OPINION: Business incubation spurs innovation & job creation

In today’s rapidly changing global economy, innovation has become an increasingly important factor for economic success. Innovation is essential for long-term productivity growth.

The success of any economy is usually attributed to growing its gross domestic product (GDP) and increasing production. One economic tool capable of channelling needed innovation and developing small businesses is business incubation.

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Business incubation generally means providing assistance to new businesses to help them start, develop successfully and grow.

Most incubators provide access to space, financial capital (bank loans, angel investors or venture capital), comprehensive mentorship, business training and higher education programs, as well as technology commercialization, marketing and management assistance.

 Our local, regional, and provincial jurisdictions have or will be transitioning towards what is widely referred to as the knowledge-based economy. An expression used to describe the greater importance of economic dependence on knowledge, information and a highly skilled workforce.

Incubators are increasingly seen as one way for our city to transition towards the knowledge-based economy. And it’s already happening in many cities across the country.

 Business incubation is being used to channel innovative ideas and develop new companies.

London’s innovation economy is rapidly growing with about four to six tech companies starting every week. The city’s digital media and technology sector is continuously growing and as such, there is an increasing demand for business incubators to provide the programming, resources and services to those passionate in starting their own business.

“There are more than 20,000 small and medium sized businesses in our community and they are at the front lines of job creation,” says Mayor Matt Brown. “It’s time to build on our emerging entrepreneurial culture to create an economic powerhouse.”

 If the City of London’s strategic plan for the next four years is to ensure the Forest City is innovative and the next start-up capital of Ontario, then it must reach out to key stakeholders and foster the leadership and collaboration to create a promising business incubator for the growing digital media and technology sector.

 People’s skepticism may question the economic impact of business incubators. Where is the evidence? Where are the facts? Are there any examples to showcase?

This week, I had the opportunity to receive a comprehensive tour of the Ryerson University Digital Media Zone (DMZ) in Toronto. At the heart of Downtown Toronto, this business incubator helps start-ups succeed by connecting them with customers, advisors, influencers and other entrepreneurs.

The DMZ has incubated 172 start-ups.

DMZ start-ups and projects have led to the creation of more than 1,500 jobs.

The success rate of DMZ alumni companies is high; between 65 and 70 percent are growing or have been acquired.

 The city also has a very high retention rate of DMZ alumni who locate their head office in the city.

Communitech, is another example of a successful business incubator in Waterloo Region. A hub for commercialization of innovative technologies, Communitech has supported and helped build a tech cluster of nearly 1,000 companies that now generate more than $30 billion in revenue.

The basic concept of business incubation has not changed since the first North American business incubator was established in Batavia, New York in 1959.

The role that an incubator has always played is that it can assist in creating long-lasting innovative jobs for our community.

Amir Farahi
Amir Farahi

Amir Farahi is the Co-Founder & Executive Director of the London Institute. He is an entrepreneur, columnist, public speaker, and is currently specializing in Economics and Political Science at Western University.

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