An Interview With David Monkman, President And CEO, National Business Incubation Association (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: What else is important for a vibrant entrepreneurial ecosystem?

David: The corporations are an important ingredient. They reflect potential demand for the products and services produced by these entrepreneurs. So, making sure they understand the participation expectations is important. That’s one thing we need. Another is making sure that the kinds of services that incubators offer are robust and provide a strong foundation for entrepreneurs in becoming a sustainable group for participating in an incubation process.

Irina: What are your personal challenges?

David: I would say that one aspect of the business incubation industry is there’s a common thread that ties them all together as incubation programs. Apart from that commonality, there’s a lot of diversity represented by our members.

Not all incubators are focused on the same objective. For example, in some communities, they take on an economic development function, while in other communities, they can have a fairly narrow, sector focus, and they can range from one industry focus to another.

For example, you could have a life sciences or a bio-science center in a community, or you could take on an IT-focused incubator. The links they develop in those communities could vary substantially based on the sectors they focus on. Or they could be mixed use and address multiple sectors simultaneously. In as much as those are differences among incubation programs, the industries characterized by those tailored solutions [have] to meet the individual demands of the communities they support. That’s one of those challenges.

Another challenge I’ve grown to appreciate is that the standard of practice varies considerably from incubator to incubator. One of our primary objectives is to improve standards for incubation programs around the country and around the world, and to help ensure that there’s more transparency and better information produced by these organizations, which are largely publicly funded.

About 95% of our incubation managers are non-profit, so our aim is to improve their sustainability by introducing new sponsorship sources, encouraging them to diversify their funding sources in as many ways as possible, deepening the service offerings to clients, and improving networks among incubation programs in regional markets. We find that there are opportunities when incubators work collaboratively.

Irina: You mentioned funding sources and support. What about revenue generating? Are they allowed to generate revenues?

David: Yes, they are allowed to generate revenues. They’re typically registered as 501(c)(3) organizations, so they, like modern non-profit organizations, are focused on trying to come up with diverse sources of revenue to offset the costs of providing services to their beneficiaries.

About 20% of our incubators are funded through the federal government. About 20% are funded by universities. About 30% are funded by state economic development agencies. Corporations are a significant funding source, and hybrid sponsorship models also feature in residual categories.

You see that it’s quite a mixed bag when it comes to how these programs are sponsored. We would do well to make sure that as many different sources are considered as possible so that services can be at the highest level possible.

Irina: What are the usual revenue sources?

David: Well, they could collect rent from their clients, which would apply to the services that they’re purchasing, or they could have a pay-per-use type of revenue model for certain types of support that’s provided to clients, or they could rent out access to a shared service facility on an hour-by-hour basis. That could be a source.

Too many times what happens is they [don’t] look at the local community and the revenue models that could be supported by those communities. There isn’t a single correct approach to how to fund incubation programs. It’s entirely dependent upon the communities they operate in.

This segment is part 3 in the series : An Interview With David Monkman, President And CEO, National Business Incubation Association
1 2 3 4