Portugal Case Study 2002

Benchmarking of Business Incubators

Incubator: Taguspark 1. Background and Regional Context Portugal has around 20 business incubators (8 EU-recognised BICs, 5 other incubators supported by the Ministry of Employment of which 3 have incubator space, 4 incubators operated by the National Association for Young Entrepreneurs, and 4 science park-based incubators). Some are very small with only 5-6 rooms whereas others are much bigger with 25-30 units. Taguspark is the oldest and largest science park in Portugal. It was established in 1992 on a 360-hectare greenfield site in the municipality of Oeiras on the outskirts of Lisbon. An initial investment of euro 20 million was made by the Portuguese authorities through a company in which 48% of the equity is held by private sector companies (the university, R&D institutes, banks and large companies such as Portugal Telecom. In total, there are 16 public and private sector shareholders). The science park has been developed in three main stages: to start with, the priority was to attract a number of large company ‘anchor’ tenants (these companies – Portugal Telecom, the call centre and IT operations of a major bank (BCP) and others - are also shareholders and were offered a 50% discount on the future price of land as an incentive to locate at Taguspark). During the second phase, the emphasis switched to attracting smaller technology-based companies. At the same time, the park’s infrastructure was developed with a central building complex being built containing a restaurant, shops and what was planned to be a hotel, together with an improved access road. In the third phase beginning in 1999, the business incubator started operations (in what was originally intended to be the hotel). The final phase involves the relocation of Lisbon University’s Institute of Engineering to Taguspark, a golf course and residential and hotel developments. Some 5,000 people are now employed by the 190 or so companies located at Taguspark. Eventually this figure could increase to 15,000. 2. Incubator Operations The Taguspark business incubator is located in what was originally planned to be a hotel and involves five ‘regimes’ – the ‘incubator of ideas’ (where would-be entrepreneurs are given desk space to develop their business plan), the ‘hotel of companies’, i.e. a room of up to 20 m² for 2-3 people, and after a year or so, space in adjacent buildings where companies can occupy two different types of units – innovation units (just office space) or technology units (a combination of office and workshop space) . Rental charges are graduated beginning with a 3-month payment holiday in the ‘incubator of ideas’ and a 30% discount on market rates after one year reducing to zero on a seven-year renewable contract.

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Benchmarking of Business Incubators

At present there are some 120 companies being assisted by the Taguspark incubator. These are active in a number of fields – ICT (the main activity), electronics, energyrelated, biotech, etc. About 10% of the current intake are projects that originated in the university (although most of the others have some link with academic institutions because the companies are run by graduates). The links with the university are expected to be strengthened once the Institute of Engineering opens its offices at Taguspark later this year. A variety of methods are used to market the incubator – radio and other media advertisements, participation in job shops run by the universities, a newsletter with a 3,000 circulation, etc. Space in the science park as a whole was originally marketed by drawing up a list of 2,500 companies from Dun & Bradstreet’s database. As a result of a direct marketing campaign, 30 companies applied for admission and four were given space. The incubator aims to achieve an overall occupancy rate of around 70%, thereby having the flexibility for existing tenants to take up more units as they expand. At present, however, it is 100% occupied. Business support services are provided by six of Taguspark’s own staff and CPIN (Centro Promotor de Inovação e Negócios), an EC-BIC. The BIC started operating from its own premises in central Lisbon in 1992 but decided to move to Taguspark in 1999 when the incubator was opened. CPIN has a total of seven personnel (five of who provide the professional services to companies). It is responsible for undertaking the initial appraisal of projects (see below), providing business planning advice, helping entrepreneurs to assess their support needs and identifying appropriate sources of assistance (where the assistance required cannot be provided by Taguspark itself). The BIC is also in discussion with several of Lisbon’s universities over the development of an entrepreneurship training programme. Taguspark has also developed an on-line database of tenants (‘Competence Centre’) with a view to promoting service provision and other partnerships between companies. This database is also available externally and is now attracting around 6,000 hits per month. A more recent initiative involves setting up an equity scheme for start-up companies (see below). One idea being considered is to take equity in firms in return for the provision of support services (which are currently free of charge). Taguspark and CPIN are also investigating the possibility of introducing a mentoring system. This will involve using executives from larger companies. Because the Taguspark incubator only started operating in 1999, no business has yet progressed through the entire incubation process. Some firms have, however, moved from the ‘hotel’ to either the innovation or technology units, and others have moved from these units to their own premises at Taguspark. 3. Good Practice Examples Taguspark demonstrates a number of good practices: Entrepreneur Skills Assessment – CPIN (the EC-BIC located at Taguspark) has developed a methodology for assessing entrepreneur skills. This consists of four

