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Comparing the selection criteria for potential
start-ups between private and public incubators in the
Netherlands
Quireyn Kolff (11935707)
Supervisor: dhr. dr. G.T. (Tsvi) Vinig 22-06-2018
MSc. Business Administration – Entrepreneurship and Innovation University of Amsterdam – Faculty of Economics and Business
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Statement of originality
This document is written by Student Quireyn Kolff, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Table of contents
Introduction ... 4
Literature Review ... 6
Entrepreneurial Ecosystems ... 6
Attributes of Entrepreneurial Ecosystems ... 7
Incubators ... 8
Incubator selection process of potential start-ups ... 12
Incubator selection criteria of potential start-ups ... 14
Data and Method ... 19
Results... 26
Discussion ... 32
Conclusion ... 35
References ... 39
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Abstract
This study investigates and compares the selection criteria for potential start-ups of private and public incubators in the Netherlands. It examines the importance of start-up screening criteria in private and public incubators’ selection of start-ups. Empirical data was collected in the Netherlands via surveys and document analysis. Thirty-one incubators filled in the survey, including fourteen private- and seventeen public incubators. The findings suggest that both private and public incubators consider the idea or product the most important selection criterion. However, private incubators put a greater emphasis on financial criteria than public incubators. Furthermore, private incubators place more importance on the track record of the entrepreneur (Entrepreneur), reputation of the entrepreneur (Entrepreneur), global potential (Idea/Product) and whether the start-up already has an investment (Financial). This study contributes to the literature of private and public incubators’ selection criteria in the Netherlands It can also help incubators improve their selection criteria and thus their selection process. Finally, it can show start-ups looking for support how to improve regarding the criteria most valued by incubators.
Introduction
As Schumpeter et al. (1934) recognized, entrepreneurship is an important source for innovation and economic growth. Entrepreneurship appears to come from visionary individuals, but it also takes place in both large and small firms (Buenstorf et al. 2016) and in universities (Rothaermel et al. 2007). According to Spigel (2017), however, entrepreneurs cannot operate in isolation. They are influenced by, and dependent on, the ecosystem in which they operate. Although an old idea, entrepreneurial ecosystems is gaining attention in entrepreneurial research and policy. An entrepreneurial ecosystem is a general term for the resources and benefits created by a community of entrepreneurs and those who help their businesses begin, survive, and grow. These entrepreneurial ecosystems consist of material, social and cultural attributes that influence entrepreneurship and innovation in a certain region (Spigel 2017).
Incubators are part of the material attributes of the entrepreneurial ecosystem (Spigel 2017). According to Bergek and Norman (2008), incubators are organizations which provide location, services, networking, and business support for new ventures. Two kinds of
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incubators exist: private and public. Private incubators are mostly profit-based and usually provide short-term intangible resources, while, public incubators are publicly-funded organizations that aim to promote economic development through incubating small medium sized enterprises (Barbero et al. 2012). According to Peters et al. (2004), an important task for incubators is selecting which entrepreneurs to support in order to effectively allocate resources. However, the current literature fails to emphasize that private and public incubators select business opportunities based on different criteria and perspectives (Mason and Stark 2004).
Unfortunately, literature about incubators is still fragmented and descriptive. Researchers still propose varying typologies for incubators (Barbero et al. 2012; Grimaldi & Grandi 2005) and mainly focus on the performance of incubators (Chan & Lau 2005; Colombo & Delmastro 2002). Furthermore, the current literature concentrates on the networks of incubators, but these network perspectives fail to examine the activities within the incubator and the difference in priorities between private and public incubators. More specifically, according to Mason and Stark (2004), there is a literature gap on the difference in selection criteria for potential start-ups of private and public incubators. Furthermore, Bergek and Norman (2008) recommended investigating whether the incubator’s context affects its selection criteria.
To fill this gap, this paper examines the activities of the incubators and the interaction with the entrepreneurial ecosystem as well as the difference in emphasis on selection criteria for potential start-ups between private and public incubators in the Netherlands.
This study was designed as a quantitative multiple comparative case study. A survey design was used to investigate the difference in emphasis on selection criteria of potential start-ups between private and public incubators. What attributes do private and public incubators find important? How do they differ? The incubator is the unit of analysis, divided into private and public incubators.
This study started with an entrepreneurial ecosystem research project. In this research project two different ecosystems were investigated using a series of interviews and surveys (Stam 2018). The cases are ACE and StartupBootcamp from Amsterdam and UtrechtInc and
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StartupHolland from Utrecht. As this study includes quantitative research, a bigger sample size than four incubators was needed. Therefore, this study investigated 31 incubators in the Netherlands.
Answering the research topic adds knowledge to the existing literature on entrepreneurial ecosystems, attributes of entrepreneurial ecosystems, incubators (private and public), selection criteria of incubators and the differences between incubators in the Netherlands.
Literature review
Entrepreneurial ecosystems:
Entrepreneurial ecosystem is a popular concept in recent entrepreneurship policy, mostly because an entrepreneurial ecosystem is viewed as a regional, national or international economic development strategy to foster a supportive environment for innovative entrepreneurship. The concept of entrepreneurial ecosystems appeared during the change of debate in the 1980s and 1990s. At first, scholars mostly investigated personality-based theories of entrepreneurship, instead of researching the surrounding context of entrepreneurship.
This interest changed once van de Ven (1993) and Spilling (1996) presented the idea of the entrepreneurial system, exploring the effect of influence of social, cultural, political and economic forces on the entrepreneurial process. This shift introduced the concept of the economic and social context surrounding entrepreneurs (Neck et al. 2004). Entrepreneurial decision-making was not isolated from the local context of the entrepreneurs. In other words, both the individual entrepreneur and contextual factors are important (Mason and Brown 2014).
Feldman (2014) argued that the creation of a context conducive for entrepreneurship requires a multitude of private and public decisions that determine the value of a region. First, private decisions result from the aspirations and opportunities of the context where the entrepreneur operates (Wright and Stigliani 2012). Secondly, according to Stam (2014), the public context influences whether a up is necessity or opportunity driven and the speed at which a
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up grows. Acs et al. (2014) defined entrepreneurial ecosystems as “a dynamic, institutionally embedded interaction between entrepreneurial attitudes, ability, and aspirations, by individuals, which drives the allocation of resources through the creation and operation of new ventures”. Stam (2014) added that an entrepreneurial ecosystem is an interdependent set of attributes that is guided such that it facilitates entrepreneurial action.
Attributes of the entrepreneurial ecosystems:
Various researchers have attempted to construct an overview of the attributes of an entrepreneurial ecosystem. The attributes within the contextual environment form the base of the entrepreneurial ecosystem. However, the presence of these attributes is not enough; the interaction between the attributes matters as well.
