Mike Badley isn't slipping into cliché when he says being part of a business incubator has helped his business shoot for the stars. Mike's Exeter-based Sigma Technical has created a cobot (a collaborative robot) to help astronauts get in the perfect physical condition to endure life in space, stay fit whilst on the spacecraft and to regain muscle mass after returning to Earth. “It's a resistance training and measuring device which can be used in zero gravity conditions,” he explains. “Commercial trips to space and potential flights to Mars mean we need to be more aware of the physical effects on humans.”
The company applied for and secured a place on the SpaceTech Incubation Initiative created by the South West Centre of Excellence for Satellite Applications, Cornwall's Goonhilly Earth Station, SETsquared and the University of Exeter.
An initial three-day programme included information on issues dedicated to space and satellite technology as well as practical sessions on how to pitch to investors, carry out market research and refine financial planning. Following that, the start-ups could apply for £5,000 in funding from SWCoESA to help develop their business through activities such as creating prototypes, three months business support through SETsquared Exeter, and a base at Goonhilly for one year free of costs.
“We didn't need the place at Goonhilly but we secured the £5,000 which helped us scope out some technical aspects,” says Mike. “The incubator also developed my pitching and financial skills and gave me access to legal and accounting knowledge. I'm a creator of physical products. The world of business is a steep learning curve and the incubator helped me understand it better.”
According to innovation foundation NESTA there are 205 incubators* in the UK supporting over 3,000 new early-stage businesses a year. It says 16% offer direct funding such as grants or equity investments. They are typically physical spaces, available on relatively flexible terms, providing services such as training for entrepreneurs, mentorship, access to networks and investors and specialist equipment.
They differ in scale and whilst most don't have a sector specific focus others are centred on areas such as life sciences or manufacturing. The physical spaces can come in many forms; for example, IncuBus Ventures uses a red London bus to host and promote high-growth start-ups to customers and prospects.
“We get our clients onto the bus for pop-up events to help develop their brand around the country, but we also focus on helping them engage their customers,” explains co-founder Rishi Chowdhury. “This leads to start-ups getting their products into a bigger market and reaching more customers and the corporate benefits from access to new ideas.”
The business world sees clear benefits in the use of incubators. “They are an essential catalyst for start-up businesses,” says Phil Ward of Kaizen Consulting. “They provide affordable premises which are important to many new businesses who struggle with cash. They also often provide a boardroom, which is more professional than holding meetings in coffee shops.
“Being with other 'new' businesses offers a good networking opportunity to acquire new clients and have others to speak to who are experiencing similar issues.”
Investors also take a keen interest. “We have invested heavily in a small number of incubator companies such as those in Entrepreneur First and Seedcamp. We are comfortable investing at a point where the strength of the team is the main or only attribute,” says Will Gibbs of Octopus Ventures.
However, he cautions: “There is a long tail of incubators that don't do a huge amount. Many look to add value and help with networks but many of the best entrepreneurs already have this. It can also be an efficient way to get in front of investors, but entrepreneurs should be wary of seeing, say, 20 and getting different perspectives which will likely conflict.” Mike says he is now seeking larger investment. “Investors will see that as we were part of an incubator they are not putting money into one man inventing things in a shed. It helps you build a picture of professional support around you.”
Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
* www.nesta.org.uk/blog/incubators-and-accelerators-updated-directory-uk (Apr 2017)