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Benchmarking of Business Incubators

dimensions or ‘enhancers/inhibitators’ – individual competencies, project characteristics, the project team, technology/market. Considerable emphasis is placed on assessing individual skills along side project characteristics rather than separately from one another. The methodology was developed after three year’s of research into the characteristics of start-ups that participated in IAPMEI’s ‘contest of ideas’ scheme. It is hoped that when further developed, the methodology might be used by investors to identify projects. Equity scheme – Under this, Taguspark will invest up to €50,000 in the share capital start-up companies with a limit of 25% of the equity. The intention is that after two years, companies can buy back the equity or sell it to another investor (Taguspark will help identify alternative investors). The target is to achieve a 25% pa return on the investment. Unlike some other schemes, Taguspark will not become involved in the management of companies. Virtual Science Park – Together with science parks from three other countries (Germany, Finland and Greece), Taguspark is involved in developing a ‘virtual science park’. Under this scheme, start-up companies will be offered a range of on-line business support packages. These include a self-appraisal system, a business planning module, a technology assessment tool, and guidance on identifying appropriate sources of finance, marketing and other aspects of setting up a business (there are a total of eight packages). The system includes an interactive element: for example, draft business plans can be emailed to an adviser provided by one of the science parks to b reviewed. There is also an on-line help manual and telephone support. The system, once fully developed, will also include direct links with a number of financial institutions (e.g. venture capital firms) and business support organisations which will help entrepreneurs market their ideas and support organisations, including the four science parks themselves, to identify potential clients. Each partner is developing a different aspect of the system and paying 50% of the costs with the remainder being covered by a grant from the EU’s Fifth R&D Framework Programme. The main components are in English with a front-page in other EU languages and the intention is to market the system throughout the EU. A pilot is about to being with 10 companies in each of the countries where partners are located testing the system. 4. Views on Key Issues A number of factors were identified in a paper written by Taguspark’s director1 as being critical to the successful operation of business incubator/science park:

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Taguspark’s Development: Key Success Factors and Lessons Learned’, Vasco Valera and Luis Maltez, paper presented to IASP World Conference in Bilbao, Spain, 10 June 2001.

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Benchmarking of Business Incubators

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Location – the location of Taguspark near Lisbon on a greenfield site and close to the motorway network around the capital makes it attractive to companies.

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Role of local authorities – the mayor of Oeiras played a key role in the development of Taguspark by lobbying for it to be located in the municipality in the first place and in subsequently ensuing that infrastructure (e.g. the access road) was developed. An integrated plan was developed by the local authority covering all aspects of the development of Taguspark and the surrounding area.

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Institutional model – the combination of public and private sector partners is also seen as key successes factor in the development of Taguspark. The decision to offer companies a 50% discount on the cost of land was important in securing the initial anchor tenants. Another crucial factor was the fact that shareholders had a clear view of how the science park should be developed and accepted that there would only be a long-term return.

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Image – considerable emphasis has been placed by the Taguspark management on developing the image of the science park as a prestigious location. As part of this strategy, the selective nature of the park’s admission criteria is stressed.

The success of Taguspark is contrasted with that of a similar initiative in Oporto, which is still at a relatively early stage of development. In Oporto, a decision was taken to develop a science park on three separate sites and to give the public authorities a much more central role than with Taguspark. These and other factors are seen as explaining why the Oporto initiative has made only slow progress. 5. List of Interviews Name

Position

Vasco Valera

Director, Taguspark

Carlos Freire

Manager, Taguspark (incubator)

Helena Duarte

Director, IAPMEI

Pedro Borges Dealmeida

Director General, CPIN

Paulo Duarte

Mobiscriptum

Management team

Webmajic

Management team

Webecedario

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