What parts of a start-up’s business model are influenced by incubators?

Differences in influence between university-sponsored and independent profit incubators in Germany

Seminar Paper 2014 18 Pages

Business economics - General



1 Introduction

2. Incubator Theory
2.1 Incubator typology
2.2 Methodology
2.3 Incubator influence on a business model
2.4 Existing literature University vs. independent incubators

3 Influence on a start-ups business model: University-sponsored vs. independent incubators

4 Conclusions and further research


List of figures

Figure 1: Incubator typology

List of tables

Table 1: Incubator influence on a start-up’s business model

Table 2: Differences between university and independent incubators in existing literature

Table 3: Interview results on differences between independent and university-sponsored incubators

1 Introduction

Incubators and their influence on start-ups as well as their performance are widely discussed, especially in Germany where Berlin and Munich are developing a very supportive environment for start-ups. There is a variety of different types of incubators and offered services. Some work for-profit others work non-profit and receive governmental support. For a start-up, the decision, which incubator to chose (or apply for a development program) depends on its business model and the parts of it that need further adjustment. Does a start-up for example need capital? Does it require a lab to conduct experiments? Does it need entrepreneurial education? All those questions influence the decision for the right incubator type.

There has been some research done compiling the services offered by incubators in general (Aerts, Matthyssens, amp; Vandenbempt, 2007; Al-Mubaraki amp; Busler, 2010; European Commission Enterprise Directorate-General, 2002; Rice, 2002; Sang Suk amp; Osteryoung, 2004). In a first step I want to map the different services offered by incubators to the parts of a start-up’s business model to generate an overview of what parts of a business model are influenced in general. There has also been some research about the services offered by different types of incubators (Mian, 1994, 1996) and there has been research comparing different types of incubators (Gassmann amp; Becker, 2006; Grimaldi amp; Grandi, 2005; von Zedtwitz amp; Grimaldi, 2006), but there is almost no literature comparing the influence on a start-up’s business model of different types of incubators. In this work I want to reveal differences in influence on a start-up’s business model in Germany between university-sponsored incubators and independent incubators, as they are the most distinguishable types of incubators. University-sponsored incubators mostly belong to governmental institution and are non-profit oriented, whereas independent (private) incubators do not belong to any institution and aim to make a profit. This work should help distinguish university-sponsored and independent incubators regarding their influence on a business model. First I want to compile the results of existing literature and in a second step challenge those results with qualitative interviews. Therefore I conducted interviews with one university-sponsored and one independent incubator. Providing a clear view on the differences in influence can help start-ups decide which incubator type to chose.

2. Incubator Theory

2.1 Incubator typology

“Incubators nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable” (European Commission Enterprise Directorate-General, 2002, p. 4). Its aim is to improve the chance of growth and rate of survival of these firms by providing them with a modular building with common facilities” (European Commission Enterprise Directorate-General, 2002, p. 5). “A business incubator is a facility that provides affordable space, shared office services, and business development assistance in an environment conductive to new venture creation, survival, and early-stage growth” (Allen amp; McCluskey, 1990, p. 61).

Although there is common sense about what the goal of business incubators is, many different typologies exist in literature (Aernoudt, 2004; Al-Mubaraki amp; Busler, 2010; Allen amp; McCluskey, 1990; Grimaldi amp; Grandi, 2005; Hackett amp; Dilts, 2004). One comprehensive typology was developed by Becker amp; Gassmann (2006a).

illustration not visible in this excerpt

Figure 1: Incubator typology

Source: Own diagram modified from Becker amp; Gassmann (2006a, p. 21)

Non-profit incubators focus on local development, creating jobs, supporting communities and other social aspects, by providing assistance to start-ups, while for-profit incubators aim to make a profit from supporting start-ups (Becker amp; Gassmann, 2006a). In the second order the supporting institution can distinguish incubators in (non-) governmental non-profit incubators, or independent or corporate for profit incubators. Independent for-profit incubators mainly aim to make a profit while corporate incubators also aim on developing technology supporting their core business (Becker amp; Gassmann, 2006a). This paper focuses on university-sponsored incubators and all independent for-profit incubators. University-sponsored incubators form a very important group within the non-profit incubators, they alone account for about 30% of all incubators (European Commission Enterprise Directorate-General, 2002, quoted from NBIA survey (1998)), with certain specialties that will be discussed later, which clearly distinguish them from other governmental incubators. All independent for-profit incubators should be regarded as they all share the same goal, making profit with the incubation process and for-profit incubators in general only account for a small fraction of incubators, roughly 20% (European Commission Enterprise Directorate-General, 2002). I want to exclude corporate incubators as they aim to integrate new technologies in the companies core business. In the further analysis I don’t want to distinguish independent incubators but just use the independent incubator as an institution accelerating a start-up’s development, making profit from that.

2.2 Methodology

The research question, the differences in influence on a start-up’s business model between university-sponsored and independent incubators, should be answered in two steps. First I want to examine existing literature and combine findings. Second I want to use conducted interviews with university-sponsored and independent incubators to support or challenge what I found in the literature. To do so I conducted two interviews, one interview with “UnternehmerTUM”, the university-sponsored incubator of the Technical University of Munich and a second interview with Wayra, which is by definition a corporate incubator as it belongs to Telefonica but acts totally independent from Telefonica. Wayra’s goal is not find start-ups, which Telefonica can profit from but to support start-ups with a promising business model.

2.3 Incubator influence on a business model

In the literature the services provided by incubators have often been subject of research (Aerts et al., 2007; Al-Mubaraki amp; Busler, 2010; Rice, 2002). In this chapter incubator’s services identified in existing literature should be allocated to the different parts of a business model. The goal is to find out, what parts of a start-up’s business model are influenced by incubators in general. In order to divide a business model comprehensively, Osterwalder’s business model canvas is used (Osterwalder amp; Pigneur, 2010). The interview with “UnternehmerTUM” revealed, that in general incubators influence all parts of a start-up’s business model, as adjusting the business model is a very important incubator task. But still there are core services that can be identified in the literature.

illustration not visible in this excerpt

Table 1: Incubator influence on a start-up’s business model

Source: Own table modified from Aerts et al. (2007), Al-Mubaraki amp; Busler (2010) and Rice (2002)



ISBN (eBook)
ISBN (Book)
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Institution / College
Technical University of Munich – TUM School of Management
Business Model Incubator Inkubator



Title: What parts of a start-up’s business model are influenced by incubators?