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East Midlands Incubation Network
The Future of EMIN
EMIN’s existing funding agreements with its University members, and contracts
with its staff, expire at the end of July 2008 and therefore I believe that now is
an appropriate time to start considering the future of the business after this
time.
The following paper is meant as a discussion document, and is designed to offer
some insights into the potential that exists, and highlight some of the issues that
will need to be addressed if we are to realise that potential.
Commercial Income
It has become quite apparent over the last 18 months that EMIN’s commercial
future is still a long way from being sustainable. There are several factors that
contribute to this:

The long lead time, and high costs, of product development

The inability or unwillingness of our end user customers (new start
businesses) to pay for services

The funding (largely public) of our incubator target market
Whilst there are still potential revenue streams around consultancy (helping
others develop services and skills to meet their client needs) and the operation of
incubators and innovation centres (for example, the Leicester Design and
Technology Park), it is clear that the business cannot – in the short term – be
sustained on commercial income alone.
EMIN’s USP (Unique Selling Proposition)
To better understand EMIN’s potential future, I thought it valuable to consider
what it is that EMIN offers, to whom, and how it can be differentiated from what
others offer. Having been running for over 5 years, it is clear that EMIN’s USP
falls into a number of distinct areas

Links to and engagement with Universities – whilst EMIN was formulated
as a loose alliance of Universities to meet the requirements of HEIF1, and
has been through a very rocky phase of “partnership” in its early days,
one of the strengths of EMIN is the way in which 6/7 Universities have
worked closely and cooperatively together. It is also important that the
“hub” has good relationships with the “spokes” and, by and large, I would
say that we have excellent relationships with, and a fairly good
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understanding of, all Universities in the network. This strength is also
perceived by others (emda, EMUA, Connect Midlands etc.)

“Honest Broker” – whilst this is a cliché, it is nonetheless true! EMIN acts
as an honest broker between the new and small businesses in the network
and the providers of business, and professional, support.
Both the
businesses, and the providers (including Universities) value this honesty
and integrity and have come to trust us in this role.

Volume and engagement – EMIN currently has 2,230 registered members
(companies that have taken the trouble to complete a registration form).
We have a regular weekly dialogue with these businesses through our ealert service, offer regular training and networking events (average 3 per
month across the region) and provide a quality range of services and tools
to help grow these businesses. This volume, which is no longer output
driven, offers us a unique position to both speak for the audience and also
to offer the provider of goods and services with a route to market.

Tools and services – EMIN offers a unique selection of business support
tools and services that others can only aspire to. We have been able to
grow these services organically, using public funding, and in order to meet
the real needs of the businesses whom we support. In a business support
environment (for example, the Universal Start Up Offer) where “one size
fits all”, it is important that we can be seen to be offering something that
is different and better.

Infrastructure – EMIN has, and has access to, a fabulous infrastructure.
We have a deeply populated website offering rich content as well as a
number of business support tools. We also have access to at least 18
physical centres (incubation centres) across the East Midlands.
These USPs should offer us a very real prospect of significant public funding. The
problem, however, is both the timing of the calls for this funding and our ability,
or willingness, to align to the specific requirements of the calls for funding.
Public Income
I believe that there are a number of sources of public income that continue to
offer potential income to EMIN.

Projects – our successful delivery of the current ESF project makes us
extremely well placed to bid for, and deliver, similar projects (training and
business development) funded by either ESF or the new ERDF
programmes. We also have the very real potential of significant income
from a future Interreg project as a follow on to our involvement in the
NENSI project. Additionally, emda are continually tendering business
support packages (for example High Growth, Regional Mentoring,
Enterprising Britain, Regional Innovation Portal etc.) some of which EMIN
is well placed, often in partnership, to deliver.

HEFCE – I have been asked by EMUA to develop a “positioning paper” for
the IKT Sub-Group that might address the collaborative potential for a bid
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around incubation, student enterprise, graduate enterprise, academic
enterprise and spin outs. I believe that, with some vision and the
willingness of the region’s Universities to collaborate, there is the
possibility to develop EMIN into a central management structure for all HEI
“enterprise” activity. This could potentially form a HEIF4 bid and would
align well to the Regional Economic Strategy and the nascent Innovation
Strategy (the CMI report names EMIN as a model of success upon which to
build) and therefore offers scope for emda matched funding.

emda – as mentioned above, emda are looking at the potential to match
HEIF4 funding if aligned to the regional priorities. We also have the
potential to work with emda on areas of quality assurance; perhaps
building on the work that they undertook with UKBI some years ago
establishing quality standards for incubation centres. We would be very
well placed to develop this further into quality assuring the people (using
our CPD tool) as well as the physical facilities. We also believe that we are
very well placed, not least through our membership of the USO consortium
in Northamptonshire, to take full advantage of the proposed “Enhanced
Start Up Offer” which is designed to be a top up to the USO. Sub-regional
Strategic Partnerships are also encouraged to look at bespoke top ups to
the USO and we have started discussions here also.
Membership
It has become clear that providing “paid for” subscription based membership to
the new businesses themselves is unlikely to be a high volume business and, if
we are not careful, the costs could outweigh the income quite significantly. We
have therefore re-assessed the classes of business membership as follows.

“incubatee” = a tenant business of one of our Member University
incubators, or of one of our Associate Member incubators. We would also
accept “virtual incubatees” directly subscribing to EMIN but will work proactively with this group on a formal incubation process (this would mean,
for example, that they must undergo some diagnostic at the front end,
and participate in EMIN activities). “Physical” incubatees would be funded
through institutional subscription (as now) and “virtual” incubatees (we do
not anticipate many in the early stages) would pay a monthly subscription.
The higher added value services that EMIN offers (business intelligence
service, for example) would be limited to this class of membership.

“members” = these are our registered users (currently c.2,230) and are
the volume that we would seek to exploit by developing partnerships with
those organisations and agencies who seek to deliver “outputs”. Some of
our higher added value services (particularly the ones for which we pay
annually) would be hidden from these members, or available on a payper-use basis.

“users” = all other visitors to the website. It is important that some of our
services are “available to all”.
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Conclusion
EMIN has a pedigree, a track record and a suite of USPs that strongly points to a
vibrant future, albeit largely public supported. The difficulty however, even at
this late stage, is predicting with any degree of certainty or accuracy exactly
which funding source, or project stream, will provide the bulk of the income.
EMIN’s staff, however, are on fixed term contracts that expire in July 2008 and
therefore we need to act urgently if we are not to run the risk of losing them.
Nick and I have evaluated the short term finances (see other papers for this
meeting) and are confident that, with no other income at all, we have sufficient
funds to run through to the end of calendar 2008 (ie. we will have a cash surplus
of around £85,000 at the end of financial year 2007/8).
I would welcome an open debate about where this might leave EMIN when we
meet on 18th October in Northampton.
Russell Copley
Chief Executive