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Lord Sainsbury of TurvilleIncubating dot.coms: The Future Role of Internet Incubators |
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Good morning Ladies and Gentlemen. I am delighted to have this opportunity to speak to an audience representing such a broad spectrum of people involved with Business Incubation. The Government believes that incubation has a key role to play in encouraging and supporting the start up of high-tech businesses, and we are actively working in partnership with industry to expand all types of business incubation in the UK. In the US Incubators are getting some negative press, particularly Internet Incubators. Last week, the International Herald Tribune referred to incubation as "The dreaded 'I'word". Specialist incubators are strongly affected by the health of the sector in which they work, and affected by the attitude of the market. So the recent media and market reaction against internet businesses has made it a lot tougher for Internet Incubators. But after the shouting has died down, the well-conceived dotcoms and incubators are still here, and still have great potential as today's speakers demonstrate. In the US incubators such as Idealab and Garage.com are very successful also. And we in Government remain convinced of the value of incubation. We are not interested in whether it is fashionable - We are interested in what is valuable and what works. And incubators can and do work:
The value of this to the economy cannot be underestimated. So if the Government thinks it's so important, what are we doing about it? My Department has had a close working relationship with UKBI from its inception, when we provided funds from our Sector Challenge programme to help UKBI become more than just a bright idea. Malcolm Buckler is a member of my clusters policy steering group, giving valuable input from the industry. The group is reviewing how we can encourage the growth of clusters and a key area we have looked at, with Malcolm's help, is the role of business incubation. Our work so far has shown that it can play a valuable role in nurturing young companies, and that this can help in the development of business clusters. DTI, along with HSBC, Oxford Trust and Advent, sponsored UKBI's Impact Assessment Study, looking at the impact of incubation on the development of new firms and local economies across the UK. DTI's Small Business Service is very keen to encourage the development of incubation as part of its start-up policy. Not just creation, but ensuring quality and standards. We will be working hard with UKBI and the incubator community to make this happen. This Government is also helping more directly. In the March 2000 budget the Chancellor announced £50m of new funding to support cluster development. This new money is being channelled through a new fund -the Innovative Clusters Fund - and will enable the Regional Development Agencies to support clusters, including business incubation, in line with their Regional Economic Strategies. The RDAs have moved quickly in putting forward positive proposals for using the new funding, and are taking this work forward. Amongst the proposals being considered for funding are some excellent examples of how incubators can contribute towards a climate of innovation in all parts of the country. Some of these projects will be specifically targeted at internet companies.
To expand this type of work, we recently announced further Regional Innovation Funding of £115m over three years. Together with the Innovative Clusters Fund, this will provide RDAs with £50m a year to promote regional competitiveness, innovation - including key innovative clusters - and economic development. Where does Internet incubations fit into our plans. Internet Incubators need to cater for the unique needs of Internet companies, as well as offering standard incubation services, for example:
And last Tuesday, Patricia Hewitt announced details of the DTI's £5.5m Internet Mentoring Initiative. Of this, we are channelling a significant proportion into an Internet Incubator Fund. Working closely with the RDAs and the Business Link network, the fund will germinate new incubators and help existing internet incubators to expand. It will also help existing generalist incubators to become specialists in Internet Businesses We are currently carrying out a tender competition to choose a contractor to operate the incubator scheme. Soon afterwards, details on the scheme and how to bid for funding will be widely promoted - including, we hope, on the UKBI website. We intend to make the first awards under the scheme next spring, Some parts of the UK already have excellent examples of internet incubation in place, and the funds will, therefore, be targeted on regions where these support mechanisms need to be either created or enhanced. They will focus on areas outside the London, South East and East of England regions. The Mentoring Initiative will also encompass a new web-based resource. This will be aimed at new and emerging internet companies, and also traditional firms who are making the transition to internet-based business. Launching in the Spring, this portal will bring together sources of advice and information from both the public and private sector. It will complement the Small Business Service gateway, but will be tailored for the unique needs of internet companies: What they need to know. At the right level. And in their own language. Amongst many other services, this portal will include:
All of this will help internet businesses make informed business decisions at these vital early stages of development. The rest of today's conference will concentrate on what Internet Incubators need to do in order to succeed, and to help the firms under their umbrella to thrive. I hope that all of you will gain a better understanding of these issues, and that you will take away new ideas and practical solutions. The Government is determined to create the best possible environment for innovation in this country and an increase in incubators is part of our plans. We have made a good start but given the scale of the scientific and technological changes taking place, there is still much to be done. Thank you. |
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Other speeches by Lord Sainsbury of Turville
(the following are available from the archive) |
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