Reality Bites: Building Incubators from the Ground Up
by Adriel Nisperos
Art by Bella Angela Del Rio
Innovative, financially viable, sustainable. These are descriptions we typically look for when we paint a picture of an ideal startup or a social enterprise. We have this long checklist of characteristics of how we want our businesses to be like as we’ve read in countless books and heard from hundreds more successful entrepreneurs and experts in the ecosystem.
In almost every journey of a rising startup or social enterprise, an incubator or accelerator is acting as a support system and a catalyst of growth. But rarely do we talk about how businesses choose their incubator or accelerator. Is it because of the funding opportunity, the network, mentors, or the skill sets that an entrepreneur can acquire from the program? What does an ideal incubator for a startup or social enterprise look like?
In the Innovation for Social Impact Partnership (ISIP), we believe that higher education institutions, through their business incubators, can breed the next generation of impact entrepreneurs. As they are a haven for research and innovation, university-based incubators are in the position to cultivate potential enterprises that will create more impact on society. On a much larger scale, the Department of Science and Technology (DOST) and the Commission on Higher Education (CHED) has been rolling out business incubators in universities to promote innovation and technopreneurship, boosting the country’s socio-economic development.
However promising, universities face challenges in establishing and sustaining their business incubators efficiently, and they wish to address these concerns to ensure they can make the most out of their limited resources to support entrepreneurs and enable impact.
Responding to these needs, ISIP conducted a virtual incubator management workshop for 30 incubator managers from 12 universities all over the country. The workshop focused on how university-based incubators can streamline their support and services for social entrepreneurs, following the processes, lessons learned, and best practices applied in running the ISIP Social Impact Accelerator. [READ: Empowering Filipino Social Enterprises: How We Do It at the ISIP Social Impact Accelerator]
From the Ground Up: Is Establishing a Business Incubator Difficult?
Navigatú, Caraga State University’s (CarSU) technology business incubator (TBI), has been supporting startups and impact enterprises since 2018. They have catalyzed the growth of 60 enterprises in their ecosystem in Northern Mindanao with some of them receiving funding opportunities amounting to PHP13 million in total.
Navigatú provides several services including a business development and incubation program from an extensively trained team, and an intellectual property management and legal services from experts trained by organizations like the Intellectual Property Office of the Philippines (IPOPHL) and the World Intellectual Property Organization (WIPO). On top of these, their facility also provides an office space complete with access to a fabrication laboratory, robotics and automation, and an ICT Center. These services enticed startups and social enterprises in the region to incubate in Navigatú’s program despite being operational for just three years from its establishment.
Melbert Bonotan, TBI Manager of Navigatú, shared that their university-based incubator did not instantly become attractive among the local startups when they started. After receiving funding from DOST and technical support from CHED in 2018, Melbert and his team pursued building the ecosystem within their academic community first. Among their initial steps, they started connecting with government agencies, such as the Department of Trade and Industry (DTI) and the Department of Information and Communications Technology (DICT), and private institutions to seek further support for their young ecosystem. They also started capacitating their faculty and team with skills in technopreneurship and incubator management. Some of which were impact-oriented coming from ISIP’s education activities for higher education institutions. [READ: Four Challenges to Overcome in Measuring and Managing the Impact of University-based Incubators]
Embracing Technopreneurship in Engineering
Melbert Bonotan, TBI Manager of Navigatu, shares their incubator is contributing to the local and regional economic development in CARAGA during the Incubator Management Workshop.
Despite their continuous hustle for an enterprise-enabling community in CarSU, they encountered inevitable challenges that made their pursuit extra difficult. “One of the problems we are facing here in CarSU is that the [academic] community is not embracing entrepreneurship. Only a few departments are embracing the idea,” Melbert shared. Without strong administration support, they face a major barrier towards implementing technopreneurship activities and creating a technopreneurial culture in the university.
Not embracing entrepreneurship is not only limited to university leaders in engineering. Many universities also share difficulties in changing the mindset of their engineering students to becoming more entrepreneurial. Aside from CarSU, the Central Philippine University (CPU) for one also faces this challenge. Yeseil Sacramento, incubator manager at CPU, shared that this year’s the first time they will be teaching the Technopreneurship 101 course alongside launching their TBI. She agrees that to move forward in achieving the goals of their TBI, the mindset of the professor and students towards technopreneurship should be aligned. Fortunately, they’re seeing a good potential for their efforts, “So far we’ve seen that our students are excited with some of the [technopreneurship] classes,” Yeseil describes.
