University business incubators are a particular type of incubator, situated within Universities.  Given that small and medium-sized businesses, of which start-ups are a part, are widely accepted as making contribution to a region’s economic development through unemployment reduction and inbound investments, it might at first be considered useful for alI university incubators to offer places to all aspiring entrepreneurs to develop their business.  However, in reality this is not the case.  Aside from the obvious capacity issues, it is often the case that business ideas are not viable, individuals may not be suited to a particular environment or that the specialisms within an incubator may not match that of a potential start-up.   Therefore, some form of incubatee selection becomes a factor and, within Europe, it can be seen that 97% of incubators utilise a selection process to evaluate potential incubatees.

Selection therefore is the decision concerning which of those ventures should be accepted for incubation and which should be rejected. 

Incubatee selection is a set of decisions made by an incubation Manager in the role of the final decision maker on which incubatees and start-ups the incubator is willing to allow entry to its programme.  

Whilst incubatee selection is an extremely important management task and a consideration for Managers of incubators for a range of reasons, it should be noted that a selection process can only be imposed where an incubator is in a position to afford the turning away of potential clients.

Whilst the first success of a start-up is the birth of the business itself, many attempts to establish a business will fail.  This can be due to a range of reasons.  For example, the business may be lacking skills in significant areas, access to funding may be difficult, key strategic management skills of the entrepreneur may be lacking or the business may not be able to fully develop an offering that fully meets a market need.  

Incubators therefore need to ensure that they are working with those businesses that offer the most opportunity for development and avoiding those that cannot be helped through/ need business incubation.  In addition, selection is the basis for effective allocation of resources in order for the incubator to be successful.   

All of this needs to be undertaken whilst ensuring a fit between the aspirations of the entrepreneur and goals of the incubator for those that are candidates for selection.  A failure to properly ensure that the right fit exists between the start-up and the incubator can result in failure for both, significantly impacting on the success rates of the incubator, as well as the ecosystem that the incubator exists within.

Most university-level entrepreneurship and incubation programs aim to increase entrepreneurial awareness, prepare aspiring entrepreneurs and empower students to develop entrepreneurial skills.  Additionally most incubators will have one or several of the following seven goals.

• Regional development
• High growth
• Student development
• Commercialisation of knowledge
• Sector development
• Supporting social entrepreneurship 
• Corporate matchmaking

Whilst opinion differs around what incubator selection criteria should be, incubator Managers need to ensure that the selection criteria for those start-ups that have incubation potential align to the goals and aspirations of the incubator.  The main goal of selection for incubators should be to select those start-ups that have the best potential for success within the context of a given incubator’s goals.

Criteria for selection of incubatees typically includes elements such as; key financial ratios, market factors, management team or entrepreneurial attributes found within the lead candidate.   Selection criteria, then, can be broadly separated into two categories; selection of the idea versus selection of the entrepreneur/ entrepreneurial group.

Selection criteria for the idea

Selection criteria for an “idea” approach will rely on a strong and deep knowledge of the area in which the potential for the business sits.  Key considerations will include:

• The product/ service being developed and its competitors.
• Competitive dynamics in the market to which the product/ service will be delivered and compete in.
• The profit potential of the idea the marketplace.

Selection criteria for the entrepreneur/ entrepreneurial team

Selection criteria for an ‘entrepreneur/ entrepreneurial team’ approach will rely on an ability to understand the potential in an individual when aligned to the incubator goals.  Key considerations will include:

• Experience factors (knowledge, previous experience, skill set etc.)
• Personality factors (drive, determination, openness to experience, agreeableness etc.)

Additional factors may come in to play, depending on the goals of the incubator or its cultural leaning.  For example, incubator managers may choose to broaden criteria away from financial ratios and market potential to include elements such as social development or ethical dimensions (including diversity in employment, equalities etc.). 

It is also important to note that it is a multi-criteria approach to selection that will likely yield the best outcomes for both incubators and incubates, as opposed to a limited criteria approach.

In either case, it is essential that selection be in line with aims and goals of the incubator to ensure the right fit for both the incubator and the incubatee.

There are a number of generic ways in which criteria may be applied, both quantitiative or qualitative in approach.  Sliding scales of ‘fit’, points-allocated or interview techniques are all commonplace.  The most important consideration should be to ensure that the approach to applying a given criteria fits well with the incubator, its resources and its goals. 

However, it is not the case that all criteria drawn up should be based purely on a criteria, whether it be on a points-allocated basis or otherwise.  There should be consideration as to whether or not a degree of flexibility should be built in to the selection criteria system to ensure that potentially good prospects are not overlooked or discouraged as a result. 

It is also the case that a single selection activity is unlikely to yield the best results.  Instead, better outcomes from a selection process may be the case where a selection approach is multi-layered.  In some case the selection process takes place at numerous stages of the relationship between incubators and start-ups – not just at the entry application stage.  Indeed, relationships may have been built that are longer-term and may result in those firms that move out from an incubator but may move back in at a later date.

It is important to note that incubator Managers may often find that there is a lack of reliable data with which to assess a candidate business plan.  This can be particularly problematic where managers need to evaluate the likely survivability of a potential incubatee, or where the potential incubatee has an exaggerated or highly optimistic view of the firm progress and/ or potential.  This then influences approaches to the selection process.  Managers may opt to be very selective of those that they have a more certain opinion that they will be ‘winners’, focussing more time and effort to the selection process in order to successfully make this prediction.  Alternatively, Incubator managers may choose to be less rigid in selection, ultimately resulting in a higher number of successful candidates, yet allowing the market to dictate who will be the ‘winners’ and ‘losers’ from the pool of talent within the incubator.  Bergek and Norman (2008) label these approaches as, ‘picking the winners’ and ‘survival of the fittest’ respectively.

Bergek and Norman (2008) take the ‘picking the winners’ and ‘survival of the fittest’ approaches to selection and combine them with the concept of ‘idea’ and ‘entrepreneur’ focussed selection criteria.  The outcome is four broad outcomes of the selection process.

(Adapted from Bergek and Norman, 2008)

Self-selection bias relates to individuals selecting themselves into a particular group which they deem to be most beneficial or likely to accept them.   This can be down to a number of factors including:

• • Incubator goals
  • Type of start-up residents in incubator
  • Incubator branding

Consideration will need to be made by incubator managers as to how organisational decision making and self-promotion will impact on self-selection of potential incubatees.

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