The Canberra Entrepreneur recently interviewed Petr Adamek, General Manager of the newly established CBR Innovation Network’s KILN Incubator.
- Could you describe the preliminary studies and assessments that provided the framework for establishment of the KILN Incubator?
The Canberra Innovation Network was looking into establishing a new business incubator, to complement the offering of the Entry29 co-working space for founders of high-tech start-ups, and the Griffin Accelerator program that provides pre-seed capital and mentoring to entrepreneurial teams. Lighthouse Business Innovation Centre offers their Business Foundations program to start-up founders, but assistance in the later early or post-seed stage, when the company has just discovered how to build traction and better understands its market opportunities, was missing in Canberra.
The ACT Business Incubator Scoping study that was delivered by my consulting business, the Berman Group, focused on bringing together research on global best practice in business incubation and in-depth understanding of local stakeholders’ motivations and objectives regarding business incubation. The results were discussed in two stakeholder workshops where the business model and general framework for the incubator operations were adopted and are now being implemented by CBR Innovation Network. The stakeholders also came up with the name KILN, connecting it with the history of Canberra.
- Could you describe the role of the ACT Government in the KILN Incubator?
The role of the ACT government is critical in sponsoring the establishment and operations of the KILN incubator. It is an investment in the local capability to generate high-growth innovative companies that will create jobs for the future and diversify our economic base. Early stage high growth companies typically do not have sufficient funds to pay for adequately experienced mentors and advisers, and at the same time they need access to these services because what they are doing is extremely difficult. They are often creating new markets, changing the status quo, disrupting established industries and typically competing globally from day one. There is no simple script for them to use and due to increased levels of entrepreneurship globally, the competition they face is omnipresent.
The ACT Government has recently adopted its Confident and Business Ready strategy, which defines innovation and smart business growth based on high-growth companies as its essential building blocks. The ACT Government is not directly involved in operating the Incubator, the operating responsibility sits with CBR Innovation Network. Tasking the CBR Innovation Network with the launch and operations of the Incubator was a smart, strategic move by the foundation members and ACT Government.
The CBR Innovation Network represents all of the ACT’s key academic and research institutions, they are naturally motivated to support commercialisation of their world-class knowledge bases, by newly established high-growth globally focused companies. This creates a strong local impact, creating employment and realisation opportunities for their students as well as their researchers.
- Could you please describe the responsibilities and functions of your role as General Manager and who are the other people behind the KILN incubator?
Initially, the General Manager does everything [hahaha … laughs]. I am responsible for the following: I have to generate deal-flow for the incubator; work with entrepreneurs to get them incubation ready; coordinate collaboration with other partners and the CBR Innovation Network’s foundation members; grow our private sector partner network; develop working relationships with mentors; design and manage incubation programs for our clients and report to stakeholders on the progress of the business incubator program.
But I am not alone, I have a lot of support. In the CBR Innovation Network team, the CEO, Dr Sarah Pearson, supports me in strategic management and relationship building and Liz Kobold, SME Director, CBR Innovation Network, supports me when KILN works with established companies. Sharyn Smith, Director Office and Events and Innovation Coordinator, CBR Innovation Network, and Colin Anstie, Head of Marketing, CBR Innovation Network, provide me with operational and marketing support. I collaborate very closely and intensively with Dr Craig Davis, CEO, Griffin Accelerator, because the Incubator and Accelerator programs are closely linked and there a number of synergies between what we do. I am also supported by the team at Sydney based ATP Innovations, led by Hamish Hawthorn, CEO and including but not limited to Petra Andren, Head of Strategy, ATP Innovations and Ben Wright, Head of Commercialisation, ATP Innovations. In the Canberra start-up ecosystem we collaborate with James Deamer, General Manager of Entry29, which manages the KILN incubator space, and with Anna Pino, CEO, and Candice Edye, Director, Lighthouse Business Innovation Centre, as their Business Foundations program adds strategic value to entrepreneurial teams who need to get incubation ready.
We have now established Team KILN, which is governing selection of companies and monitoring their progress in the incubation program. Team KILN will include our private sector partners, as well as a representative of the CBR Innovation Network foundation members. We have access to the network of Griffin Accelerator mentors, and we also have access to a pool of international advisers – I would especially like to mention the following: Vanessa Clark, internationally experienced business growth adviser from New Zealand, and Wayne Attwell, strategic marketing and branding expert, author of Smart Marketing and a person with a wealth of experience with assisting start-ups in New Zealand and Europe.