Spigel (2017) created a framework that grouped the attributes of the entrepreneurial ecosystem into categories (Table 1). Spigel argues that the various attributes influence and interact. There are multiple compositions between these attributes, which lead to various types of ecosystems. These compositions contain feedback loops and mutually influencing attributes.
Spigel’s framework distinguishes three attributes of entrepreneurial ecosystems: cultural, social and material. Cultural attributes involve a regions belief’s regarding entrepreneurship. Two relevant cultural attributes are supportive culture and history of entrepreneurship. According to Aoyama (2009), cultural factors shape the acceptable norms and practices in a region. On top of that, Feldman et al. (2005) discuss that a history of entrepreneurial success stories has a positive influence on the entrepreneurial ecosystem. Stories of local entrepreneurs who succeeded in a region motivate other entrepreneurs to start. Social attributes are the resources collected through the social networks within an area. According to Spigel (2017), there are four attributes within the social category: worker talent, networks, investment capital, and mentors and role models. Lastly, material attributes are the institutions and organizations in the ecosystem that support entrepreneurial growth. Material attributes include policies, universities, infrastructure, open markets and support services, such as incubators.
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Even though they are not in the locus of the entrepreneurial ecosystem literature, incubators can fulfill many of the attributes needed in the ecosystem (van Weele et al. 2016). Incubators have received increasing attention in recent years, both academically and in policy (Eveleens et al. 2017).
Table 1: Attributes of entrepreneurial ecosystems (Spigel 2017)
Incubators:
The European Union aims to be the most competitive economy in the world and through innovation (Commission of the European Communities 2000). Start-ups are an important factor in innovation. Encouraging the establishment and growth of innovative companies is a policy priority for the European Union (Commission of the European Communities 2000). According to a study of the OECD (2002), however, the start-up failure rate is high. One of three European start-ups fails before the second year and 50–60% fail before the seventh year. One way to foster innovation and lessen the startup-failure rate is the incubator (Lalkaka 2003).
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‘Incubator’ is often used to describe organizations that establish a supportive environment for creating and developing new companies. An incubator’s primary goal is to nurture new ventures (Mian et al. 2016). The more specific category of accelerators’ goal is to enhance the growth of new startups (Cohen 2013; Pauwels et al. 2016; Stam & Bosma 2015). According to Bruneel et al. (2012), there are three generations in the evolution of business incubation. The first emerged in the 1980s and offered affordable co-working spaces and shared resources (Barrow 2001). Infrastructure is a basic function common to all incubators and a core part of their value proposition (Allen and McCluskey 1991). These co-working spaces provided physical places where people could work together on projects, while sharing ideas, equipment and knowledge. According to Chan and Lau (2005), office space is critical for incubating businesses and is the most important feature for incubatees.
In the early 1990s, it became evident that innovation and technology were becoming corner stones of economic growth. Incubators became a popular tool to encourage entrepreneurs to create new technology intensive companies (Lewis 2001). Consequently, this second generation involved more than infrastructure assistance for start-up companies. Business support, coaching and training were crucial elements for accelerating the learning curve within incubators (Hansen et al. 2000).
In the late 1990s, the third generation of incubators emerged, which emphasized providing access to services via external networks. Incubators provided entrepreneurs preferential access to potential customers, suppliers, technology partners and investors. According to Hansen et al. (2000), the most important factor for successful incubation programs is networking. By helping entrepreneurs access networks, incubators contribute to help start-ups deal with their inherent resource scarcity, and thus accelerate start-up growth (Zhao and Aram 1995).
The evolution of incubators not only depends on the resources and services, but also on the surrounding entrepreneurial ecosystem (Stam 2015). Feldman et al. (2005) argues that incubators play a significant role in an ecosystem by influencing the set of actors in the ecosystem to enable entrepreneurship. Incubators in weak regions are not likely to be successful (Degroof & Roberts 2004), while incubators in flourishing ecosystems can be
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highly productive. Some argue that incubators are the essential micro building block of flourishing entrepreneurial ecosystems (Theodoraki & Messeghem 2017).
Fernandez Fernandez et al. (2016) argue that the key of incubators in the entrepreneurial ecosystem is the arrangement of business services. Additionally, incubators can stimulate the provision of capital and enable the access to (academic) knowledge, talents and the networks of mentors and other actors that are relevant to the entrepreneurial ecosystem. Recent findings (van Weele et al. 2016) suggest that incubators create an environment that protects start-ups from unfavorable institutions.
Difference between private and public incubators
Incubators’ nature, role and effects on the entrepreneurial ecosystem are likely to differ for public versus privately owned incubators (Tamasy 2007). The two types of incubators have differential access to finance and managerial capacity and they are likely to have different goals and strategies (Allen & McCluskey 1991; Barbero et al. 2012; Grimaldi & Grandi 2005). According to Babero et al. (2012), private incubators are mostly profit based and usually provide short-term intangible resources. These organizations’ incubation strategy is private and corporate. Private incubators help startups with business development and private investment. These incubators provide private capital and access to highly valued intangible assets, such as managerial talent, QSEs and partners. The private capital and intangible assets create a fast track to market and good return on investment. Frenkel et al. (2008) argue that because of the focus on business development, private incubators tend to focus more on a specific sector than public incubators. Public incubators are publicly funded organizations whose goal is to promote economic development through incubating small medium sized enterprises.
To better understand the difference between private and public incubators, the management literature not specifically concerning incubators is helpful. According to Boyne (2002), the difference between private and public organizations can be defined in terms of ownership and funding source. In private organizations, shareholders and owners have a direct financial incentive to control managers’ performance and behavior. Furthermore, managers likely benefit from improved performance, either because they own shares in the company or
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because their pay is linked to the company’s financial success. In contrast, public organizations are owned collectively and acquire funding through taxation. Additionally, managers from public organizations usually do not receive financial benefits for higher organizational performance (Boyne 2002).
Morales et al. (2012) show that besides ownership and funding, private and public organizations also differ in a variety of other aspects. They concluded that public organizations in the Netherlands have more regulatory dependency, higher levels of accountability and a greater emphasis on rule compliance during decision-making. Nevertheless, there is still a large grey area of organizations that partly fit both definitions, which means it is still difficult to determine the difference between private and public organizations (Boyne 2002). The overarching goal of both incubators remains the same—to provide entrepreneurs with a nurturing environment and the resources they need (Grimaldi & Grandi 2005; Zedtwitz 2003).
