Draft Agricultural Technology business incubation Guideline of EIAR

The Ethiopian Institute of Agricultural Research (EIAR) is mandated to conduct research that
will provide market competitive agricultural technologies that will contribute to increased
agricultural productivity and nutrition quality, sustainable food security, economic
development and conservation of natural resources and the environment. Since its
establishment in 1966, the institute has delivered more than 3,000 technologies and
management practices, more than 1000 improved crop varieties. In spite of its remarkable
achievements in making available agricultural technologies, knowledge and information,
only few of them have reached farmers and other end-users. Some of these technologies
have tremendous potentials for commercialization. Moreover, the institute is expected to
contribute to the transitioning of an agriculture dominated by small subsistence farming to
predominantly market oriented agriculture, which the country aspires to realize.
Commercialization of available technologies can also have substantial contribution towards
job creation for the youth. One method of commercializing agricultural technologies is
business incubation.

What is Business incubation?

According to the National Business Incubators Association (NBIA), the business
incubation is defined as ‘business support process that accelerates the successful
development of start-up and fledgling companies by providing entrepreneurs with an array
of targeted resources and services.

The incubation process focuses on nurturing innovative early-stage agro-based enterprises

that have high growth potential to become competitive businesses. Agribusiness incubators
often enable the start-up and growth of innovative value adding agribusinesses.
Technology-driven and knowledge-based developments not only exhibit tremendous
business potential, but also offer a range of innovative applications beneficial to various
sectors of the society (Khanduja, et al., 2008). Agribusiness incubation complemented with
national and institutional intellectual property rights (IPR) and technology transfer
management, provide a new context for incubating ideas coming from the research and
commercializing these innovations.This process has encouraged use of formal and
innovative processes of technology transfer and shiftedaway from informal outreach and
free exchange of agricultural discoveries.The process of business incubation, now a
standard part of the academic landscape especially in U.S.,Europe and some advanced
countries in Asia, facilitates the creation and growth of innovation-based companies. For
the agricultural sector, successful businesses coming out of the incubators resulted in
commercialized products, latest farm technologies, new seed and planting materials, new
markets, businesslinkages benefiting universities and research institutes, several industries and local farming
communities.

Business Incubation process has threephases: 1) Pre-Incubation/Idea development, in which ideas and
teams are nurtured, 2) Incubation and Acceleration, where business plan is prepared, and 3) Post-
Incubation, Consolidation and Growth.

The concept of ‘‘incubator’’ is often used as an overall denomination for organizations that constitute or
create a supportive environment that is conducive to the ‘‘hatching’’ and development of new firms.

Goal

The Goal of the incubator is to translate research outputs into commercial applications and successfully
bring them to the marketplace.

Purpose
The purpose of technology business incubation is facilitating transfer of technology from research
centers, stimulating the commercialization of research and the creation of new enterprises, and foster
diffusion of new technologies.

Objectives:
 Identifying and adopting technologies appropriate for business incubation
 Identifying and motivating youth, women and other entrepreneurs in agribusiness
enterprises
  Building commercial conduits in the form of value chains which integrate new value creating
activities in rural and urban spaces

Role of business incubator

An agribusiness incubator creates a mechanism to assist in the identification, adaptation, and

commercialization of products from agricultural research centers. An Agribusiness incubator is also a
place where the process of starting Agri-business venture is catalyzed by supporting the entrepreneurs
with Agricultural Technology, Business Consultancy, Networking with Management Experts, Venture
Capital Funding, Infrastructure and other facilities.
Incubators provide a means of leveraging the significant resources invested in R&D and infrastructure,
generating employment and income in rural areas, and ultimately creating wealth to support the
livelihoods of the poor.
Business incubators provide wide assortment of assistance services to the start-up companies:
from operational and material assistance in capacity building; to advisory and strategic
assistance in building competitive sustainability during the early phase of the venture existence.
In general, business incubators provide nursery for aspiring entrepreneurs, and serve under a few broad
mission statements:
 Initiating local community development or revitalization,
 Enhancing knowledge and technology transfer and speeding up high grow potential of the
existing businesses,
 Fostering commercialization of the research

Knopp (2007) posits that common services provided by incubators include –

 help with business basics;
 networking activities;
 marketing assistance;
 high-speed internet access;
 help with accounting/financial management;
 access to bank loans,
 loan funds and guarantee programs;
 help with presentation skills;
 links to strategic partners;
 access to angel investors or venture capital;
 comprehensive business training programs;
 advisory boards and mentors;
 Management team identification and building - Developing capability of the
managers/management would be crucial to incubator practice and impact. Several core
functions managers of the incubators should develop: managing the environment
relationship, managing and developing tenants; developing entrepreneurial
management of the incubator itself. The core management capability profile should
therefore include financial, analytical, business function skills, interpersonal and
entrepreneurial competences;
 help with regulatory compliance;
  and intellectual property management
 all aspects of insurance,
 assistance in developing business and marketing plans,
 obtaining capital and
 access to arange of other more specialized professional services, specialized knowledge,
or special clients

Drivers of business incubation

The six specific strategic drivers of business incubation identified are: (1) positioning in the value chain,
(2) risk-taking/time perspective, (3) revenue model, (4) governance/ control, (5) internationalization,
and (6) cooperation/competition

