Archive for November 2009

A few words by David Gill, Managing Director of St John's Innovation Centre Ltd:

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  Nov. 30, 2009 Incubation as a Public Good - the Swedish Model

  Last week, I was in Stockholm for two days speaking at a conference called Best Practices in Science-based Incubation, organised by the Technopolicy Network. My session was on “Public/Private Finance for Sustainable Incubation” and the debate was lively. Incubators around Europe and beyond are frequently set up with the benefit of public funding but are expected in a few years to become self-financing.

  Long story short, all of us on the panel were trying to conform to the orthodoxy that one way or another all incubators should find methods of weaning themselves off reliance on public subvention. Suggestions from the US included proposals to gain corporate sponsorship for academic incubators; the presentation from New Zealand demonstrated the extent to which sponsorship is already provided there, in the short term at least. But I was not alone in feeling that the orthodoxy of self-sustaining incubation is a chimera.

  The ice was broken by interventions from Sweden and Germany, both pointing out how naked the emperor of self-funding incubation really is.

  The Swedish representative told us that in his country the view has been taken that business incubation is in effect a public good, like education or research or defence. So the state recognises that an element of public funding is a long-term necessity providing benefits for society at large, not a cost of which to be embarrassed.

  The chairman of my panel, Heinz Fiedler, president of Science Park & Innovation Centres Expert Group (SPICE), was the founder of the first European incubator, in Berlin in 1983 – predating even St John’s Innovation Centre by about 4 years. He summed up the discussion by supporting the Swedish Model. We should stop talking about public funding for incubation services as a cost – it is a fee for a service from which the whole economy will benefit. This reminded me of angel investors who bridle when entrepreneurs talk of giving equity away: “You’re not giving it – you’re selling it!”

  Not for the first time in recent months I was struck by the extent to which mainland Europe and the Anglo-Saxon world seem like oil and water. Perhaps because in the 1970s we had both dire public services (remember the trains?) and high taxation, Britain in particular started an experiment in the 1980s of championing the private sector and living by market rules. Denis Healey famously referred to “sado-monetarism” as the hallmark of British economic policy then, but “sado-markets” might have been closer to the truth.

  As a diligent reader of the Economist magazine since I was in the 5^th form at school, I think I can recite the theoretical virtues of the market in my sleep. But when I experience the virtues of public transport in France or Germany - or Sweden- or listen to the unhinged objections to universal healthcare underwritten by government emanating from the loopy Right in the US (‘death panels’ will decide who should live, according to the ineffable Sarah Palin), my faith in government intervention to meet market weaknesses revives. Not all markets are self-correcting.

  Here at the St John’s Innovation Centre, we should acknowledge the contribution of government agencies such as EEDA and the Greater Cambridge Partnership over the years in paying for services that pull the Centre away from being simply managed workspace with a few additional services, and instead enable us to provide the advice, guidance, introductions and support that make for successful incubation.

  At the moment, thanks to funding from GCP we can advise 175 companies a year under the High-growth Starts programme. And through EEDA’s Understanding Finance for Business series of training workshops we are providing introductory sessions to around 500 companies a year. I doubt either scheme would exist if left entirely to the market. If only 10% of those companies we advise go on to improved performance, the impact on the regional economy will be significant.

  So much as I understand the theoretical case for market-based solutions as the earth around which we must all revolve, seeing the interventionist Swedish model in action reminded me of Galileo’s (alleged) famous phrase when he was forced to recant his belief that in fact the earth moves round the sun: “E pur si muove” – “And yet it moves”. External support is still necessary to make incubation work, and it is not a cost but an investment.