However, in spite of the worldwide explosive growth in the number of incubators (and other related organizations, like accelerators), there is still little evidence of the effectiveness of incubators in nurturing new ventures and thus stimulating economic development (Tamasy 2007; Akcomak 2009). Isenberg (2010) argues that even if incubators are effective on the economy, it might still take 20 years to see the effects on the ecosystem. As mentioned before, the current literature mainly looks at incubators’ effect on incubatees using quantitative analyses (see for example: Chan & Lau 2005; Colombo & Delmastro 2002). Furthermore, current research focuses on incubators’ networks, which provide some insight in the context of the incubator (e.g., Eveleens et al. 2017; Hansen et al. 2000; Liu & Chen 2010). But these network perspectives fail to provide an understanding of incubators’ activities in the entrepreneurial ecosystem and the difference in priorities of private and public incubators.
According to Aerts et al. (2007), an incubator’s success depends on its tenants’ performance. Therefore, an incubator benefits from limiting its tenants’ failure rate. One way to decrease the failure rate is by subjecting the potential start-ups to a selection process. This lets the incubator determine the presence of characteristics essential to develop successful start-ups
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(Peters et al. 2014). According to Lumpkin and Ireland (1988), these characteristics differ based on the incubator.
Incubator selection process of potential start-ups:
Having described the configuration of the incubator and discussed the difference between private and public incubators, the next step is examining the process of selecting incubatees. Several researchers pointed out that the selection process is an essential component in incubation (e.g., Hacket and Dilts, 2004; Mian, 1994). Mian (1994) observes that most incubators in his dataset screen start-ups on both a formal and informal basis.
According to Bergek and Norman (2008), selection is an incubator’s decision on whether to accept a new start-up. The selection process of start-ups is an essential task for the management of incubators (Peters, Rice & Sundararajan 2004). According to Peters et al. (2004) selection is important because it is the basis for effective resource allocation, in both the incubator and the general economy (Lumpkun and Ireland 1988; Hacket and Dilts 2004).
Little has been written about the selection process of incubators. Therefore, to characterize the process beyond the current literature, studies unrelated to incubators that involve matchmaking are useful. Feeney et al. (1999) discuss the private investors’ investment process. They identified Tyebjee and Bruno (1984) as the first to identify the process of venture capital selection. As shown in Table 2, various stages comprise the selection process of venture capital firms. It is likely that such a stage-like selection process exists at incubators as well.
Bergek and Norrman (2008) developed a framework that can be used to identify best practices for incubators. The framework distinguished three components: selection, business support and mediation. Bergek and Norrman argue that selection can be divided into two
Table 2:
Five-stage venture capital investment process
Stage Description
Stage 1: Deal orgination In which potential investments reach the venture capitalist for a decision
Stage 2: Screening A step in which venture capitalists reaches an initial decision to investigate further to investment, or not. Stage 3: Evaluation A stage (or stages) during which the venture capitalitst conducts detailed analysis of the venture.
Stage 4: Deal structuring A step in which the framework of an investment is ironed out. If acceptable to both parties, the deal is closed. Stage 5: Post-investment Activity in which the venture capitalist monitors the firm and is involved to a greater or lesser extent. Source: Tyebjkee and Bruno (1984)
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areas. First, selection based on the idea, which requires the incubator to have knowledge about the relevant technology and market to assess the start-up’s viability. Second, selection
based on the entrepreneur or team, which requires incubators to judge the personality of
entrepreneurs as well as other business development requirements that can be used to evaluate entrepreneurs’ experience, skills, characteristics and driving forces.
However, selection is not just about the criteria, it also concerns the flexibility or strictness in applying them. Therefore, Bergek and Norrman created two selection approaches. First,
picking the winners, in which incubators find a few potentially successful start-ups before
they are selected. Second, survival of the fittest, in which the incubators select a large number of start-ups. In this case the selection process shifts from the incubator to the market, which will pick the winners. The selection methods of incubators mentioned by Bergek and Norman (2008) are illustrated in Table 3 below.
Table 3:
Selection strategies Survival of the fittest Picking the winners
Idea-focused selection
Entrepreneur-focused selection
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Bergek and Norman (2008) define the combinations shown in Table 3 as follows:
Survival-of-the-fittest and idea: The portfolio of incubators presumably consist of a large
number of idea owners (or upcoming entrepreneurs) with immature ideas related to a broad spectrum of fields.
Survival-of-the-fittest and entrepreneur: The resulting portfolio is diversified and consists of
entrepreneurs/teams with strong driving forces representing a broad set of ventures.
Picking-the-winners and idea: This results in a highly niched portfolio of thoroughly
screened ideas within a quite narrow technological area—often sprung from the research of highly ranked universities.
Picking-the-winners and entrepreneur: The portfolio consists of a few handpicked and
carefully evaluated entrepreneurs, commonly with ideas coupled to the research areas of a nearby university.
Incubator selection criteria of potential start-ups:
Lumpkin and Ireland (1988) found that a screening process is essential for incubation success. Incubators need to select start-ups based on factors related to success in the areas where the incubator operates. However, according to Peters et al. (2004) opinions differ regarding the appropriate selection criteria, which could explain why different incubators emphasize different criteria. After surveying US incubator managers, Lumpkin and Ireland (1988) identified three categories of screening criteria. The first is ‘experience of the management team’. It involves management marketing and technical and financial skills. The second is ‘financial strength’, which includes profitability, liquidity, price earnings, debt and asset utilization, personal investment of the management team and current size of firm. The third is ‘market and personal factors’. It involves references from others, business plan, personal persistence, the marketability of the product or service, creativity, uniqueness of the product or service, and the age of the management team.
15 Xi Description Financial Ratios Liquidity Profitability Asset utlization Price earnings Debt utilization Personal Characteristics of the management team
Age seks Technical skills Management skills Financial skills Marketing skills Aggressiveness/persistance
Market factors Current size
Growth rate
Uniqueness of product/service Marketability of product/service Written business plan
Table 4: Aerts et al. (2007), based on the article of Lumpkin and Ireland (1988)
Aerts et al. (2007) presented different selection criteria based on research by Lumpkin and Ireland (1988). They identified eighteen sub selection criteria used by incubators, under three main criteria, as seen in Table 4 below.
However, these are not the only selection criteria identified in the literature. Hacket and Dilts (2004) reviewed the research about selection and screening processes of incubators, such as Kuratko and Lafollette (1987) and Lumpklin and Ireland (1988).
There is no clear answer in the literature on the difference in emphasis on selection criteria between private and public incubators. However, they can be distinguished based on strategy. Frenkel et al. (2008) found that private incubators’ strategy matches the business interest of venture capital (VC) funds. First, just as VC funds, private incubators concentrate on selected fields. Second, private incubators mainly have an economic and business interest. Third, private incubators are profit seeking and are directly involved in start-ups by providing capital, knowledge, management skills and day-by-day support. In contrast, according to Grimaldi and Grandi (2005), public incubators sponsor a variety of fields and have a national and social interest. Furthermore, pubic incubators are not profit seeking and mostly act as intermediaries, without being involved directly in the start-up.
