Evidencing demand for incubators

Superficially, and perhaps appropriately given the metaphor, new and existing incubators can be subject to the ‘chicken and egg’ dynamic: how to evidence demand from startups when the desire for an incubator by the initiator is driven (in part) by the lack of them?

Actually, this question addresses the critical success factor for incubators, especially in regions: there must be a foundation of talent, industry investment of otherwise ‘(potential) demand’ for what the incubator will offer. A desire based on deficiency is not sufficient, build it and they will come is not sensible, co-creating and evolving with those you seek to service is recommended. There must be something nascent or existent to be ‘incubated’. Without real inquiry into the prospective relationship between an incubator and its geographical or industry context, its design may be based on a guess, projection or aspiration that is mis-aligned with reality.

Practically, when considering investing in incubation services, consideration of these questions and the evidence to answer them is recommended. They are listed in rough priority order of relevance to assessors of government funding applications. If your reason for seeking evidence is the incubators’ sustainability more broadly, you may prioritise the questions differently.

This is not a strict official recommendation, rather a guide for a frequently asked question based on interpretation of assessors feedback to past applicants.

The first step in consideration a new incubator is to contact the Incubator Facilitator. This resources is also best read in conjunction with others accessible here including: support from the facilitator, resources for applicants, suggestions for partners etc..

Is there demand from startups (or founders)?

Ideally evidence should be current. Past is also useful. Prospective is also, but must be explained and evidence carefully. Examples of evidence and how to collect it:

  • Survey or EOI responses from startups to the specific incubator proposition e.g. direct responses in a webform from potential applicants from a website specifically for this incubator
  • Summary of numbers and types of startups from past events or programs e.g. number of participants and ventures in a past startup weekend 
  • Case studies of startups historically: requesting support, or being successfully supported e.g. successful startups from the region or in that industry that succeeded with limited support 

What is there evidence of demand for?

  • Survey responses showing the type of support sought by startups e.g. prioritising of training in marketing vs hackathons with industry vs mentoring by investors
  • Overview of past events or services provided and number of participants e.g. showing all programs in the last calendar year as a foundation for expanding in coming year
  • The gap in current services to different types or stages of startups that the incubation services will fill e.g. showing events for ideation and investment, but lack of services around business model development and customer validation 

Is there evidence of demand from customers, industry and investors?

  • Letters of support that evidence demand or support for startups and incubator services e.g. unique (not template) letters from partners, MoUs citing their own evidence, experience and commitment 
  • Industry reports showing the potential demand and advantage in this sector e.g third party reports on the need for AgTech innovation to keep Australia’s cattle industry competitive
  • Evidence of historical investments in startups and demand for more e.g. summary, totals or case studies of past government, private investment in startups of the type for this incubator

Is there evidence of capacity and capability to meet the demand?

  • Summary of past activities: events, workshops, training and evidence (evaluation) of their effectiveness e.g. tabular summary of types of events and support and their quality or impact on startups
  • Willingness to pay for incubation services e.g. evidence from sponsors, investors, industry or participants via survey responses or historical analysis
  • Evidence of past successes, even if different services e.g. festivals or new business units that show ability to design well, work in partnership and execute successfully

Is there evidence of a (sustainable) competitive advantage for the incubator or industry?

  • National or international reports showing trends or highlight this area e.g. projections of demand for defence technology
  • Historical or contextual evidence of the durability of the industry e.g. leading fishing industry hub for several decades
  • Unique or significant assets and investments e.g. a billion dollar, multi-decade commitment to a science project 

If you have additions or questions about this guide please get in touch with the Incubator Facilitator or provide anonymous feedback here: http://bit.ly/aro_eval

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