- Could you please describe the content and intent of the KILN Incubator’s pre-incubation workshops? Who lectures at these workshops?
The series of workshops, together with First Wednesday Connect networking events, demonstrate our effort to support strong, competent and well connected entrepreneurial teams that are ready for growth and focused assistance through our acceleration and incubation programs. We have put these events together with Dr Craig Davis, CEO, Griffin Accelerator, with support of CBR Innovation Network and Entry29. Our ambition is for these to become the ACT innovation and entrepreneurship community’s most accessible events rather than events ‘owned’, branded and affiliated with a particular organisation or group.
First Wednesday Connect networking happens every first Wednesday of the month, it is an open platform for entrepreneurs, investors, mentors, innovators, researchers, and business owners to meet and network. Attendees will also learn about each other’s businesses, projects, challenges and opportunities, and encourage greater connectedness in the ecosystem. It’s an easy entry point for anyone who wants to start up a business in the ACT region, they can come and join this community to build their networks and learn about what other entrepreneurs are doing. These free events see a huge crowd attend, between 150 – 200 registered participants.
The KILN Incubator and the Griffin Accelerator have also worked together to create a series of start-up workshops, to offer a highly practical standard of growth focused start-up education in the ACT for anyone interested in learning how to build a high-growth scalable business, and how to innovate in a rapid learning cycles like high-growth start-ups do. For simplicity, and to remain lean, we run these half-day workshops also every first Wednesday of the month, in the afternoons immediately before the First Wednesday Connect events.
As we meet with entrepreneurs to discuss their high-growth business opportunities, we repeatedly come across misconceptions and behaviours that prevent people from making real progress in bringing their solutions to market, or learning quickly and cost-efficiently that the demand is simply not there. This leads to wasted efforts, often not only in wasted time but also money, disappointments and it can discourage people from trying again. While start-ups are not for everyone, and learning by failing is an inevitable part of the journey, our mission is to help founders to get better in the essential skills of building an early stage high growth company and getting it on the right trajectory. These include namely: market validation, customer development, business model generation and iteration, marketing, selling, and also pitching and communicating their offering and growth opportunity more effectively, with relevance to their target audience. Our workshops are very different, we do not ‘teach’ what people can view in the form of videos on the internet, we enable people to develop the essential start-up mindset and skills in practice, by coaching them to work in teams and under time pressure on scalable start-up case studies. These workshops seem to be very popular, we have great feedback and so far they always sold out really quickly. We offer to sponsor fifty percent of ticket price for teams with high-growth potential start-ups, to further support those who face the opportunity and have the courage, passion and energy to build and scale solutions that will make a difference globally, while leveraging resources we have in the ACT, and making an impact on our economic base. At the same time we have seen participants of these workshops being able to present higher quality applications to our programs. We had over eighty participants through the workshops since early July, plus we delivered a special edition of the workshops to over seventy public servants as part of the 2015 Public Service Innovation month.
The workshops are led by Dr Craig Davis and myself, but we also have other experts involved, the October workshop ‘Selling to Grow’ was led by Nick McNaughton, CEO, ANU Connect Ventures, who is a highly experienced venture capitalist, start-up expert and sales guru.
- Is there a systematic connection, a path of learning, or progression of businesses, from programs like Innovation ACT, to the Griffin Accelerator, to the services of the KILN Incubator?
Yes, there is a natural continuum. There are a number of initiatives in the ACT that are focused on encouraging entrepreneurship and innovation, they start even earlier than at the tertiary level. Initiatives like the YWCA Computer Clubhouse, or HACT ignite passion for technology among ten to seventeen year olds. The Inspiring Australia project also focuses on encouraging STEM (science, technology, engineering and maths) and entrepreneurship, at secondary school level. The recent very successful Teen Start-up Camp event by Lighthouse Business Innovation Centre encourages the entrepreneurial efforts of teenagers, together with tertiary educational institution initiatives, such as Academy of Interactive Entertainment’s Accelerator and Incubator programs, and ANU’s TechLauncher for student ideas. InnovationACT supported by a range of ACT-based tertiary institutions, and the STIR platform supported by CBR Innovation Network and run by young creatives – these all contribute to the breadth and capabilities of the ACT economy’s future entrepreneurs. CBR Innovation Network has Indigenous business focused, and social innovation focused programs in the making, as well as an ambitious intra- and inter- industry collaboration platform known as Collaborative Innovation Lab that is designed to bring higher interaction and bridging of industries, regulators, users, science and technology disciplines to support creation of new innovative high-growth ventures (the CBR Innovation Network already ran great pilots of the Lab in the health, space and renewable energy sectors and has a full pipeline of initiatives in the making). The landscape is very rich and developing rapidly, and I apologise for certainly having forgotten to mention some important initiatives.