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Main selection criteria Sub selection criteria
The Entrepreneur
Market/industry knowledge Track record
Leadership
Referred by reliable source Reputation The Idea/Product Proprietary, protected Market acceptance Development stage Innovative Global potential The Market Fast growing
Stimulates existing market Creates new market
Not much competition in first year The VC is familiar with the market There are established distribution channels
Financials
Require a return within 5-10 years Easily made liquid (e.g., IPO, M&A) Require a return within 5 years
I will not be expected to make subsequent investments I will not participate in latter round
Investment more than 1 million guilders
Table 5:Screening criteria for business plans by Vinig and de Haan (2008)
As the strategy of private incubators matches the business interests of VC funds, those funds’ selection criteria are relevant to examine. Vinig and de Haan (2008), compared the screening process of venture capitalists’ business plans in the Netherlands and the US. They evaluated the screening process based on the relative importance of four criteria: 1) Entrepreneur 2) Product/Service 3) Market and 4) Financials. Based on the relative importance of the main and sub-criteria, Vinig and de Haan (2008) identified the difference in selection criteria between VC funds in the United States and the Netherlands. The selection criteria used in this research are shown in Table 5.
As mentioned before, literature about incubators is still fragmented and descriptive. Different studies propose different typologies of incubators and there is a literature gap on the internal activities of incubators within their ecosystem. This is because the literature focuses on the effect of incubators on their incubatees. Furthermore, there is a gap regarding the difference in the screening process and selection criteria for potential start-ups between private and public incubators. Selection criteria is a well-known construct in venture capital literature, but as Mason and Stark (2004) mentioned, little is known about how different types of funders
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emphasize selection criteria. Although Frenken et al. (2008) found that the strategy of private incubators match the business interest of VC funds, do they emphasize the same selection criteria? Furthermore, what selection criteria do public incubators find important? Finally, how do private and public incubators differ in their selection criteria in the Netherlands?
Based on these concerns, the following central research topic was formulated:
Comparing the selection criteria for potential start-ups between private and public incubators in the Netherlands
Based on earlier research about business incubators’ selection criteria (Aerts et al. 2007; Lumpkin and Ireland 1988 and Hacket and Dilts 2004) and research about the selection criteria of VC funds (Frenken et al. 2008 & Vinig and de Haan 2008), a list with twenty-six sub-criteria was created for this study. These sub-criteria are grouped under four main selection criteria: Entrepreneur, Idea/Product, Market and Financial. As shown in the conceptual model, these four criteria are used to compare private and public incubators’ difference in emphasis on selection criteria for potential start-ups in the Netherlands. This leads to the following hypotheses.
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Hypotheses:
H0: There is no difference in selection criteria between private and public incubators.
If H2 and H3 are accepted, H0 is rejected and if H0 is accepted, H2 and H3 are rejected.
H1: For all the incubators together, one of the four main criteria differs significantly in importance compared to the other three main criteria.
The emphasis on the four main selection criteria (Entrepreneur, Idea/Product, Market and Financial) are compared for the incubators (private and public) in the Netherlands. If one of the four main criteria has a significantly greater emphasis for incubators, H1 is accepted. If none of the four main criteria has a significantly greater emphasis for incubators, H1 is rejected.
H2: Private incubators put a greater emphasis on one of the four main criteria than public incubators.
The emphasis on the four main selection criteria (Entrepreneur, Idea/Product, Market and Financial) are compared between private and public incubators. If one the four main criteria has a significantly greater emphasis for private incubators than for public incubators, H2 is accepted. If none of the four main criteria has a greater emphasis for private incubators than for public incubators, H2 is rejected.
H3: One or more sub-criteria within the four main criteria has a greater emphasis for private incubators than for public incubators.
The emphasis on the sub-criteria of the four main selection criteria (Entrepreneur, Idea/Product, Market and Financial) are compared between private and public incubators.
For Entrepreneur, the sub-criteria are: knowledge of the market/industry by entrepreneur, track record of the entrepreneur, leadership ability of the entrepreneur, referred by reliable source in the ecosystem, reputation of the entrepreneur, entrepreneur is from the Netherlands, entrepreneur is from the city of the incubator.
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For Idea/Product, the sub-criteria are: idea/product can be protected/patented, demonstrated market acceptance, development stage, innovative, service related, product/technology related, global potential.
For Market, the sub-criteria are: fast growing market, existing market, niche market, little competition in first year(s), the incubator is familiar with the market, there are established distribution channels, uniqueness of idea/product.
For Financial, the sub-criteria are: investment easily made liquid (e.g., IPO, M&A), projected growth in turnover of start-up, projected profitability of start-up, incubator control in start-up/takes equity, start-up already had investment.
If one (or more) of the sub-criteria of the four main criteria has a significantly greater emphasis for private incubators than for public incubators, H3 is accepted. If none of the four main criteria has a greater emphasis for private incubators than for public incubators, H3 is rejected.
Data and method:
To answer the research topic, 31 private and public incubators (based in the Netherlands) were studied. This study started with a contact list in MS Excel with all the contact information of incubators in Netherlands (65+ incubators). Using the contact list, all the founders of the incubators were called. The research project was explained to them and they were asked to participate. When incubators were willing to participate in the research project, they were promised all the results. Out of the 65 incubators approached, 31 incubators completed the survey, for a response rate of 47,7%. Out of the 31 incubators, there were fourteen private- and seventeen public incubators.
The high response rate had three causes. First, the online survey only took five minutes. Second, if the incubator was willing to fill in the online survey, they were promised to receive the end-results after completion. Second, most of the incubators were interested to see how other incubators (private and public) evaluate start-ups. Lastly, all the incubators were called repeatedly, until they clearly accepted or declined to participate.
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Main selection criteria Sub selection criteria
Entrepreneur
Knowledge of the market/industry Track record of the entrepreneur Leadership ability of the entrepreneur Referred by reliable source in the ecosystem Reputation of the entrepreneur
Entrepreneur is from The Netherlands Entrepreneur is form the city of the incubator
Idea/Product
Idea/Product can be protected/patented Demonstrated market acceptance Development stage Innovative Sevice related Product/technology related Global potential Market
Fast growing market Existing market Niche market
Not much competition in frist year(s) The incubator is familiar with the market There are established distribution channels Uniqueness of Idea/Product
Financial
Investment easily made liquid (e.g. IPO M&A) Projected growth in turnover of start-up Projected profitability of start-up Incubator control in start-up/ takes equity Start-up already had investment
Table 6: Selection criteria for potential start-ups for incubators
This research was conducted by a combination of a quantitative multiple comparative case study with qualitative document analysis based on the results. An online-survey was used to investigate how private and public incubators in the Netherlands differ in emphasis on selection criteria of potential start-ups. Using Qualtrics, this study conducted a self-administered online survey filled in by private and public incubators in the Netherlands. The characteristics tested in the survey were expanded on based on research on incubators, and on the study of Vinig and de Haan (2008), who used selection criteria to investigate the screening processes of venture capitalists’ business plans in the Netherlands and the US. The survey was tested in a pilot study, to determine whether the questions were understandable and whether the survey’s criteria and sub-criteria defined the criteria used in the selection of potential start-ups in the Netherlands.