[RELATED: Emotional Intelligence in Developing the Entrepreneurial Mindset]
Sustaining a Functional Incubator
Melbert’s team at CarSU also expressed their difficulty in managing and sustaining their university incubator. Previously, they had a safety net in the form of funding that helped them meet their needs such as employing a dedicated team for the incubator. But when their resources started to deplete, movement within the facility started to slow down too.
“Following the end of our funding support, we’re trying to restructure Navigatú. I’ve read in a resource from InfoDev and the World Bank suggesting that TBIs should be established like a business complete with a business model, feasibility study, and the like. With that, we’re planning to conduct a feasibility study on opening our TBI to existing businesses outside the campus and have them rent our facilities,” Melbert shared. This is one way their team thought they could sustain Navigatú’s operations. “Our search for funding opportunities continues for Navigatú not only for our incubator operations but also for our community development initiatives,” he added.
Another rising incubator is experiencing a similar concern. Jeffrey Lavarias, Technopreneurship Hub (TechHub) Project Leader at the Central Luzon State University (CLSU), cites that they are also in the middle of restructuring their TBI. Their team at the Agricultural Technology Incubation Startups (ATIS) is figuring out how they can better position their facility to aspiring entrepreneurs in their university. This is because another incubator is already existing at CLSU before ATIS, and the university administration deems that focusing on just one incubator will streamline the achievement of their university’s goals.
According to Jeffrey, they are exploring different kinds of services to ensure that they will not simply repeat what the other incubator is offering thus providing a case for the university administration that building on ATIS is worth the shot.
Educating the Ecosystem
Moving outside the halls of the university, Melbert also shared that their pool of investors in the region is relatively small and has yet to fully understand the nuances in investing in startups and social enterprises. Melbert and the Navigatú team sought the help of ISIP to conduct a capacity-building workshop for business investors in Butuan City to raise their awareness about startups and social enterprises and investing in those kinds of businesses.
“Based on our capacity-building activity with ISIP, investors in our region want to see ROIs (return on investment) after one to two years,” Melbert recalled. This creates the challenge of getting their incubatees invested.
With all these issues, it shows how establishing an incubator goes beyond having a functional facility and a comprehensive incubation program. Incubator managers in universities also look into how they can engage the whole ecosystem in their community to support their startups and social enterprises. These problems, besides, are not unique to those that have established incubators, but also to those in their early stages. Now, it is up to the incubator manager to see this as a difficulty, or as a challenge that can open up a lot of possibilities to further sustainable and inclusive development.
Benchmarking Practices: What Does an Ideal Business Incubator Look Like?
When establishing a functional incubator, it’s good to have something to look up to. In that way, incubator managers find inspiration and benchmark against them. But what does a model university-based business incubator look like?
Using 2015 to 2019 survey data from partner-accelerators, the Global Accelerator Learning Initiative (GALI) reported in their 2020 knowledge brief that 26% of the 473 surveyed ventures ranked network development as their top desired benefit from an acceleration program. This is followed by business skills development (23%), direct funding (19%), mentorship (17%), and access to investors (9%) in the lower part of the list.
In our case at the Innovation for Social Impact Partnership (ISIP), most of our applicants in the Social Impact Accelerator also desire to expand their network when they enter the program. They also want to access mentorship opportunities, build partnerships in the social enterprise community, and develop their business acumen and skills.
While there are many thriving incubators and accelerators in the Philippines and other parts of the world, seldom do you find one that not only focuses on the growth of the enterprise operationally and financially but also in terms of its social impact in the community or environment. This is what the Social Impact Accelerator puts a premium on: scaling up for growth and social impact.
“26% of 473 ventures ranked network development as their top desired benefit from an acceleration program.”
To date, the Social Impact Accelerator has supported 15 social enterprises coming from various industry verticals. Each of them received a year of support tailor-fitted to meet their needs composed of learning sessions and workshops, mentorship sessions, and networking. The program culminates in a Social Enterprise Showcase (ISIP’s version of a Demo Day) where entrepreneurs pitch to potential partners, funders, and investors. [WATCH: Social Enterprise Showcase 2019 Recap]
Check out the social enterprises we are supporting in the Social Impact Accelerator Batch 1 and Batch 2.
