The 1980s saw a surge of activity in the science park movement, with the number of parks rising from just two in 1981 (at Cambridge and Herriot-Watt Universities) to 36 by the end of the decade. Although the concept was born in 1950s America to help academics commercialise their technology, their growth in the UK was driven by the need to revive regions that suffered badly from the collapse of traditional industries and the economic downturn in the early 1980s. Today, with the knowledge economy replacing industrialisation, science parks continue to flourish - they now number over 100, according to the UK Science Park Association (UKSPA).
UKSPA defines a science park as 'a cluster of knowledge-based businesses, where support and advice are supplied to assist in the growth of companies'. To confuse matters, they can also be called research or technology parks, as well as incubators and innovation centres. But there are some important distinctions, says UKSPA. An incubator, for example, typically supports start-ups in their early stages: an innovation centre does the same, but it may also take companies well beyond the incubation phase.
Where they all differ from business parks - which are simply property developments - is that they also offer technology and business support services. These vary from one centre to another, but science parks tend to offer practical help with things like business plans, marketing and funding, as well as standard business support services and research facilities.
'A nice environment, with good security, catering facilities and modern meeting rooms, helps to support companies on a science park,' says Roz Bird, UKSPA's business development manager.
A science park location also helps with access to finance, she says. It gives banks and other lenders a better perception of the company, since they know tenants will have been through a fairly rigorous checking process and will also be operating within a supportive environment. Many science parks also have their own funds. The Nucleus - the London Science Park's science and innovation centre, which is due to open this month - provides access to a �500,000 seed capital fund.
The focus of science parks has tended to remain local or regional - the London Science Park at Dartford, for example, will be part of the Thames Regeneration Scheme - and they often have links to local higher education or research institutes. The Nucleus has ties to Imperial College and the Universities of Kent, Greenwich and East London.
The Nucleus will provide 30,000 square feet of accommodation for start-up and stage two science and technology companies. But in common with other science parks, the Dartford development will eventually accommodate more established organisations alongside newer businesses. This, says Bird, is one of the key attractions of science parks to young companies. 'Most healthy science parks have a mix of large and small organisations. In some sectors where it's possible to share expensive pieces of equipment, this mix is beneficial to the small companies as they're able to borrow equipment that they could never afford to buy.' That also extends to employees. Working among other science and technology companies makes it easier for small companies to share talent when they need help with specific projects.
The mix also benefits large companies, says Bird, enabling them to speed up time to market by outsourcing some product development work to their smaller neighbours.
But it's the flexibility of science park facilities and leases that particularly appeal to occupiers, she says, providing them with the option to scale up to larger premises if things go well, or quit their premises if they don't. Agreements are typically 'easy in, easy out', normally on a month-by-month basis. Occupiers of the Nucleus, for example, will be able to expand into self-contained office and lab space as they grow.
So how does the commercial performance of science park tenants compare to similar businesses located elsewhere? The last available research from UKSPA, published in 2003, shows that the majority of respondents didn't see any perceived benefits of a science park location in terms of access to new markets, technological development and business networking. But intriguingly, the research indicates that companies based in science parks have seen higher growth rates than those elsewhere. The research team surveyed senior managers at 876 companies, of whom 617 were based on science parks. It found that, over a three-year period, a 'significantly higher' number of science park tenants had bigger turnovers than three years previously, compared to those that were off-park. It also found that a higher proportion had 10% more full-time employees than three years earlier.
By Alison Hjul, Webster Buchanan Research
Thursday, May 24, 2007
Virtual Networking Bennefits
Popular wisdom has it that if you walk down University Avenue in Palo Alto, in the heart of Silicon Valley, one in twenty of the people you walk past will be worth $3 million. It’s probably not strictly accurate – for one thing, people with that kind of money don’t need to walk anywhere – but it’s a good indication of just how many people have made it good.
What would the figure be for London? Within the Square Mile, no doubt fairly impressive - but outside the financial sector, would you encounter the same percentage of millionaires? If you assume that the official capacity of a tube carriage is about 150 – I can’t vouch for that figure, but it’s the best that a Google search can throw up – the next time you squeeze into a packed train, ask yourself how likely it is that seven and a half people in the same compartment have started to hit the big time.
The preponderance of wealthy people in Silicon Valley isn’t just an interesting statistic, it’s an important part of what makes the area’s unique entrepreneurial mix. While the wealth is badly distributed – the city of East Palo Alto, in fact, has long been plagued by crime and poverty – there are certain democratising forces at play. It’s partly a cultural thing, an expectation that those who make it big will put something back into the business community – and what they’re putting back, of course, is both money and expertise.