The survey consisted of two parts. The first related to the characteristics of the incubator. The second part tested the selection criteria for potential start-ups. To understand the rationale behind the relative importance the incubators give to each main criterion, the survey asked about the relative importance of the sub-criteria. This way, this study identified the reasons for the relative importance of the main criteria. The sub-criteria were questioned with a 6-point scale (0–5). This scale was chosen such that each advance up the scale represents a distinct increased emphasis of the criterion. Table 6 lists the main and sub-criteria. Based on the results of the online survey, a qualitative document analysis of the selection criteria of one private and one public incubator in the Netherlands was conducted.
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As discussed earlier, this study started with a research project about entrepreneurial ecosystems in the Netherlands (Stam 2018). Together with a research team of four researchers, the difference in interaction with the ecosystem between private and public incubators in Amsterdam and Utrecht were investigated. Within this research project (Stam 2018), ACE-incubator and StartupBootcamp from Amsterdam, and StartupHolland and UtrechtInc from Utrecht were investigated. These four incubators (Table 7), were the first to fill in the survey of the thesis.
Table 7: Incubators in Amsterdam and Utrecht investigated in research project (Stam 2018)
Amsterdam Utrecht
Private StartupBootcamp HollandStartup Public ACE-incubator UtrechtInc
As this study conducted quantitative research, a bigger sample size was needed. According to Baxter and Jack (2008), using multiple cases improves a study’s reliability and generalizability. Therefore, to investigate as many incubators as possible, the scope of this study changed from incubators in Amsterdam and Utrecht to the incubators in the Netherlands. Statistical analysis in SPSS requires at least 12 cases in both control groups within the unit of analysis. The unit in this study is the incubator; fourteen private incubators and seventeen public incubators filled in the survey. This is at least 12 cases in each group.
To make it possible to track and replicate the findings, the steps taken within the quantitative research method are presented:
1. An online survey was created with Qualtrics, from which it is possible to extract an SPSS file with the data set.
2. After receiving the responses to the survey, the results were exported from Qualtrics to SPSS. First, the dataset was cleaned by removing respondents with >10% missing data. The remaining cases had 100% valid responses. Next, the dataset was prepared for further analysis, by converting system missing to ‘0’ for the multiple response
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question (Q8). The age of the incubator was created by ‘2018’ minus ‘the year the incubator was founded’.
3. Descriptive analysis was performed to describe the sample and map the incubators. 4. Two types of incubators are identified: private and public. After that, these incubator
groups were tested on the phase 1 variables by a Pearson Chi Square test for the categorical variables and a Mann-Whitney U test for the not normally distributed scale variables: age incubator and number of employees.
5. A reliability analysis was performed on the sub-criteria for the four main criteria to investigate the coherence between the sub-criteria. If the Cronbach Alpha was higher than 0,7, the selection criteria were taken together as a total score. The Cronbach Alpha was higher than 0,7.
6. The sub-criteria were tested on importance using descriptive analysis.
7. The total scores of all of the four main selection criteria were calculated as the mean over the sub-criteria within each main criteria. After this, the four main criteria (measured on scale-level) were described for both types of incubators (private and public).
8. To test the hypothesis, the following tests were done:
i. H0: If H2 and H3 are accepted, H0 is rejected and vice versa.
ii. H1: repeated measures ANOVA to compare the four main criteria for both incubators taken together (incubators as a whole)
iii. H2: independent samples T-test to determine for each main criteria whether there is a difference between private and public incubators.
iv. H3: The sub-criteria (ordinal level) were each individually tested using a Mann Whitney U-Test to determine whether they differ between the two types of incubators
Survey strategy:
The survey was used to investigate the difference in emphasis on selection criteria of potential start-ups between private and public incubators. The survey was used because selection criteria is a well-known construct in venture capitalist literature. VC funds have a structural process for selecting and using well known parameters. The emphasis on these parameters can be tested to compare private and public incubators. On the other hand, VC
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funds are profit based, like private incubators. Therefore, it was important to add other more general parameters, to test the difference in screening process between private and public incubators.
The survey started with an introduction of the researcher. Next, it asks general questions about the interviewee and the incubator. The final part was introduced by a small explanation, after which the different parameters were tested using a 0–5 scale (see picture below).
Document analysis:
Text and document analyses were also conducted. Mixed method studies (which combine quantitative and qualitative methods) sometimes include document analysis. According to Bowen (2009), document analysis is useful for methodological and data triangulation and because documents are valuable in case study research.
Document analysis is a systematic procedure for reviewing printed and electronic documents. As with other methods in qualitative research, document analysis requires the data be examined and interpreted to extract meaning to develop empirical knowledge (Corbin & Strauss 2008).
Document analysis was used to verify findings and corroborate the evidence gained from the survey results on the selection criteria of private and public incubators in the Netherlands. If the documentary evidence contradicted the survey results, the results were investigated
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further. When the document analysis agrees with the survey results, this increases the credibility of the findings.
Documents about the selection process and criteria of one private and one public incubator were investigated. By analyzing these documents, the findings were verified.
Two document analysis cases:
Startupbootcamp:
StarupBootcamp was founded in 2010 in Copenhagen. This European rooted incubator/accelerator helps early stage tech founders rapidly scale their companies by providing direct access to an international network of industry professionals. StartupBootcamp has programs in London, New York, Singapore, Berlin, Amsterdam and many other cities. More information can be found at www.startupbootcamp.org.
ACE:
The Amsterdam Center for Entrepreneurship (ACE) is passionate about innovative tech and science-based ideas. They help students, researchers and alumni turn ideas into successful companies by offering training and support and connecting start-ups to their extensive network of entrepreneurs and business professionals. More information can be found at www.ace-incubator.nl.
Qualitative criteria for quantitative methods:
External validity:
The external validity of this research was limited because of the nature of the quantitative case study. This study was difficult to generalize due to the limited number of cases and surveys. Nonetheless, the understanding of the difference in selection criteria for potential start-ups of private and public incubators might be useful for other incubators, entrepreneurs and governmental institutions.
Internal validity:
The internal validity was expected to be strong. The main reason for a bias in this study was a different understanding of the selection criteria between the researcher and the incubators
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filling in the survey. Therefore, the structure and selection criteria of the survey were explained in the introduction.
