Currently there are between 600 to 750 business incubators in the United States according to the National Business Incubation Association (NBIA); and between 2000 and 3000
worldwide. The modern form of business incubators dates back only about 25 years to the mid 1970's in the U.S. when states hard struck by economic recession began to use them for revitalization of hard hit cities and towns.
However, the basic model of incubation can be tracked back over 100 years in the U.S., and even further in Europe.
In the mid 1970's, during the "rust belt" recession, several states opened business
incubators to foster economic development through job growth. In fact, the first incubators in the U.S. were started in Pennsylvania and are still in operation today. By 1980, there were fewer than 10 incubators open in the U.S.
In the 1980's, the incubator model began to be used for technology commercialization. These incubators were set up to commercialize technology developed in U.S. Government and state sponsored university labs. The Oak
Ridge incubator in Tennessee and the Atlanta Technology Development Center located at Georgia Tech, both circa 1980, are examples of these type of incubators. The primary intention of these incubators was to foster the
commercialisation of technology developed in research labs into products or services that would generate a profit for the business owners, income for the labs through patent and technology licensing, and provide high-tech jobs for
the surrounding communities. By the end of the 1980's, there were an estimated 400 to 500 incubators in the U.S.
The recession of the late 80's and early 90's saw a decrease in the number of incubators in the
U.S. as state and federal government cutbacks meant many of the programs could not be funded out of state coffers. Despite this initial decline, the deep recession of the early 90's has actually spurred a boom in the incubator
industry. As states and towns across America sought ways to spur economic growth, incubator programs began to appear faster than ever. In addition, the 1990's saw the advent of a new type of incubation - the "for-profit"
incubator. While the first "for-profit" incubators emerged during the technology frenzy of the mid 80's (think bio-tech, genetic engineering, and computers), many failed due to a high number of bad bets. Their numbers
were very few and it is not known if any survived the deep recession at the end of the decade.
In the 1990's, "for profit" incubators have been fueled by Venture Capitalists' and Angel Investors'
increasing appetite for technology start-ups. By the late 1980's, "for profit" incubators represented only about 4% to 6% of the total (approx. 36). Today, that number has grown to between 10% and 20% of the total
(between 75 and 165). At one point in 1996, the NBIA estimated that incubators were opening in the U.S. at a rate of 5 or 6 per month.
According to a recent study carried out by the NBIA, business incubation
programmes in the US are having impressive measurable impacts on the communities they serve and are playing a significant role in their economic development.
US Incubator Characteristics
- About half of all incubators have opened since 1992
- 45% of incubators are located in urban areas; 36% in rural areas.
- 43% of incubators are mixed use, serving a variety of companies.
- 10% of incubators are technology oriented.
- 75% of incubators are less than 40,000 square feet in size.
- 51% of all facilities are not-for-profit and are sponsored by the government and/or other non-profit organisations.
- Only 8% of all North American facilities are private/for profit. These incubators are run by investment groups or by real estate development partnerships.
Impact
- In total, graduate and current client companies of American incubators have created nearly 19,000 companies and more than 245,000 jobs.
- The average number of current client companies per incubator is 20.
- The average number of jobs created by current client companies per incubator is 85.
- 73% of all incubated companies are still in business.
Business Incubation In The Developing Countries
The incubator characteristics in seven countries' studies are summarized in the table below
These countries represent more than half the incubators in the industrializing world.
The typical incubator can be characterized as leasing something over 3,000 squaremeters to two dozen tenants. Each tenant employs on the order
of fifteen employees.
