THE IMPORTANCE OF R&D AND TECHNO PARKS FOR YOUNG ENTREPRENEURS

RUSTAM LALKAKA

President, Business &Technology Development Strategies LLC

I am delighted to be back in Turkey and to talk this morning about Technology-business incubators and the emerging trends. Let me clarify that there is some problem about (Norman-Kletcher) always in Turkey, technology incubator is micro environment which selects potential entrepreneurs and helps them commercialize their technologies whereas technology park is much larger park-like environment, zone with many many hectors and takes many many millions of dollars of many years to develop, Turkey presently has as was said about 15 incubators and as you see in this graph there are today worldwide about 4,5 thousand incubators. The interesting point is that for the first time this year the number of incubators in developing and restructuring post communist has exceed the number in developed or industrial countries, this is an amazing development considering that incubators started largely as an initiative of UNDP in many developing countries only 8-9 years after they’ve started elsewhere so this is the important point.

If you look at the bottom, what I am saying is that what the world needs now is not more incubators in numbers but incubation which is the process, the process of value adding services of creating access to external resources what we need is better incubation and just not more and more incubators. As the number of the incubators in the world increases they have come under great criticism as to their performance and I believe that we have to look at the future trends and the first one of them is that we have greatly need to enhance the performance of incubators nationwide. This means that incubators will increasingly have to seek some kind of certification an ISO certification for instance and incubator managers must be accredited just as we have chartered engineers, chartered accountants and must continuously improve his or her capabilities so this is the very first point. The next is that we need to establish incubation as an integral part of the whole system, the whole national innovation system and all entrepreneurship development system and the SME system, it cannot stand alone, it is a part of a larger constellation of forces. Thirdly the big problem of entrepreneurs everywhere in rich countries and poor is to find finance and more and more in the fix generation of incubators I propose a seed venture capital facility must be a part of the incubator itself under the management of the incubator team. A seed venture facility or what you might call an angel network. Turkey has a long history of incubators, the first one starting in early 1990’s at METU and yet Turkey has no incubator association. We need an association that fulfills the role of advocacy of communication, of exchanging experiences so clearly we need to take steps to start an incubation association and then a system of benchmarking and improving the quality of existing incubators finally a system to mobilize the expatriate Turks who are abroad and who have tremendous expertise and tremendous network of contacts, they need to be mobilized to improve the system over here again finally public subsidy that is to say support from KOSGEB or others from TUBITAK is essential to start to incubator but there must be steps taken immediately to reduce the level of subsidy and make the incubator self-sustaining in a very short time. The government gets enormous benefit from incubators therefore we need not call it subsidy, let’s call it social venture capital. Incubator is emerging now in the future as a platform for public private cooperation in the whole process of venture creation as some of you may know there was a very fine study initiated by UNDP recently called the UN Commission on private sector and development and one of the important things that came out of it was that the bottom of pyramid, the number of people, the income of people in the rural communities is today much larger and much more exciting opportunity for transnational corporation then what you might call the top of the pyramid. The bottom of pyramid has 4 billion people with 2000-dollar purchasing power parity income and they constitute a vast market so we have to pursue and induce force our multinational corporation, the large corporations in the country and outside to serve this larger community.

We need a new model, I call it e-incubator for empowerment, the bulk of our people live in rural communities on the edge of poverty, the new ICT’s enables us to provide distance counseling, distance mentoring, networking, facilitation using ICT and bringing people face to face periodically as and when needed so we need to develop e-incubators where we split the incubation process from the incubation space, take the services to the incubator incubatee’s wherever they are and serve them there through a physical hub and satellite network. Deal with the community as a cluster not as individuals, adopt experience of micro finance of vulture systems; these are the emerging devices, modalities that Turkey must need to experiment on.