Lots of people have tried to put their finger on what makes Silicon Valley unique – just last Friday, in fact, it was the closing topic at a global tech conference in Palo Alto – and the answers are always complex. It’s partly the risk-taking mentality – a combination of Gold Rush legacy and the day-to-day reality of driving over bridges and working in high-rise buildings on top of a patchwork of earthquake fault lines. It’s partly the fact that the symbols of entrepreneurial success are so visible, from the garage where HP was set up to the sprawling Mountain View complex occupied by Google and the HQ of Genentech.
And it’s partly that these companies go so far out of their way to promote entrepreneurialism within their own ranks – which is why Google engineers are famously encouraged to work on their own development projects one day a week, and why at least two of Genentech’s blockbuster therapies had their roots in years of unofficial ‘underground’ research carried out by their own scientists.
But it’s also partly an engrained belief in sharing knowledge and experiences. The stereotype of the British stiff upper lip has long been diluted, but many Brits do still demonstrate a reluctance to boast about their achievements and residual embarrassment about past cock-ups, business or otherwise. The stereotypical Californian may come across as more laid back than many of their East Coast peers, but they’ve never been shy to talk about either success or failure. Failure, in fact, is still seen as a learning experience – so long as you can prove you did actually learn and won’t repeat the same kind of mistake, investors will often see it as a plus point on the road to entrepreneurial wisdom.
This knowledge sharing helps explain how Silicon Valley has evolved into a series of micro-clusters, each of them representing a community of all the different skills and services required to develop particular types of products and services. The New York Times recently reported on how Silicon Valley is effectively “a collection of remarkably local clusters based on industry niches, skills, school ties, traffic patterns, ethnic groups and even weekend sports teams”. The Times pointed out that if you’re looking to set up an IT hardware company – particularly in networking or semi-conductors – you’re best off in the south of the Valley around San Jose (home among others to Cisco Systems) and Santa Clara (where Intel is based). San Francisco in the north, meanwhile, is a hub for digital design and online advertising. If you’re a hybrid of two different disciplines – combining software engineers with consumer marketing, for example – you either need to locate yourself somewhere in the middle, set up separate operations, or be prepared to spend a disproportionate amount of your life driving along Highway 101.
Clusters tend to be self-fulfilling, attracting skilled resources in the form of both prospective employees and potential business partners, from specialist lawyers to public relations agencies. Because of the relative openness of the Valley, particularly in terms of the community’s willingness to share experiences, start-ups that are drawn to clusters of like-minded companies effectively end up operating with an in-built support mechanism.
Even if it’s not possible to recreate a business and social environment like Silicon Valley elsewhere – and many have tried but failed – many of the same positive characteristics have become evident in London in recent years, from support networks to micro-clusters. For entrepreneurs, this presents both practical and strategic opportunities. At a practical level, the cluster factor is probably a better factor to base location decisions on than proximity to your home, your favourite restaurants, or any of the other arbitrary factors that tend to come into play. At a more strategic level, everything company founders can do to suck out knowledge from people who’ve made it is going to help them. London’s culture may not yet match Silicon Valley’s in terms of the experience that successful entrepreneurs routinely put back into the business community – but there’s nothing to stop entrepreneurs seeking out knowledge themselves.
By Keith Rodgers, Webster Buchanan Research
What would the figure be for London? Within the Square Mile, no doubt fairly impressive - but outside the financial sector, would you encounter the same percentage of millionaires? If you assume that the official capacity of a tube carriage is about 150 – I can’t vouch for that figure, but it’s the best that a Google search can throw up – the next time you squeeze into a packed train, ask yourself how likely it is that seven and a half people in the same compartment have started to hit the big time.
The preponderance of wealthy people in Silicon Valley isn’t just an interesting statistic, it’s an important part of what makes the area’s unique entrepreneurial mix. While the wealth is badly distributed – the city of East Palo Alto, in fact, has long been plagued by crime and poverty – there are certain democratising forces at play. It’s partly a cultural thing, an expectation that those who make it big will put something back into the business community – and what they’re putting back, of course, is both money and expertise.
Lots of people have tried to put their finger on what makes Silicon Valley unique – just last Friday, in fact, it was the closing topic at a global tech conference in Palo Alto – and the answers are always complex. It’s partly the risk-taking mentality – a combination of Gold Rush legacy and the day-to-day reality of driving over bridges and working in high-rise buildings on top of a patchwork of earthquake fault lines. It’s partly the fact that the symbols of entrepreneurial success are so visible, from the garage where HP was set up to the sprawling Mountain View complex occupied by Google and the HQ of Genentech.