Reliability:
The reliability of this research was limited, as the interpretation of the researcher is essential for the analysis of the data and each researcher has a different interpretation of the data. After receiving the results, every researcher in the research project investigated the results independently. After this, the results were discussed. This holistic approach, led to consistency in interpretation. Different researchers analyzed the data, which led to inter-observational consistency of the results.
Objectivity:
Everything possible was done to eliminate any form of bias in the survey design. The researcher stood outside of the phenomena studied, the participants filled in the survey in their own time and online. Furthermore, the criteria, which were tested on scale level (0–5), are not biased by any personal feelings or beliefs of the researcher. The objectivity was double-checked by carrying out a pilot version of the survey, which was analyzed by a quantitative teacher and the assistant professor in organizational behavior and research methods of the University of Amsterdam.
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Table 1:
Descriptive statistics of main criteria
Private incubators (n=14) Public incubators (n=17)
Selection criteria Median Mean SD Median Mean SD
Entrepreneur 3.36 3.37 0.74 3.1 2.9 0.8
Knowledge of the market/industry 4.50 4.41
Track record of the entrepreneur 3.93 2.76
Leadership ability of the entrepreneur 4.29 3.47
Referred by reliable source in the ecosystem 3.64 3.18
Reputation of the entrepreneur 4.29 2.88
Entrepreneur is from The Netherlands 1.43 1.65
Entrepreneur is form the city of the incubator 1.5 1.94
The Idea/Product 3.93 3.87 0.68 3.6 3.39 0.97
Idea/Product can be protected/patented 3.29 2.71
Demonstrated market acceptance 4.5 3.59
Development stage 3.64 3.06 Innovative 4.64 4.35 Sevice related 2.64 2.88 Product/technology related 3.93 3.65 Global potential 4.43 3.47 The market 3.57 3.71 0.84 3.3 3.11 1.04
Fast growing market 3.43 3.24
Existing market 3.21 2.94
Niche market 3.21 2.88
Not much competition in frist year(s) 3.14 2.71
The incubator is familiar with the market 3.93 3.35
There are established distribution channels 3.43 2.88
Uniqueness of Idea/Product 4.64 3.76
Financial 3.60 3.51 0.60 2.80 2.76 1.12
Investment easily made liquid (e.g. IPO M&A) 3.29 2.71
Projected growth in turnover of start-up 3.71 3.35
Projected profitability of start-up 4.21 3.59
Incubator control in start-up/ takes equity 3.21 2.24
Start-up already had investment 3.14 1.94
Results:
This section presents the results of the analysis on the main research topic. First, the descriptive statistics are presented to show the relative importance of the main and sub-criteria of private and public incubators. Second, the results of H1 are shown. To test H1, the four main criteria for both incubators taken together were tested using a repeated measures ANOVA. Third, the results of the H2 are discussed. An independent samples T-test, was conducted to test whether private incubators put a greater emphasis than public incubators on one (or more) of the four criteria. Fourth, for H3, the sub-criteria (ordinal level) were each individually tested using a Mann Whitney U-Test to determine whether the sub-criteria have a greater emphasis for private or public incubators. Lastly, based on the hypotheses, document analysis was conducted to investigate the results found in the selection process of two incubators (Startupbootcamp and ACE) in the Netherlands.
Descriptives:
The table below shows the descriptive statistics on the importance of the main and sub-criteria for private and public incubators in the Netherlands.
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Tests of Within-subjects Effects
Source Type III Sum of Squares df Mean Square F Sig. Partial Eta Squared
Componenten Sphericity Assumed 5.149 3 1.716 8.356 0 .218
Greenhouse-Geisser 5.149 2.702 1.906 8.356 0 .218
Huynh-Feldt 5.149 2.995 1.719 8.356 0 .218
Lower-bound 5.149 1 1 8.356 .007 .218
Error (Componenten) Sphericity Assumed 18.488 90 90 Greenhouse-Geisser 18.488 81.067 81.067 Huynh-Feldt 18.488 89.863 89.863
Lower-bound 18.488 30 30
Table 2:
Pairwise Comparisons 95% Confidence interval for Differenceᵇ (I) Componenten (J) Componenten Mean Difference (I-J) Std. Error Sig.ᵇ Lower Bound Upper Bound
Entrepreneur Idea/Product -.493* .096 .000 -.764 -.222 Market -.207 .115 .487 -.532 .117 Financial .007 .130 1.000 -.360 .375 Idea/Product Entrepreneur .493* .096 .000 .222 .764 Market .286* .096 .036 .013 .558 Financial .500* .120 .001 .161 .840 Market Entrepreneur .207 .115 .487 -.117 .532 Idea/Product -.286* .096 .036 -.558 -.013 Financial .215 .128 .629 -.148 .577 Financial Entrepreneur -.007 .130 1.000 -.375 .360 Idea/Product -.500* .120 .001 -.840 -.161 Market -.215 .128 .629 -.577 .148
Based on estimated marginal means
*. The mean difference is significant at the .05 level ᵇ. Adjustment for multiple comparisons: Bonferroni
Table 3:
Estimates 95% Confidence interval
Componenten Mean Std. Error Lower Bound Upper Bound
Entrepreneur 3.111 .143 2.819 3.403
Idea/Product 3.604 .156 3.284 3.923
Market 3.318 .174 2.962 3.674
Financial 3.103 .176 2.743 3.463
1) H1: For all the incubators together, one of the four main criteria differs significantly in importance compared to the other three main criteria.
Table 9: Tests of within-subjects effects
Table 10: Pairwise comparisons
Table 11: Estimates
As discussed earlier, H1 was tested using a repeated measures ANOVA. This test analyzes the mean differences between the main selection criteria for all the incubators. The results demonstrate a significant difference between the four main criteria: F(3,90) = 8,36 p < 0.01.
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T-Test - Group Statistics
Selection Criteria
Type Incubator
N
Mean
Std. Deviation
ENTREPRENEUR
Private
14
3.37
0.739
Public
17
2.9
0.800
IDEA/PRODUCT
Private
14
3.87
0.680
Public
17
3.39
0.966
MARKET
Private
14
3.57
0.844
Public
17
3.11
1.039
FINANCIAL
Private
14
3.51
0.595
Public
17
2.76
1.116
Idea/Product (mean=3.60) scored significantly higher than Entrepreneur (mean=3.11), Market (mean=3.32) and Financial (mean =3.10). The results show that both private and public incubators assign the highest value to the idea or product in their selection of potential start-ups in the Netherlands. For that reason, H1 is accepted.
2) H2: Private incubators put a greater emphasis on one of the four main criteria than public incubators.