Finally incubators are not for technology alone, 99% of incubators in the developing or industrializing countries are focused on technology, only 25-30% of incubators in Europe and in America are focused on technology. There are kitchen incubators, there are arts incubators, and these are the areas that we need to support so we need to stimulate social innovations and social entrepreneurs such as NGO’s in the future developments of Turkey. There is a great deal of synergy between technology part the big one and …….2 or 3% of exports have a strong technology base, those can be rectified, changed by this nexus between the technology incubator, the technology park, university and the community. I submit that we need to have new models of incubation, first of all let us develop what are called increasingly international business incubators. These are incubators to facilitate the soft landing of small or large companies into complex markets such as China or Turkey. This is a Chinese pioneering initiative, we set up an incubator for returning Chinese scholars, and we will give them the task of developing such an incubator. In India for instance many of the best incubators are the ITI’s and these have bee financed and supported by people Indians returning from Silicon valley and elsewhere so we need an incubator which is based upon bringing in foreign companies and I am confident that the EU accession process will provide plenty of opportunity and plenty of funds if we know how to access those funds in developing some of these new modalities.

Summarizing, enhance the incubation performance to higher levels of sustainability, we participated recently in an EU funded study, although I am an American company but working with UK partners on benchmarking of incubators in Europe and we found that if the subsidy provided to European incubators and Turkish incubators for that matter would reduce our stock, 2/3^rd of them would either close down or would have to greatly lower their operations so the important thing is to raise the income from the incubators and lower the level of subsidy we need to accredit the incubators and their managers to meet higher professional standards. Emphasis on monitoring, evaluating, benchmarking to raise those at the lower level to higher-level performance. The convergence of management consultancy and engine equity in the incubator platform as I said earlier we could develop seed venture capital company under the management of incubator normally entrepreneurs started incubators using friends and family and their credit cards but before they are ready for traditional venture capital there is a vast gap where they need only 50.000 or 100.000 dollars and can come from angel networks. We need to develop e-incubation to empower communities on distance spaces, we don’t need to bring them to Istanbul or to Ankara, we can deal with them where they are through portals and giving them access all varieties of support. New models, incubators for profit today 20 to 30% of incubators worldwide are for profit, they start with initial government subsidy but they’re very quickly develop sources of income through IPO’s or whatever. All over the world there is a tendency or trend to set up incubators for women, we are setting up one in China for instance in Cancin, another one in Semerkant, women have unique problems when it comes to starting enterprises an access in credit in approaching market places etc. so incubators for men and women could be a priority and it is not only ICT that belongs in incubators, there are more and more incubators in biotechnology, in nanotechnology, in renewable energy and in environmental technologies, ICT is pervasive technology it does not need any special support now, we need to concentrate on the advance and frontier technologies. Start an international business incubator to facilitate the soft landing of European companies in Turkey, first one could be in Istanbul another one in Ankara there is enormous interest and experience now in international partnering. Turkey needs an incubator association to create a dialogue there are dozen incubator meetings worldwide every year and I attend quite a few of them not in single one have I seen a Turkish incubator manager nobody knows what is happening in Turkey and Turkey doesn’t know what is happening in the rest of the world. Under the EU programs there are numbers of programs, which pay 80% or more of the cost of participation in these conferences why aren’t we doing that? This is something that I would strongly urge finally launch a national program to expand incubators. In a country like Finland which has 5 million population there are 40 incubators, in a country like Korea which has a population of 50 million there are 350 incubators in another words there are 70 to 80 incubators per million of population, Turkey with a population of 70 million could easily have 100 incubators and I would submit that we start with a national plan to launch 50 robust incubators and incubator variants in the next 5 years. Thank you very much.

Question (Gül Turan):İki küçük sorum olacaktı, bir tanesi sayın Lalkaka’ya, I can see from your CV that you have been involved in various projects in Turkey and what I was wondering is whether this involvement would continue and help us plan in formulating for those 100 incubators that you were discussing? The other question was to Mr. Renaudin who also affiliated with AWWAR and I also see that France is a very bureaucratic country like Turkey and what I was wondering was what do the private sector thinks about AWWAR and what are the criticisms that are put to it? Thank you.