsin University, University Research Park (URP)
Mark D.
Bughe, mdbugher@wisc.edu, http://www.universityresearchpark.org/overview.htm
Xian Jiaotong University Incubation Centre
tlo@mail.xjtu.edu.cn, http://www.xjtu.edu.cn/
Part II: UBIs of Taiwan region

Chaoyang University of Technology, Innovation and Incubation Centre
ycyin@mail.cyut.edu.tw, http://www.cyut.edu.tw/new/
China Institute of Technology, Incubation Centre
Page 247
Appendices
incubatr@cc.chit.edu.tw, http://www.chit.edu.tw/www/index.htm
Chinese Culture University Innovation and Incubation Centre
ltlee@cec.pccu.edu.tw, http://www.iic.pccu.edu.tw/
Chung Hua University, Innovation and Incubation Centre
wchsu@chu.edu.tw, www.iic.chu.edu.tw/
Chung Yuan Christian University, Innovation and Incubation Centre
kuolihui@cycu.edu.tw, http://www.iic.cycu.edu.tw/
Dahan University of Technology, Innovation and Incubation Centre
ytcheng0326@sinamail.com, http://www.iic.dahan.edu.tw/
Da-Yeh University Innovation and Incubation Centre
ec4009@mail.dyu.edu.tw, http://www.iic.dyu.edu.tw/
Far East University, Incubation Centre
incubator@cc.fec.edu.tw, http://www.feu.edu.tw/
Feng Chia University, Innovation and Incubation Centre
khtang@fcu.edu.tw, http://www.fcu.edu.tw/
Fortune Institute of Technology (fjtc), Innovation and Incubation Centre
incubatr@center.fjtc.edu.tw, http://www.fotech.edu.tw/
Fu Jen Catholic University, Innovation and Incubation Centre
shane@iic.fju.edu.tw, http://www.fju.edu.tw/
Kao Yuan Institute Of Technology, Innovation and Incubation Centre
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Appendices
incubator@cc.kyit.edu.tw, http://www.kyu.edu.tw/kyu/index.htm
Kun Shan University, Innovation and Incubation Centre
clc@mail.ksut.edu.tw, http://www.ksu.edu.tw/
Ming Chuan University, Innovation and Incubation Centre
dyfu@mcu.com.tw,
http://www1.mcu.edu.tw/Apps/SB/SB_Site.aspx?PageID=164
Mingchi University of Technology, Innovation and Incubation Centre
incubator@ccsun.mit.edu.tw, http//www.mit.edu.tw
National Central University, Innovation and Incubation Centre
ketejeng@cc.ncu.edu.tw, http://www.ncu.edu.tw/index.php
National Changhua University of Education, Innovation and Incubation
Centre
incub@abc.ncue.edu.tw, http://www.iicncue.edu.tw/front/bin/home.phtml
National Cheng Kung University Innovation and Incubation Centre
mcchen@mail.hcku.edu.tw , http://www.ncku.edu.tw/ver2006/ch/
National Chiao Tung University, Innovation and Incubation Centre
incubator@iic-nctu.org.tw, http://www.nctu.edu.tw/
National Chin-Yi Institute of Technology Innovation and Incubation Centre
incubate@chinyi.ncit.edu.tw, http://www.ncut.edu.tw/
National Chung Cheng University Innovation and Incubation Centre
asthjy@ccu.edu.tw, http://www.ccu.edu.tw/
Page 249
Appendices
National Chung Hsing University, Innovation and Incubation Centre
incubate@dragon.nchu.edu.tw, http://www.nchu.edu.tw/index-950414.htm
National Formosa University, Innovation and Incubation Centre
ted4112@ms41.hinet.net, http://iic.nfu.edu.tw/
National Kaohsiung First University of Science and Technology, Innovation and
Incubation Centre
johnfu@ccms.nkfust.edu.tw, http://www.nkfust.edu.tw/
National Penghu University, Innovation and Incubation Centre
csc@npit.edu.tw, http://www.npu.edu.tw/
National Ping Tung University of Science and Technology, Innovation and
Incubation Centre
incubator@mail.npust.edu.tw, http://www.npust.edu.tw/
National Sun Yat-Sen University, Innovation and Incubation Centre
yuanmh@mail.cmu.edu.tw, http://www.nsysu.edu.tw/
National Taipei University of Technology, Innovation and Incubation Centre
meiching@ntut.edu.tw, http://www.ntut.edu.tw/
National Taiwan University of Art, Innovation and Incubation Centre
d34@mail.ntua.edu.tw,, http://www.ntua.edu.tw
National Taiwan University, Innovation and Incubation Centre
nicholas@ntuiic.com, http://www.ntu.edu.tw/
National Taiwan Normal University of Education Incubation Centre (ntnic)
Page 250
Appendices
iona_293@mail.ntnuic.org.tw, http://www.ntnu.edu.tw/
National Taiwan University of Science and Technology, Innovation and
Incubation Centre
I-center@mail.ntust.edu.tw, http://www.ntust.edu.tw/front/bin/home.phtml
National Tsing Hua University Innovation and Incubation Centre