Table 12: Independent samples T-test
Table 13: Group statistics T-test Table 4:
T-Test - Independent Samples Test
Selection Criteria t-test for t df Sig. (2 tailed) Mean difference
ENTREPRENEUR 1.678 29 0.104 0.47
IDEA/PRODUCT 1.567 29 0.128 0.48
MARKET 1.338 29 0.191 0.46
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H2 was tested using an independent samples T-test to compare the emphasis on the main selection criteria between private and public incubators. The independent samples T-test compares the means between two unrelated groups (private and public incubators) on the same dependent variables. There are several important results. First, no significant difference was found in the importance of Entrepreneur between private (mean=3.37 SD=0.74) and public incubators (mean=2.90 SD=0.80), t(29)=1.68, p=0.104. Second, no significant difference was found in importance of the Idea/Product between private (mean=3.87 SD=0.68) and public incubators (mean=3.39 SD=0.97), t(29)=1.57, p=0.128. Third, no significant difference was found in the importance of Market between private (mean=3.57 SD=0.84) and public incubators (mean=3.11 SD=1.04), t(29)=1.34, p=0.191. A significant difference was found in the importance of Financial between private (mean=3.51 SD=0,59) and public incubators (mean=2.76, SD=1.11), t(29) = 2.26, p=0.032.
These results demonstrate that private incubators place a significantly greater emphasis on the financial criterion than public incubators. Consequently, H2 is accepted.
Boxplot:
As shown in the boxplot, the median scores of the main selection criteria are compared between private and public incubators.
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3) H3: One or more sub-criteria within the four main criteria has a greater emphasis for private incubators than for public incubators:
Table 14: Npar tests: Mann-Whitney test – ranks Npar Tests: Mann-Whitney Test - Ranks
Selection Criteria Type Incubator N Mean rank Sum of ranks
ENTREPRENEUR:
Knowledge of market/industry Private 14 16.29 228.00
Public 17 15.76 268.00
Track record of entrepreneur Private 14 20 280.00
Public 17 12.71 216.00
Leadership ability of the entrepreneur Private 14 18.68 261.50
Public 17 13.79 234.50
Reffered by reliable source in the ecosystem Private 14 18.25 255.50
Public 17 14.15 240.50
Reputation of the entrepreneur Private 14 20.57 288.00
Public 17 12.24 208.00
Entrepreneur is from The Netherlands Private 14 15.57 218.00
Public 17 16.35 278.00
Entrepreneur is from the city of the incubator Private 14 13.57 190.00
Public 17 18.00 306.00
IDEA/PRODUCT:
Idea/Product can be protected/patented Private 14 17.93 251.00
Public 17 14.41 245.00
Demonstrated market acceptance Private 14 18.79 263.00
Public 17 13.71 233.00
Development stage Private 14 18.00 252.00
Public 17 14.35 244.00
Innovative Private 14 17.39 243.50
Public 17 14.85 252.50
Service related Private 14 15.32 214.50
Public 17 16.56 281.50
Product/technology related Private 14 16.64 233.00
Public 17 15.47 263.00
Global potential Private 14 19.57 274.00
Public 17 13.06 222.00
MARKET:
Fast growing market Private 14 16.82 235.50
Public 17 15.32 260.50
Existing market Private 14 17.00 238.00
Public 17 15.18 258.00
Niche Market Private 14 17.50 245.00
Public 17 14.76 251.00
Not much competition in first year(s) Private 14 17.82 249.50
Public 17 14.50 246.50
The incubator is familiar with the market Private 14 17.46 244.50
Public 17 14.79 251.50
There are established distribution channels Private 14 17.96 251.50
Public 17 14.38 244.50
Uniqueness of Idea/Product Private 14 18.93 265.00
Public 17 13.59 231.00
Financial:
Investment easily made liquid (e.g. IPO M&A) Private 14 18.14 254.00
Public 17 14.24 242.00
Projected growth in turnover of start-up Private 14 17.43 244.00
Public 17 14.82 252.00
Projected profitability of start-up Private 14 18.54 259.50
Public 17 13.91 236.50
Incubator control in start-up/takes equity Private 14 18.93 265.00
Public 17 13.59 231.00
Start-up already had investment Private 14 20.32 284.50
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Npar Tests: Mann-Whitney Test - Test Statistics
Selection criteria Mann-Whitney U Wilcoxon W Z Asymp. Sig. (2-tailed) Exact. Sig. [2*(1-tailed Sig.)] r
ENTREPRENEUR:
Knowledge of market/industry 115.000 268.000 -0.168 .867 .891ᵇ -0.03
Track record of entrepreneur 63.000 216.000 -2.273 .023 .026ᵇ -0.41
Leadership ability of the entrepreneur 81.500 234.500 -1.528 .127 .138ᵇ -0.27 Reffered by reliable source in the ecosystem 87.500 240.500 -1.296 .195 .215ᵇ -0.23
Reputation of the entrepreneur 55.000 208.000 -2.59 .010 .010ᵇ -0.47
Entrepreneur is from The Netherlands 113.000 218.000 -0.298 .766 .135ᵇ -0.05 Entrepreneur is from the city of the incubator 85.000 190.000 -1.493 .135 .186ᵇ -0.27
IDEA/PRODUCT:
Idea/Product can be protected/patented 92.000 245.000 -1.096 .273 .297ᵇ -0.20 Demonstrated market acceptance 80.000 233.000 -1.604 .109 .128ᵇ -0.29
Development stage 91.000 244.000 -1.136 .256 .279ᵇ -0.20 Innovative 99.500 252.500 -0.805 .421 .444ᵇ -0.14 Service related 109.500 214.500 -0.386 .699 .710ᵇ -0.07 Product/technology related 110.000 263.000 -0.367 .714 .739ᵇ -0.07 Global potential 69.000 222.000 -2.057 .040 .048ᵇ -0.37 MARKET:
Fast growing market 107.500 260.500 -0.468 .640 .653ᵇ -0.08
Existing market 105.000 258.000 -0.569 .569 .597ᵇ -0.10
Niche Market 98.000 251.000 -0.86 .390 .421ᵇ -0.15
Not much competition in first year(s) 93.500 246.500 -1.04 .298 .316ᵇ -0.19 The incubator is familiar with the market 98.500 251.500 -0.831 .406 .421ᵇ -0.15 There are established distribution channels 91.500 244.500 -1.128 .259 .279ᵇ -0.20 Uniqueness of Idea/Product 78.000 231.000 -1.690 .091 .109ᵇ -0.30
Financial:
Investment easily made liquid (e.g. IPO M&A) 89.000 242.000 -1.225 .221 .246ᵇ -0.22 Projected growth in turnover of start-up 99.000 252.000 -0.819 .413 .444ᵇ -0.15 Projected profitability of start-up 83.500 236.500 -1.492 .136 .161ᵇ -0.27 Incubator control in start-up/takes equity 78.000 231.000 -1.687 .092 .109ᵇ -0.30
Start-up already had investment 58.500 211.500 -2.475 .013 .015ᵇ -0.44
a. Grouping variable: TypeInc b. Not corrected for ties
Table 15: Npar tests: Mann-Whitney test – statistics
To test H3, the sub-criteria were individually tested using a Mann Whitney U-Test to determine whether the emphasis on the sub-criteria differ between the two types of incubators. Four significant results were found for the sub-criteria. In the main criterion Entrepreneur, ‘track record of the entrepreneur’ was more important for private (mean rank=20) than for public incubators (mean rank=12,71), U=63, p=0.023, and ‘reputation of the entrepreneur’ was more important for private (mean rank=20,57) than for public incubators (mean rank=12,24), U=55, p=0.010. In the criterion Idea/Product, ‘global potential’ more important for private (mean rank=19,57) than for public incubators (mean rank=13,06), U=69, p=0.040. In the criterion Financial, ‘start-up already had investment’ was more important for private (mean rank=20,32) than for public incubators (mean rank=12,44), U=58.5, p=0.013. For the other sub-criteria, no significant difference in emphasis was found, (see Tables 7 and 8 for the results). Therefore, H3 is accepted. To sum up, H0 is rejected, as H2 and H3 are accepted. Furthermore, H1 is accepted.