These initiatives are critical for the quality of inputs into early stage business growth-support mechanisms such as the following: Lighthouse Business Innovation Centre’s Business Foundations program; the Innovation Connect grants; the GRIFFIN Accelerator and last, but not least, the KILN Incubator that supports teams with validated high-growth business opportunities and aims to convert them into long-term wealth-generation engines for the founders, and thus the ACT economy.
Having “graduated” from any of the aforementioned initiatives, a developing start-up team can locate in Entry29 co-working space, and apply for Innovation Connect grant to get their product ready for the market, while attending our workshops, or receiving pre-acceleration and pre-incubation coaching. When they are ready, they will apply to get a place in a Griffin Accelerator cohort. If successful, they will receive pre-seed venture capital from Griffin, plus an intensive three-plus-three months program of mentoring, which focuses on cementing their product-market fit, getting the company on a high-growth trajectory and getting it ready to raise the seed round of capital, typically from angels from Canberra and Sydney.
This is when the KILN Incubator offering kicks in, because maintaining the momentum and sustaining the growth levels established during the Accelerator program is extremely hard task for the founders in the later early stage; only the best of the best can do so without more programmatic assistance. Having said that, this does not mean that companies that have not been through the Accelerator cannot access or benefit from the Incubator’s offering. In fact knowledge-intensive companies with longer gestation periods, or established companies with a high-growth scalable opportunities, should be able to seek assistance from the Incubator and benefit from its longer term disciplined focus on building a strong growth momentum in the company. My experience from overseas suggests that the first twelve weeks of incubation have similar characteristics to acceleration, but without the benefit of cohort dynamics and support that I find extremely beneficial for the Griffin Accelerator companies.
- Could you please describe the equity for services model offered to start-ups by the KILN Incubator?
We understand that start-ups do not have a lot of cash, and even if they had, they quite rightly tend to spend it on developing their offering, rather than on consultancy services. KILN provides business growth consultancy services, management guidance and access to mentors and experts, for a low nominal fee. This can by no means finance the operating cost of the Incubator, and it is far lower than the value the companies receive during the programme. Therefore, we require that the founders of the incubated company share five percent of equity with KILN Incubator trust. This strongly aligns us with the future success of the company. It means if the company is successful we can earn money to support start-ups in the future, if they are not we will not be able to do so. That’s what we call equity for services business model – it is high-risk and it can only be self-sustainable in the long run, approximately ten years, because not all incubated companies will be successful, and the Incubator will be able to liquidate its equity holding in a successful company only after a longer period of time.
Our vision is to generate wealth in the portfolio of incubated companies that KILN owns, to support operations of the Incubator in the long run. For this we also need a family of private sector partners who share this vision with us and want to commit to be part of this effort that is critically important for the future of the ACT economy.
- Has the KILN Incubator so far found any private partners?
We are talking to a number of potential partners: they are management consultancies, accounting firms, technology companies, law firms and banks at this stage. They will be CBR Innovation Network partners, and if they select to support KILN Incubator they will provide in-kind services to the incubated companies as part of the incubation program. They will co-own and co-govern the KILN incubation program, and they will also provide resources or in-kind contributions to the Incubator in general. They will also contribute cash, because as mentioned before, incubation is expensive, and world’s best practice suggests that its costs should be shared by a balanced private-public partnership. We are now attracting companies who understand the shared value of building a world-class business incubation program for the ACT community and want to join us on this mission. We have two potential private partners in intensive partnership discussions with us and they have committed to jointly trial the relationship in the next months – so we are not yet ready to disclose who these partners are. But should these initial trials turn into partnerships, we are talking about hundreds of thousands of value committed to the Incubator and its client companies.
- Could you please detail the services offered by the KILN Incubator?
The incubator is not a physical space, but we do offer for our clients to co-locate here at the CBR Innovation Network, thanks to our partnership with Entry 29. We in fact require that founders of an incubated company, whether they are located in the incubator space or not, need to spend at least a day per week in the co-working environment with us.
As a KILN client you will get:
- Strategic advice, founder support and management guidance.
- Lean start-up methods and systems.
- Disciplined focus on growth.
