Selecting the right business to join an incubator is one of the important tasks of the management team. There are many crieteria to be weighed up, including how ready the applicant is for an incubation process, what the process could add to the applicant's business, and what the applicant's business will add to the incubator. This article steps through in detail how to choose businesses for admission to an incubator.
The function of the business selection process is choosing, from amongst candidate companies, those with the greatest potential for success. This is a complex process, because the concept of success is a relative value. Each incubator has its own criteria, that result from the decisions taken during the modelling and planning of the incubator. For more information, see guideline Modelling and Planning an ICT-Enabled Business Incubator. Definitions of partners, mission, vision, objective, focus, model and purpose of the incubator are highlighted
The business selection process must be compatible with the incubator’s internal and external environment. During this process companies are chosen that contribute to improving the indicators used for evaluating an incubator’s performance. See area Evaluating and Reporting on the Incubator.
It is important to ensure that there are a large number of candidate companies. This gives a better chance of selecting high quality companies. That is: the more businesses that take part in the selection process the higher the probability of selecting companies with greater chances of success.
The management team must publicize the incubator at the whole community level and, specifically, amongst potential candidates. See guideline Marketing the Business Incubator.
At the same time procedures must be implemented that make it possible to seek out companies/entrepreneurs to participate in the selection process. See guideline Prospecting for New Entrepreneurs.
The selection process has three critical parts:
1. Definition of Criteria
- Definition of criteria
- Process stages
- Professionals involved:
The choice of selection criteria must give due consideration to the incubator’s characteristics and performance evaluation system. The following aspects are taken into account:
2. Definition of selection process stages
Selection stages should be planned with an increasing degree of selectivity. The applicant enterprises should be evaluated with regard to their alignment with the incubator’s characteristics, followed by more specific steps for evaluating the merit/quality of the enterprise. Important questions are:
3. Professionals involved
- Preliminary evaluation: the selection process’s first stage chooses those enterprises most in line with the incubator’s characteristics;
- Training: will the selection process include a preparatory course for entrepreneurs (Elaboration of the Business Plan, for example)?
- Interview: time should be planned for the incubator’s management team (or a professional designated by that team) to have contact with the entrepreneurs.
- Evaluation Committee: The involvement of different professionals is essential to the success of the selection process. Consideration should be given to evaluation of the enterprise/entrepreneurs by professionals from outside the incubator.
It is essential that enterprises are evaluated from different points of view. In general terms, this can be divided into four groups, who could form an Evaluation Committee:
- Academics: include researchers and professionals knowledgeable in the technical area/technology focused on by the company
- Market: involves the participation of businesspeople, venture capitalists, and marketing professionals, who can evaluate the enterprise from the business point of view.
- Government and development institutions: ensure a macro vision of the selection process, by evaluating the impacts of the enterprise on society as a whole.
- Representative of the incubator’s management team: ensure integration among the different enterprise visions involved.
Incubator Managers and Board of Directors.
- Number of candidate companies
- Selection/stage percentage
- Variability of evaluations
The final result is the selection of companies with a high probability of success. In terms of the selection process itself, the level of subjectivity will be reduced and the entire process systematized.
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