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Discussion
This research explored how private and public incubators in the Netherlands differ in emphasis on selection criteria. The results demonstrated that private and public incubators assign the highest value to the idea or product (H1). Moreover, private incubators put a greater emphasis on financial characteristics than public incubators (H2). Lastly, private incubators put a greater emphasis on the track record of the entrepreneur, reputation of the entrepreneur, global potential and if the startup already had an investment (H3).
This section examines the results of the research topic. It discusses the significance of the findings based on the document analysis of a private and a public incubator in the Netherlands and by comparing the results to previous studies. How does theory about the selection criteria of incubators relate to our findings? What are the implications for real world-practice?
Document analysis:
Examining the selection criteria of Startupbootcamp (private) and ACE (public) verified the findings. As H1 concluded; incubators assign the highest value to the idea or product in their selection criteria. After analyzing the selection criteria of both Startupbootcamp and ACE, this result was partly confirmed. For Startupbootcamp, of the fifty-six questions asked within the selection criteria, 14 were about the idea or product (25%). At ACE, in contrast, only three of the 18 questions were asked about the idea or product (16%). ACE focusses primarily on the Entrepreneur criteria, with 9 questions asked (50%).
Examining the selection criteria of Startupbootcamp and ACE confirmed the result of hypothesis 2—private incubators put a greater emphasis on financial characteristics. At Startupbootcamp, 10 of the 56 questions were asked about financial characteristics of the start-up (18%). At ACE, however, only one question of the 18 was asked about finances (6%).
The four results regarding H3 were tested in the document analysis. First, the survey found that private incubators put a greater emphasis on the track record of the entrepreneur than
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public incubators. This result was not confirmed by the document analysis; at Startupbootcamp, seven of the 56 questions were asked about the track record of the entrepreneur (13%), while at ACE, this was six of the 18 questions (33%). Second, the survey found that the entrepreneur’s reputation is more important for private than for public incubators. The document analysis does not confirm this result; at Startupbootcamp four questions were asked about the reputation of the entrepreneur (7%), while at ACE three questions were asked about this topic (16%).
Third, the survey found that private incubators put a greater emphasis on the global potential of a start-up than public incubators. The document analysis confirmed this result, Startupbootcamp had one question about the global potential of the start-up (2%), while ACE had no question at all about the global potential of the start-up (0%). Lastly, the survey found that private incubators put a greater emphasis on whether a start-up already had an investment. This was confirmed by document analysis; Startupbootcamp asked two questions about whether a start-up already had an investment (4%), while ACE did not ask any (0%). Table 9 shows the results of the document analysis are demonstrated. The documents that were reviewed are given in the appendix.
Table 16: Document analysis table Startupbootcamp and ACE
Previous studies:
The results were also compared to previous studies. Grimaldi and Grandi (2005), distinguished two incubating models. First is model 1, or public, incubators, whose services are more oriented towards providing tangible assets and market commodities. Second is model 2, or private, incubators, whose services focus on providing finance and more
Table 16
Document analysis Startupbootcamp & ACE
Significant results survey Startupbootcamp % of tot. questions Survey score (0-5) ACE % of tot. questions Survey score (0-5) Result confirmed/declined by Document analysis
1) Incubators assign highest value to Idea/Product 25% 2.9 16% 2.29 2) Private incubators > Public incuabtors on financial 18% 2.6 6% 1 3) Private Incubators > Public incubators on track record of entrepreneur 13% 3 33% 0 4) Private Incubators > Public incubators on reputation of entrepreneur 7% 4 16% 0 5) Private Incubators > Public incubators on global potential 2% 4 0% 4 6) Private Incubators > Public incubators on start-up already had investment 4% 1 0% 0
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intangible assets, in the short term. Grimaldi and Grandi (2005) found that private incubators put a greater emphasis on financial characteristics of the start-up, as they are directly involved in start-ups by providing capital, knowledge, management and day-to-day support. Furthermore, they found that private incubators are interested in the combination of a national and international market, while public incubators focus more on the regional and national market potential. These conclusions confirm our results, as private incubators in the Netherlands put a greater emphasis on financial characteristics. More specifically, private incubators put a greater emphasis on whether a start-up already had an investment. Moreover, our results demonstrated that private incubators in the Netherlands put a greater emphasis on the global potential than public incubators.
Aerts et al. (2007) investigated European business incubators’ role and screening processes. They classified four types of screeners: financial, team, market and balanced screeners. They indicated that incubators are unbalanced in how they screen their tenants. The market seems be the most important selection criteria (61%), followed by team screeners (27%) and financial screeners (6%). Incubators that screen using a balanced set of criteria, are rare (only 6%). Aerts et al. (2007) discussed that a balanced way of screening is the most effective for future performance.
A comparison between the results of Aerts et al. (2007) and this study, gives several insights. First, while Aerts et al. (2007) concluded that incubators in Europe mainly screen on market selection, this research suggested that incubators in the Netherlands find the idea or product most important in their selection process. This could be due to differences in national culture. In general, European firms are more team and long-term oriented and place a high value on feminine values (nurturance, people and altruism). As Aerts et al. (2007) investigated 654 European business incubators, the overall average European culture could have influenced the result. In the research of Hofstede (1980), the Netherlands scores low on masculinity (14) and high on individualism (80). The difference between the national culture of the Netherlands and the overall average culture of the 654 European business incubators could explain why the focus in selection criteria is different. Another possible explanation is that Aerts et al. (2007), did not include a separate Idea/Product selection criterion. Therefore, it is unclear how incubators would have evaluated selection criteria related to the idea or product
