THE ENTREPRENEURIAL PROCESS IN HIGH-TECH INCUBATED COMPANIES
Jose Dornelas, Babson College
Principal Topic
The objective of the present work is to provide a better understanding on entrepreneurial practices and the innovation of technology-based companies starting up in Brazilian business incubators. Business incubators are the major support programs to creation of new companies in Brazil— which has more than 200 incubators—especially technological start-ups. Brazilian government agencies have been investing strongly in these programs in order to create new innovative companies. However, there still lack studies that analyze the Brazilian entrepreneurial process and its particularities, and comparing its entrepreneurial practices to best international practices, in order to optimize the return on this investment.
Method
A survey of 96 technology-intensive startups located in 12 incubators in Brazil was undertaken to gather numerical data on firm management, technology frontiers and incubator characteristics, to see how they compared with best practice. With the experience of this preliminary survey, we will be able to see if it can be turned into an annual event and coverage expanded in an economical manner with an improved questionnaire. A 64% return rate from a self-administered paper survey of 24 questions indicates the methodology is highly efficient and cost-effective, although more questions will need to be added to increase specificity and accuracy where startup founders are not familiar with management terminology. Preliminary analyses of data just in show that 70% of founders come from technology backgrounds and have little management training. 44% of the firms are in software. 59% of startup funding comes from the founders, while only 6% are from angel or venture capitalists. 45% of the firms report investing more than 20% of their budget on R&D. Analysis of this database has just begun and will soon show much finer relationships among key parameters such as these.
Results and Implications
Understanding how the entrepreneurial process occurs in such companies will help in redefining the services provided by business incubator programs in Brazil, in order to accelerate the graduation of incubated companies on a high successful rate. The results of this research will contribute for the future planning of the initiatives regarding business incubation in Brazil and similar developing countries, what will impact on three levels: a) to help the government agencies define which is the best way to invest financial and economic resources in incubation programs around the country; b) to help the current programs make self-assessment and to improve its models, identifying the patterns in these businesses and comparing them to best international practices, what can provide both the entrepreneurs and the managers of incubators with information that will assist them in improving their management; and c) to present a proposal of a framework to be used in new programs that are being created in the country.
CONTACT: Jose Dornelas, Faculdade Trevisan, Rua Nova York 609, 33B, Sao Paulo-SP, 04560-001, Brazil; (T) 55-11-50905250; (F) 55-11-50905250; dornelas@planodenegocios.com.br
© 2004 Babson College. All rights reserved. Last updated May 2004.