Business Incubation As Entrepreneurship Policy: An Italian Story

Entrepreneurs find it difficult to raise the funds they need and are often forced to resort to debt capital, not suitable in the early stages of the company development. Besides inadequate financing, poor business planning and inability to compete in a difficult market lead new business ventures to failure within the first years of opening. Hence there is the need for a category of investors, able to match the new trends on the market and that would help companies to achieve higher performance. This thesis studies business incubation as entrepreneurship policy, with a specific focus on an Italian successful incubator, H-Farm, which has helped young entrepreneurs in launching new initiatives based on digital technology and has supported the transformation and innovation of traditional Italian companies. The first part of the thesis defines the actors involved in the process of business ideas development and examines the characteristics of business incubators, their evolution over time and the context in which they operate, as well as their incentive to the emergence and growth of new business ventures. In particular, attention will focus on the importance of allocating tangible and intangible resources to incubators' tenants, the significance of networking, the idea of complementarity and the business model concept. By means of non- monetary adding services, one among many the mentor-ship programs offered, through giving advice and being involved in the creation and innovation process behind the business ideas, incubators enhance the value of the new start-up companies without the traditional contractual investment provisions. Most of business incubators tend to be physical places where one can start a business under a collective roof, giving the ability of participants to network, but also actively support entrepreneurs in their search for finance and introduce funders to the participants. The second part of the thesis discusses the case of H-Farm, whose business model is interesting because it reflects a dual soul, either of a venture capitalist and a business accelerator. As a venture capitalist H-Farm invests seed capital, granting the finance necessary for the early stage activities. As a business accelerator it provides a series of services to speed up the business process, including an inspiring workplace, centralized general administration, press office, human resources, legal and financial consultancy.