Critical Success factors

Experiences with business incubators in the world has revealed three critical factors that are important
to their success.
1. the creation of the incubator itself and its management,
2. Legitimate feasibility studies and business plans.
3. Priority is given to the mentoring, networking, and human resource development.
4. Entrepreneurial manager
5. Developing flexibility, commitment, ability to lead (tenants) and to serve (local
community partners)
6. Proactive and strategic focus - Proactive and strategic focus are enhanced by
continuation of the clients, environment, and industry monitoring and alertness.
7. Continuing, regular evaluation of the performances and the abilities of the program to
fulfill its goals, and to evolve with the market
8. Developing strong relationship with community
9. Benchmarking performances to the best practice standards
10. Upgrading management and networking skills of the incubator staff
11. Developing challenging but realistic goals

The pillars forhigh-performance incubation are:

 business planning,
 business development, and
 access to capital

Examples of Best practices

The Agribusiness Innovation Platform (AIP) setup by the International Crops Research Institute for the
Semi-Arid Tropics (ICRISAT), provides prototype innovations, knowledge and expertise, training and co-
location with researchers for close interaction; while the entrepreneurs fine-tune the prototypes, and
take them to market, including bearing the risks and reaping the rewards involved. It has benefited more
than 158 ventures in agribusiness since 2003. Through the agribusiness incubators, ICRISAT helps
enhance its public-private partnerships as a model for fostering agro-business to bring research for
development innovations of ICRISAT (e.g. seeds, varieties, breeding techniques, biotechnology crops,
etc.) and its partners to the market for faster, wider-scale impact. ICRISAT also set up another business
incubation platform in Africa, called Afri Banana Products Ltd, an agribusiness innovation incubator for
banana sector value-chain development. This incubator involves a consortium of public universities and
research institutions that include Kyambogo University as the lead institution, Uganda Industrial
Research Institute for agribusiness, Mbarara University of Science and Technology, Kenya Agricultural
Research Institute, the Uganda National Council for Science and Technology. It identified and promoted
entrepreneurs to take agribusinesses in the banana value chain. Activities include production of tissue
culture seedlings, Matooke (Uganda’s staple food), banana fiber products, briquettes and biogas using
banana peel and other wastes through incubation. Since establishment in 2015, the incubator has, so far
nurtured 39 entrepreneurs; commercialized six conventional and modern biotechnologies; and helped
generate employment for over 420 people.

Critical steps to be followed byEIAR researchers in technology business incubation with youth and
women

1. Establish technology incubation core team in EIAR composed of relevant technical directors
(crop, seed, livestock, biotechnology, technology transfer, agricultural engineering, agri-
economics, Agricultural& Quality Laboratory, natural resources)
2. Assign business incubation manager
3. Identify innovative candidate technologies with business potential
4. Conduct assessment for the identified technologies formarketability- The market study has to
identify the customers and also the competitors, with an emphasis on the competitive
advantages and the differentiation factors attached to the new product/service. A SWOT
analysis is critical at this point. The marketing plan looks at the desired brand positioning and
the means to be used for informing potential customers about the company and what is offering
5. Ensure intellectual property protection for the technology
6. Carefully select a location for business incubation that is within proximal distance to a relevant
research center and other important stakeholders, and where there is basic infrastructure
7. Identify critical stakeholders of the identified agribusiness
8. Determine entrepreneurs’ experience and technical expertise requirements of the
technology incubationand the market the venture is aiming at.
9. Identify the right type of youth and women that share the same objectives, and that can truly
benefit from the services offered, and organize them in uniform groups for each agribusiness
category
10. Provide technical and entrepreneurial trainings,especially business planning, leadership,
marketing and sales, and business development advice.
11. Develop an appropriate marketing strategy - specific actions that will be taken over time to
achieve the objectives with the participation of the incubatees. It is an overall game plan for
reaching people and turning them into customers of the product or service that the agribusiness
provides. A marketing strategy grows out of a company’s value proposition. The value
proposition summarizes the competitive advantage a company has in its market. Walmart, for
 example, is a discount retailer with “everyday low prices” and its business operations and
marketing revolves around that.
12. Prepare detailed financial plan - It is required that an estimation of all costs deemed necessary
(operational, financial, etc.) for all phases leading to the release of a new product/service.
13. Provide mentoring as entrepreneurs need particular guidance at the very beginning and
throughout the uncertain endeavor of new business creation. Mentors should have regular
meetings with the incubateesor they should even approach them proactively.
14. Enter a license agreement with the imcubatees - The license agreement includes terms and
conditions for the use of the technology, commercial development milestones, and the amount
of compensation to EIAR in fees and royalties.
15. Monitor and support the licensee to ensure compliance with contract terms and success in the
marketplace after a license agreement is in place
16. Build a network (potential customers, partners, employees, researchers, financiers, etc.) from
which expertise for business support activitiescan be sourced
17. Plan graduation of the incubatees - Incubation periods in which incubateesare allowed to stay in
the incubator varies, but on average this process tend to be from 3 years (for service businesses)
to 5 years (for production) depending on the targeted markets. The graduation criteria should
be clearly stated and communicated to potentially incubated ventures, as well as rigorously
followed in the incubator’s operations.

Common challenges incubators may face:

 Budget for their own operations,

 Difficulty in accessing finance by incubatees,
 Finding suitable management for incubatee firms,
 Lack of support for the SMEs,
 Poor legal and taxation infrastructure,
 Markets