During the incubator management workshop, ISIP’s Entrepreneurship team shared their experiences and best practices in designing and implementing the ISIP Social Impact Accelerator. They shared how these steps can also be replicated by university incubators to achieve their goals and objectives. An example of this is conducting due diligence before selecting and onboarding enterprises in the program. Although this may be taxing, conducting due diligence ensures that the program will be engaging with businesses that are legal and ethical. This helps in reducing the risks that the implementing organization(s), or in this case a university, may face in the future. For university-based incubators, this will be most helpful if they are onboarding startups and social enterprises built outside the campus. Otherwise, they can still conduct a simpler due diligence process for university-grown businesses.
Yeseil Sacramento, Incubator Manager from Central Philippine University (CPU), shares their aspirations for their incubator and how their program can support startups from their university.
Aside from learning about how the Social Impact Accelerator is implemented, sitting down with Melbert, Yeseil, and Jeffrey helped us visualize the kind of incubator they want to build for the startups and social enterprises in their community. “We really want to help our incubatees to have investors. We plan to provide a physical facility, internet access, business training programs, access to angel investors, and technology commercialization assistance for our incubatees,” Yeseil shared.
Similarly, Jeffrey also wishes for their incubator to provide a quality incubation experience for the startups and social enterprises in their region. “First and foremost, we want to provide them [incubatees] a coworking space. We also want to provide them mentoring opportunities. We can get our graduates who are into business to be their mentors and success stories,” he shares. At the operational level, Jeffrey and his team hope that they will be supported by the university administration and that they will be able to see the impact of ATIS on students and CLSU.
For Melbert and his team at Navigatu, becoming aggressive on getting their incubatees funded by investors is the dream. “My only wish is to become the leading incubator in the CARAGA region where every incubatee that enters the incubator will become successful when they graduate,” Melbert shares.
What can be the steps forward to achieve a thriving business incubator?
After participating in the workshop and learning how to streamline their support and services in their incubator, the incubator managers shared their key takeaways and next steps to achieve their aspirations for their TBI in the university.
“Personally, I learned a lot about the steps needed to do the pre-incubation process such as conducting due diligence and pre-incubation assessments. I also realized that when we create a work plan, we have to consider the nature of our incubation program and the needs of our incubatees,” Yeseil expressed.
For Jeffrey, his key takeaway focused on setting the goals for their ATIS TBI. Through the workshop, they’re starting to think about how best they can complement the services of the other incubator at CLSU instead of competing with them for incubatees. He also added how the workshop helped him change his view about managing their incubator.
Jeffrey Lavarias, Technopreneurship Hub Project Leader at the Central Luzon State University, shares how the workshop reduced his fears and anxieties when it comes to managing their incubator.
“Before I joined the workshop, I thought managing an incubator would be taxing as I have to deal with a lot of things. But through the workshop, I realized that I can break down the preparations into smaller parts and deal with them in a more organized way. My fears in running our TBI were diminished, learning the principles and processes in the workshop,” Jeffrey shares. He furthered that introducing the UN Sustainable Development Goals (SDGs) in the program can inspire students to tackle problems as the SDGs provide real-world yet solvable problems.
On the other hand, Melbert, being part of an already established incubator, shared that learning how ISIP does the Social Impact Accelerator provided him another framework in supporting startups and social enterprises. While they have their own at Navigatú, he shared that he gained insights on how they can do things differently to achieve his dream for the incubator.
“I know that the Social Impact Accelerator program of ISIP is successful, that's why I was curious about how you take in incubatees -- your selection criteria and how you assess the teams who will join the program. In the past three years, our practice is just to automatically take in all the teams who sign up to our program thus the quality of the enterprises we incubate were not always good. This then made us realize that we have to carefully set a criteria based on market needs and other factors. I got a lot of frameworks to benchmark against from the workshop,” Melbert emphasized.
University-based business incubators are key to developing a stream of social enterprises in the Philippine social enterprise ecosystem. Aside from inculcating an entrepreneurial mindset through teaching technopreneurship, incubators play a role in turning ideas into working innovations that solve real problems. But as incubators carefully set criteria on the enterprises they will take in their program, it is also good to take into account what are the criteria of enterprises when selecting the incubators they will participate in. Maybe it’s not that there are no incubatees, to begin with. Maybe enterprises are just looking for something else. Now, that’s worth finding out.
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Adriel Nisperos is a passionate and mission-driven communications professional. Gaining a background in development communication, Adriel uses communication to advocate for quality education, social innovation, and sustainability in and outside the work that he does. He is currently the Communications Coordinator for the Innovation for Social Impact Partnership (ISIP) project, empowering social entrepreneurs and innovators by telling stories of impact.