And it’s partly that these companies go so far out of their way to promote entrepreneurialism within their own ranks – which is why Google engineers are famously encouraged to work on their own development projects one day a week, and why at least two of Genentech’s blockbuster therapies had their roots in years of unofficial ‘underground’ research carried out by their own scientists.
But it’s also partly an engrained belief in sharing knowledge and experiences. The stereotype of the British stiff upper lip has long been diluted, but many Brits do still demonstrate a reluctance to boast about their achievements and residual embarrassment about past cock-ups, business or otherwise. The stereotypical Californian may come across as more laid back than many of their East Coast peers, but they’ve never been shy to talk about either success or failure. Failure, in fact, is still seen as a learning experience – so long as you can prove you did actually learn and won’t repeat the same kind of mistake, investors will often see it as a plus point on the road to entrepreneurial wisdom.
This knowledge sharing helps explain how Silicon Valley has evolved into a series of micro-clusters, each of them representing a community of all the different skills and services required to develop particular types of products and services. The New York Times recently reported on how Silicon Valley is effectively “a collection of remarkably local clusters based on industry niches, skills, school ties, traffic patterns, ethnic groups and even weekend sports teams”. The Times pointed out that if you’re looking to set up an IT hardware company – particularly in networking or semi-conductors – you’re best off in the south of the Valley around San Jose (home among others to Cisco Systems) and Santa Clara (where Intel is based). San Francisco in the north, meanwhile, is a hub for digital design and online advertising. If you’re a hybrid of two different disciplines – combining software engineers with consumer marketing, for example – you either need to locate yourself somewhere in the middle, set up separate operations, or be prepared to spend a disproportionate amount of your life driving along Highway 101.
Clusters tend to be self-fulfilling, attracting skilled resources in the form of both prospective employees and potential business partners, from specialist lawyers to public relations agencies. Because of the relative openness of the Valley, particularly in terms of the community’s willingness to share experiences, start-ups that are drawn to clusters of like-minded companies effectively end up operating with an in-built support mechanism.
Even if it’s not possible to recreate a business and social environment like Silicon Valley elsewhere – and many have tried but failed – many of the same positive characteristics have become evident in London in recent years, from support networks to micro-clusters. For entrepreneurs, this presents both practical and strategic opportunities. At a practical level, the cluster factor is probably a better factor to base location decisions on than proximity to your home, your favourite restaurants, or any of the other arbitrary factors that tend to come into play. At a more strategic level, everything company founders can do to suck out knowledge from people who’ve made it is going to help them. London’s culture may not yet match Silicon Valley’s in terms of the experience that successful entrepreneurs routinely put back into the business community – but there’s nothing to stop entrepreneurs seeking out knowledge themselves.
By Keith Rodgers, Webster Buchanan Research
Sunday, May 20, 2007
Planning the Perfect Pitch
First impressions really count when you present to investors, but even well-established companies can struggle to get their message across. Every entrepreneur out there wants to make sure they have the perfect investor pitch deck with which to impress investors.
One of Gateway 2 Investment's first clients is typical of the paradox many start-ups face when they look for finance. The company, which helps media organisations communicate with their clients across different channels and counts Mercedes, Channel Five, Endemol and The Guardian as customers, says: 'It's a complex environment. Our customers understand what we do, but investors didn't. What they wanted was the elevator pitch, but it always seemed to take us 22 minutes to do the one-minute pitch. That was the problem.'
Here was a company that has proven technology and a solid customer base, and yet it couldn't get the ear of investors. G2I helped by bringing investors to the table who were prepared to listen to a more complex proposition, and the company now has agreements in place for a considerable investment to follow: 'It allowed us to engage with investors for a longer period of time and in a way that suited us, so we could explain our business better and its benefits.'
It's not uncommon for smaller organisations to struggle with the presentation of a business idea. In fact, the government-backed Access 2 Finance scheme was set up in response to research backed by the London Development Agency, which found that the key reason businesses failed to raise finance was the way they presented themselves to investors. 'You want investors to ask questions,' says Richard Ellis, a business advisor with Business Link 4 London. 'But you don't want them to have reams and reams of questions. The business plan should cover off most of what they need to know.'
In many cases, however, poor presentation is a symptom of deeper running problems, and many start-ups struggle with more fundamental issues than merely explaining their idea. Geoff Sankey, managing director of The Capital Fund, says a surprising number of companies neglect the basics of sales, product and management - out of some 40 opportunities he receives every month, 'quite a number' are purely conceptual. 'People say they have an idea - and would we like to invest in it?'
