An incubator is an organisation which executes an incubation process designed to enable the accelerated growth of high quality start-ups into successful businesses. Incubators increasingly play a significant role in developing new businesses. Start-ups can prompt employment, innovation, and economic growth. Stimulating starting entrepreneurship is important in countries with meagre economic perspectives, especially for the growing young population with limited prospects of a job. Through various services such as coaching, work space and access to finance, incubators help start-ups to extend their business into a successful organisation.
Through the support to incubators PUM is responding to their growing influence in developing countries and emerging markets. We use our knowledge and experience to make incubators grow into wellfunctioning, self-reliant businesses in a matter of years, so they in turn can guide start-ups through their developing process.
Self-sufficient Vietnamese incubator
The Vietnam Climate Innovation Center (VCIC) is a business incubator for Vietnamese start-ups specialising in sustainability and climate solutions. The VCIC was set up two years ago as a World Bank initiative and needs to be self-sufficient from 2021. PUM is helping it on its way.
Climate change is a public concern worldwide and awareness of the problem is rising, including in Vietnam where its geographical location makes the country particularly vulnerable. As incubators are well-suited for developing local innovative business, the World Bank decided to invest in the VCIC, and in the space of just over two years, the VCIC has supported 38 start-ups thanks to World Bank financing. The question now is what the incubator has to offer new entrepreneurs when the World Bank steps back in 2021. In order to be able to stand on its own two feet, the VCIC asked PUM for help and various missions were agreed upon that would focus on the transition phase, product development, fundraising and the incubator’s clients.
Non-profit to profit
Following up the first mission, which mainly focused on structuring the incubator, Anthony Hoogeveen signed up for the second PUM mission. He quickly ascertained where the problems lay. “The VCIC is an extension of the World Bank and acts as a non-profit organisation. Changing to operating as a profit organisation demands a huge turnaround in the way it thinks and works. At the moment the financing from the World Bank is the main reason most start-ups sign up for selection by the VCIC. As soon as the funds have been awarded, the VCIC generally plays a controlling role but real support in terms of market research and product development is lacking.”
Knowledge and capital
In order to develop a revenue model and be of relevance to start-ups, Anthony feels the business needs to be reorganised. “The VCIC employees are young and well qualified. In the current organisational model, they have to play the role of expert but their young age means they lack sufficient experience. My advice is to use them as account mangers so that they can guide the process and maintain the contact with the client. In that way, you can find out what the client really needs and on the basis of that, you can hire in the right expertise. That means you have to invest in building up a network of experts from universities and business. And the VCIC will need to build a network of investors. It’s only when they can bring new entrepreneurs into contact with knowledge and capital that they can really have something to offer. Earning capacity and expertise development have to go hand in hand for VCIC.”
‘Earning capacity and expertise development have to go hand’
Anthony Hoogeveen is an economist and has considerable experience as entrepreneur, investor and advisor guiding companies in strategy and financing. After the sale of his company, he launched into the world of impact investing. He has worked for PUM for three years now and has been on six missions. The use of toxic chemicals for preserving foods is perfectly normal in the Vietnamese food industry. But it shouldn’t have to be, thought Dr Dao Thi Nhung from Hanoi University. So in 2017 she launched her company Pham Gia developing natural substances for preserving fresh fruit and vegetable for as long as possible. Her preservatives include using chitosan, derived from shrimp and crab shells, in combination with other natural additives such as vitamin C and lactic acid. The VCIC saw potential in the plans for the young start-up and now supports Pham Gia both financially and business wise. “There’s intensive contact between us and the VCIC,“ says Nhung. “We’ve taken various courses through them and they introduce us to experts in the field. I hope that in the future we’ll be able to affiliate with other research groups so that we can further develop our technology and take it to the market.”