ere@ii.nthu.edu.tw , http://www.nthu.edu.tw/
National United University, Innovation and Incubation Centre
huichen@mail.nuu.edu.tw, http://www.nuu.edu.tw/
National Koahsiung University Of Applied Sciences, Innovation and
Incubation Centre
ywliu@cc.kuas.edu.tw, http://www.kuas.edu.tw/index.asp
National Yunlin University of Science and Technology, Incubation Centre
csmbi@yuntech.edu.tw, http://www.yuntech.edu.tw/
Oriental Institute of Technology, Innovation and Incubation Centre
incubator@mail.oit.edu.tw, http://webmail.oit.edu.tw/
Shih Chien University, Innovation and Incubation Centre
incubator@anet.net.tw, http://www2.usc.edu.tw/usc/tw/client/index.asp
Shu-Te University, Innovation and Incubation Centre
XEROX@mail.stu.edu.tw, http://www.stu.edu.tw/
Southern Taiwan University Of Technology, Innovation and Incubation
Centre
Page 251
Appendices
wangly@mail.stut.edu.tw, http://www.stut.edu.tw/stut_index/
Transworld Institute of Technology, Innovation and Incubation Centre
ruling@tit.edu.tw, http://www.tit.edu.tw/
TungNan Institute of Technology, Incubation Centre
hlchung@mail.tnit.edu.tw, http://www.tnit.edu.tw/
Vanung University Innovation and Incubation Centre
jmlee620@ms6.hinet.net, http://www.vnu.edu.tw/
Yuan Ze University, Innovation and Incubation Centre
imyclin@saturn.yzu.edu.tw, http://www.yzu.edu.tw/
Page 252
Appendices
APPENDIX II - Questionnaire on the Financial Sustainability of University
Incubators
By
June 28, 2004
Dear University Incubator Managers or Directors
University Incubators bear the missions of Technology Commercialization and
Local Economic Development. Although the past records are glorious in terms
of campus and society contribution, most university incubators are dependent
upon the financial support from the government and the university to maintain
normal operational cost.
Facing to this Knowledge Economy era many universities have pressure to
generate more income to help campus development. Besides the existing
Technology Transfer Office (TTO) that can receive revenue, can University
Business Incubator (UBI) also generate income for the university? is the
interesting subject of this study.
We have designed some questions to discover this issue. Main points are
focused to the Profit Model and Financial Sustainability of surveyed UBIs. Your
help in filling the form and returning to us is greatly appreciated. Please email
back your answering form to PhD student hsiyy001@students.unisa.edu.au at
your earliest convenience.
Yours sincerely,
Helen Hsiao
PhD. student of Advanced Manufacturing & Mechanical Engineering,
University of South Australia. Email: hsiyy001@students.unisa.edu.au
Page 253
Appendices
Please kindly provide us your opinions by typing your answer number when
you reply.
Part (A): Basic Information of your UBI
1. Year of start (
), number of full time staff ( ), floor space in square ft/m (
).
2. ( ) Normal number of SME tenants: (1) within 10, (2) 11 ~15, (3) 16~20, (4)
21~25, (5) 25~30 (6) above 30.
3. ( ) Type of your university: (1) private, (2) public.
4. ( ) Type of your UBI: (1) for non-profit, (2) corporate and for profit.
5. ( ) Your UBI receives annual budget support from: (1) your university, (2)
government, (3) non-profit foundations, (4) private sectors.
6. ( ) Your UBI has constant revenue from: (1) Rent, (2) Incubation service
fees, (3) Seminars or Workshops, (4) Industrial services, (5) Others (please
specify)__________________________.
7. ( ) Your UBI has: (1) Founding fund (or capital), (2) Equity stocks from
incubatees with average
% of
their capitals.
Part (B) Profit Model
8. ( ) Does your UBI have investment fund? (1) Yes, (2) No.
( ) If the answer is yes,
Has your UBI made investment on: (1) Tenant SMEs. (2) Outside companies.
Has your UBI started to receive investment return? (1) Yes, (2) No.
9. ( ) If without any financial support from Item 5, can your annual income cover
annual expenses?
(1) Yes, (2) No.
10 ( ) Does your UBI r have any plan for financial sustainability? (1) Yes (2) No.
If YES please describe this plan:
_____________________________________________.
Thank you very much for spending your time with us.
Your name: _____________________________.