Doug Richard, chairman of Library House, has had plenty of experience of entrepreneurs with great ideas but little perception of their market potential. As well as providing an on-line investment readiness test at Library House, Richard is a panellist on the 'Dragon's Den' TV programme, for which he spent 180 hours listening to pitches from 82 companies. 'I know what it's like when things don't exist to make entrepreneurs investment-ready,' he says, adding: 'But it's not rocket science - if it was then companies like Microsoft wouldn't exist. It's a matter of step-by-step planning and approaching that in a logical fashion.'
Richard says many entrepreneurs get so caught up in their idea that they ignore core issues such as whether there's a market for their product. 'I call them Hamlet investments [after the cigar adverts] - fantastic opportunities that are fatally flawed.' Richard agrees what entrepreneurs need is 'to be put in a position where they can get an honest answer, to understand what investors think about, what they look for and how to approach them.' Advisors may be able to help pick holes in a presentation and present the company in a more favourable light. 'Sometimes the business is ready, but it needs to fix or consolidate a few things, then come back in six months,' says Ellis. 'It's a clich�, but you'll never get a second chance to make a first impression.'
One of the key pieces of advice any professional adviser will offer is to give the process enough time and effort. Companies need to be prepare upfront for the fact that it can take six to nine months to hone a business plan, present to investors and get money in. 'If you go into this half-baked, you'll get a half-baked outcome,' says John Blowers, managing director of equity funding exchange AngelBourse. 'But if you can get together enough funds to spend on the right advisor and raise enough finance to extend the runway sufficiently, then it's worth the effort.'
By David Longworth
One of Gateway 2 Investment's first clients is typical of the paradox many start-ups face when they look for finance. The company, which helps media organisations communicate with their clients across different channels and counts Mercedes, Channel Five, Endemol and The Guardian as customers, says: 'It's a complex environment. Our customers understand what we do, but investors didn't. What they wanted was the elevator pitch, but it always seemed to take us 22 minutes to do the one-minute pitch. That was the problem.'
Here was a company that has proven technology and a solid customer base, and yet it couldn't get the ear of investors. G2I helped by bringing investors to the table who were prepared to listen to a more complex proposition, and the company now has agreements in place for a considerable investment to follow: 'It allowed us to engage with investors for a longer period of time and in a way that suited us, so we could explain our business better and its benefits.'
It's not uncommon for smaller organisations to struggle with the presentation of a business idea. In fact, the government-backed Access 2 Finance scheme was set up in response to research backed by the London Development Agency, which found that the key reason businesses failed to raise finance was the way they presented themselves to investors. 'You want investors to ask questions,' says Richard Ellis, a business advisor with Business Link 4 London. 'But you don't want them to have reams and reams of questions. The business plan should cover off most of what they need to know.'
In many cases, however, poor presentation is a symptom of deeper running problems, and many start-ups struggle with more fundamental issues than merely explaining their idea. Geoff Sankey, managing director of The Capital Fund, says a surprising number of companies neglect the basics of sales, product and management - out of some 40 opportunities he receives every month, 'quite a number' are purely conceptual. 'People say they have an idea - and would we like to invest in it?'
Doug Richard, chairman of Library House, has had plenty of experience of entrepreneurs with great ideas but little perception of their market potential. As well as providing an on-line investment readiness test at Library House, Richard is a panellist on the 'Dragon's Den' TV programme, for which he spent 180 hours listening to pitches from 82 companies. 'I know what it's like when things don't exist to make entrepreneurs investment-ready,' he says, adding: 'But it's not rocket science - if it was then companies like Microsoft wouldn't exist. It's a matter of step-by-step planning and approaching that in a logical fashion.'
Richard says many entrepreneurs get so caught up in their idea that they ignore core issues such as whether there's a market for their product. 'I call them Hamlet investments [after the cigar adverts] - fantastic opportunities that are fatally flawed.' Richard agrees what entrepreneurs need is 'to be put in a position where they can get an honest answer, to understand what investors think about, what they look for and how to approach them.' Advisors may be able to help pick holes in a presentation and present the company in a more favourable light. 'Sometimes the business is ready, but it needs to fix or consolidate a few things, then come back in six months,' says Ellis. 'It's a clich�, but you'll never get a second chance to make a first impression.'
One of the key pieces of advice any professional adviser will offer is to give the process enough time and effort. Companies need to be prepare upfront for the fact that it can take six to nine months to hone a business plan, present to investors and get money in. 'If you go into this half-baked, you'll get a half-baked outcome,' says John Blowers, managing director of equity funding exchange AngelBourse. 'But if you can get together enough funds to spend on the right advisor and raise enough finance to extend the runway sufficiently, then it's worth the effort.'
By David Longworth
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