- Capital-ready assistance and capital raising support.
- Support in setting-up high quality governance & investor relations.
Specifically, our services include:
- Access to KILN and Entry 29 shared facilities and co-working infrastructure;
- Dedicated Incubator programme manager experienced in start-up business growth advisory and incubation (dedicated time reserved for each company);
- Specialist consultants, mentors and experts brought in by KILN at various stages as required;
- Access to business, legal and accounting templates by KILN partners (currently in development);
- Subsidised business services provided by KILN partners (accounting, legal, consulting, technology provision – currently in development);
- Access to mentors and in-house knowledge of how to get capital ready – investor ready assistance;
- Networking, ecosystem connectivity and introductions of your company as a KILN company to potential partners;
- and support in Public Relations and communications.
- What is the selection criteria for admittance into the KILN Incubator program?
First it’s the business idea – does it have a high growth potential and can the team build a sustainable competitive advantage? How defensible is the idea? Then it’s the team: are they available, committed and coachable? Do they have the necessary domain knowledge, experience or connections? Is the team bigger than one person? Then we are also looking at funding, not in a discriminatory way, but we cannot take on board a team, generally, who are in debt or do not have sufficient funding to survive until the next funding round.
For the ACT Government, the biggest concern is the potential impact of the venture. Does it build on ACT’s key strengths? Does it connect and add value to the important local industries and knowledge networks? Does it connect the ACT economy with the world? Does it add to ACT economy’s competiveness? In terms of stages, we are looking at the later early stage, so ideally the company already has customers or is close to revenues. The approximate valuation would be over one million dollars. We will be looking at less valued companies too, but only when we can identify the potential for explosive growth. Geographically we are not really restricted, as long as the company can demonstrate impact benefits for the ACT economy. We are a destination Incubator, meaning that we provide our services here in Canberra. In terms of industries, again we prefer that the company is part of an industry that has strong linkages to the ACT economy, whether its Government services, education, research, sport and health, renewable energy, aerospace, etc., but generally we are sector agnostic Incubator and will not apply any such discrimination if the company has other focus.
The selection criteria is applied by Team KILN when considering whether or not to offer the incubation program to a potential candidate. To get in front of Team KILN you need to first get through screening pitch with at least two members of Team KILN. You need to submit assessment form via the KILN Incubator website, have a one on one session with the KILN Incubator manager, and if you are invited to pitch to Team KILN after you pass the screening process, you need to deliver a five minute pitch, in which you address the following questions:
- Who are your customers / what size is your addressable market?
- What is the problem or pain that your potential customers have?
- What is your solution to the customer’s problem, how is it uniquely different from other solutions available?
- What is your business model / how are you making money?
- What makes your team qualified to build this company?
- You are also required to formulate what you expect from the KILN incubation program, in return for sharing five percent of equity with KILN.
After the five minute pitch Team KILN will ask you further questions, and if they find your company meets the KILN selection criteria, and are in agreement to be offered a spot in the program, you’ll will receive a written offer from KILN that will start your incubation once accepted by you.
- Could you please detail your immediate future plans for the KILN Incubator?
Yes, in the last three months we have identified fifty prospect companies, of these fifty, we offered to four companies to participate in the KILN screening process and two have gone through and pitched to Team KILN a couple of weeks ago. They are currently negotiating the basic parameters of their incubation program with us and once it commences we will have a lot of work in assisting their growth ambitions. The other two companies need to do some more work on their market validation and fine tuning their pitch to be able to get through the screening process. We have two potential client companies participating in the Lighthouse Innovation Centre’s Business Foundations program, so we will be looking to work with these and get them ready to go through the screening process as well. The other companies in the pipeline are in various stages of readiness for the program. Some are now more fit for the Griffin Accelerator program, some are the Griffin program’s recent or previous graduates, some are closer and some further away from meeting our selection criteria. We will continue to provide some assistance to these companies to get them incubation ready. We will also continue to offer our workshops and one-on-one consultation sessions to expanding the KILN potential client pipeline further. We know that there is a huge potential in CBR Innovation Network’s foundation member organisations, so I will focus on collaborating with the foundation members on identifying these prospects in the following months.
We want to get a minimum of three companies in the incubation program by June 2016, and to develop a strong pipeline of potential clients, so we are well on track. We are looking to attract some highly talented interns to work with us in supporting start-ups and in 2016/17, we will be looking to grow the team further. So there is plenty of work ahead.
Tickets to the next Inspire workshop, covering Market Validation, are available here.