Position: _____________________________.
Email: ___________________________________.
Page 254
Appendices
Website: ___________________________________.
University/ Incubator centre: _________________________.
Please return this form to: Helen Yu-Chan Hsiao, PhD. student of Advanced
Manufacturing & Mechanical Engineering, University of South Australia.
Email: hsiyy001@students.unisa.edu.au
Page 255
Appendices
APPENDIX III QUESTIONNAIREPhase Two
Subject: Move UBI to a sustainable organization
By
Background 1:
Many universities have faced higher and higher pressure in fund raising and
getting more income in recent years. In this competition age, stronger finance
can develop better university. Universities should, therefore, go to
entrepreneurship, such as selling IP, leasing unused land, providing more
industrial services, commercializing technologies, etc.
Background 2:
Current university business incubators (UBI) still rely on the financial support
from the university or government for annual maintenance. The majority of
UBIs regard themselves as a service organization on the campus. However,
knowledge can create economy. Similar to the Technology Transfer Office,
which is bearing mission to sell campus IPs, UBI also has the potential to
create significant income for the university. Long term financial sustainability
of UBI will be requested by the university in the future. It is the time to look at
the possibility of the position change of UBI.
Background 3:
Many private incubators have established in recent years with the strategy of
investment and then incubation to some selected tenants. The policy is forprofit in the long run. UBI has more intangible assets from the campus.
Learning and implementing the effective investment policy of private
incubators, UBI can become a profitable organization for the university. Long
term sustainability will become possible.
Background 4:
From this research investigation, UBI has many more functions than just
incubation. Increasing revenue from rents, service fees, equity, royalty, etc., can
only bring short term profit. Technology investment will be a key factor to gain
big return in the long run. Policy making, process development, and
implementing strategy to reform UBI into a for-profit and sustainable company
is the theme of my research work.
Your reply to my first phase questionnaire is deeply appreciated. The summary
explores the current status of worldwide UBIs as in the attachment. Although
an half of replied UBIs are considering process to sustainability, I still design
my second questionnaire and wish to have your feedback opinions.
Page 256
Appendices
Yours sincerely,
Helen Y.C. Hsiao
PhD student
Please kindly provide us your opinions by typing your answer number when
you reply
Q1: As the UBI policy maker, do you think the UBI shall consider financial
sustainability in the near future? (If your answer is NO, please specify your
viewpoint)
( ) (1) Not at all (2) could be possible (3) very possible
Q2: Do you agree that the UBI tenants can have higher success rate than
outside companies?
Q3: In your UBI, do you have chance to nurture very potential and successful
tenants?
Q4: If your UBI has investment fund, will you take investment on those very
good tenants at their early stage?
Q5: If your answer is Yes, do you have confidence your investment will get
profitable return?
Q6: Which action do you think will generate more income? (Maximum selects
two)
( ) (1) expand space to increase rent, (2) providing more services, (3) charging
royalty, (4) liquidating equity stock, (5) raise fund so as to get interest, (6)
take returnable investment.
Q7: Will you persuade the university policy makers to permit you to raise
investment fund for your UBI?
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Appendices
Q8: If you are in a public university, can the university funds be used for
investment?
Q9: Do you think that going privatization UBI will be better for operation and
fund raising?
Q10: Do you think that your University will accept to form a UBI Company if
you submit a good business plan?
Thank you very much for spending your time with us.
Your name: _____________________________.
Position: _____________________________.
Email: ___________________________________.
Website: ___________________________________.
University/ Incubator centre:_________________________.
Please return this form to: Helen Yu-Chan Hsiao, PhD. student of Advanced
Manufacturing & Mechanical Engineering, University of South Australia.
Page 258
Appendices
APPENDIX IV Internship Consent Letter
Page 259
Appendices
APPENDIX V Visiting case studies photos
Visiting National Taiwan University Innovation Incubation Centre, Dec. 2003
Visiting Hefei University Science and Technology Park, summer 2004
Visiting NUS Business Incubator April 20, 2006/7/13
Page 260

