EU co-funded business incubators for start-ups: quality of infrastructure generally good, but performance lags behind in terms of support offered to their clients, say EU auditors

A report published today by the European Court of Auditors (ECA) reveals that the EU has made a significant financial contribution to the creation of business incubator infrastructure, particularly in Member States in which this type of business support is relatively rare. However, the performance of audited incubators was modest.

“We consider that the provision of incubation services - and, consequently, the wider impact on local businesses - was rather limited, due to financial constraints and the low level of incubation activities”, stated Mr Henri Grethen, the ECA Member responsible for the report, “This was mainly because Member States and incubator managers lacked expertise concerning incubation practices. There were also shortcomings in management systems.”

These less effective results may be explained by the insufficient use of good practices. More specifically, too little attention had been paid to the effectiveness of incubators’ business support functions when incubators were being established. Secondly, incubation services were only loosely linked to clients’ business objectives. Thirdly, monitoring systems within the incubators had not provided adequate management information. Finally, incubators’ financial sustainability had conflicted with the objective of providing adequate incubation services.

At the EU Member State level, management systems did not pay sufficient attention to the operational activity of business incubators. In particular, the procedure for selecting incubators for co-funding had not given due consideration to several elements which are crucial for incubation activity such as staff qualifications, the scope and relevance of incubation services, and financial sustainability. Finally, the Commission did not take sufficient steps to facilitate the exchange of knowledge and good practices.