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UNIVERSITY OF SOUTH AUSTARLIA

A Framework of University Incubator to

Hsiao, Yu-Chan Helen

A thesis submitted in fulfilment of the requirement for the degree of PhD of

Table Of Contents ............................................................................. i

CHAPTER 2: THE REVIEW OF RELATED LITERATURE

Business Incubator ............................................................... 29

2.1.8 Network ........................................................................................... 40

Chapter 3: EXPLORATION OF THE SUSTAINABILITY OF

3.4.2 Phse II: Future Sustainability Plan For UBIs .................... 92

CHAPTER 4: AN INTEGRATIVE FRAMEWORK FOR

Introduction ....................................................................... 103

CHAPTER 5: THE IMPLEMENTATION FRAMKWORK FOR

THE MODEL: DEVELOPMENT OF A

CHAPTER 6: CASE STUDIES

Introduction ....................................................................... 166

Introduction to NUS ............................................................... 170

6.2.4.1 Campus Incubation Network ............................... 174

CHAPTER 7: CONCLUSIONS AND FUTURE WORK

Conclusions ........................................................................ 215

Appendix I - The respondents of questionnaire surveys

UBI to a sustainable organization

Research Flow Chart

Outline of Literature Review

Growth of the Worldwide Incubator Industry

Flow Chart of Chapter 3

Six Steps of Scenario Analysis

Number of UBIs vs. Developed Years

Rented Space of Taiwan UBIs

Sources of UBIs Annual Budget Support

UBIs Annual Financial Support by the Government in

Sources of UBI Revenues

Annual Revenue from UBI Business in Taiwan

Figure 3-10 Percentage of Government Support in Total Annual

Figure 3-12 Plan for Financial Sustainability

Outline Flowchart of Chapter 4

Incubation System Before 1990

The Modern Incubation System After 1990

Private Incubator Model

University Business Incubator Model

Emerging Merits of UBI, CPI and IPI into BIC

Closely Linked Incubation System

The Proposed Integrative Framework of EUI

The Proposed Incubation Company Organization

Figure 4-10 Internal Financial Flow of the EUI System

Process of the Top-Down Privatization

Process of Bottom-Up Privatization

Proposed Process of Privatizing A University Incubation

Proposed Incubation Company Organization

NUS Incubation Framework

Organization Structure of HFUSP

Incubation Framework of HFSUP

Organization of NTU Incubator

Organization Chart of NTUIIC

NTUIIC Incubation Framework

Internal Interaction of NTUIIC

Research Questions and Formulated Hypotheses Of

Types of Business Incubators

Best Practice of AABI Incubators 2004

Various Goals in Different Regions/Countries

Mission, Function and Assessment of UBI

Some Successful University Business Incubators

Gross Revenue from Technology Transfer of Some UBI

Strength and Weakness Analysis of Different Types of