Vieta idejām!

Business incubators-support for business start-ups

Speaker• Sanita Laiviņa

Valmiera Business and Innovation

Incubator

Great Latvia success storyhttp://www.youtube.com/watch?v=E_KNJYBCK7c

Latvia is again among the growth leaders in Europe

Facts about Latvia• Capital: Riga• Population: 2,181,580• Total Area:24,938 (sq miles)64,589 (sq kilometers)• Currency: Latvian lat (LVL)

Macroeconomic indicators • GDP (2011): $34,58 billion (USD) • Inflation (May 2012) – 2,2% • Exports are the Latvian economic “driving force”. In 2011,

in comparison to 2010, it increased by about 28,1 %

Promising business sectors are:• Wood processing• Metalworking and mechanical engineering• Transport and storage• Information technology• Environmental technology• Health care• Life sciences

Future?• Knowledge and innovation are the main resources of

Latvia’s national development goals

Demography• In 2011 65.8% were working-age population, whereas

20.5% older than working age. 13.7% of the inhabitants were younger than working age

• In Latvia, there are significantly more working age women than working age men

• 67% of the inhabitants of Latvia live in towns and cities, whereas only 33% - in rural territories.

Labour force• Unemployment rate - 12.1 %• Minimum wage - LVL 200 (approximately 285 Euros)

per month• Latvians have the highest foreign language skills

among the EU countries• The most in-demand specialists are IT professionals

and sales specialists• Latvia’s labour force is rated in the top five in the

world in terms of university students per capital and possesses a northern European culture and work ethics

• Latvians generally are hard working, reliable and quick to learn

Education• In 2010 about 10 000 people have graduated

vocational schools. Consequently, the demand in production and vocational industries will increase during the next years

• The number of graduates from universities and colleges has doubled from 2000 to 2010

• Since 2000, the bulk of university graduates is in social sciences, merchandising and law, which is 14 500 in year 2010

Doing business in Latvia

Setting up business in Latvia

Reasons holding back to set up business in Latvia• Additional stress – 59%• Stable job and income vs risk to have no profit – 59%• Uncertainty about the future, insecurity, high risk -

42%• Less time with family and friends - 38% • Business performance is harder work than paid

employees – 25%• Entrepreneurs have to do things that do not want to

do (for example, relations with public authorities, paperwork, etc. .) – 12%

Reasons encouraging to set up business in Latvia• Access to free funds that can invest in business - 41%• Good business idea - 27% • Tax cuts - 21%• accessible public support programs for entrepreneurs

- 16% • confidence about stability in the national economic

situation - 13%• associates / business partners' appearance - 13%• 24% of working age population expressed the opinion

that nothing could encourage them to start their own businesses

Setting up a businessin Latvia

Share

capital

The state

fee for

recording

in the

Register

The fee for

the

publication

of the

recording in

the Register

The fee for

the

signature

approval in

the

Register

Considering

of the

application

TOTAL

Limited

liability

company

Minimum

share capital

LVL 2000

(appr. EUR 2

846)

LVL 100

(appr. EUR

143)

LVL 24 (appr.

EUR 34)

LVL 2.75

(appr. EUR

4)

within 3

working days

EUR

3027

Micro

enterprise

Minimum

share capital

LVL 1,00

(appr. EUR

1.7)

LVL 15

(appr. EUR

22)

LVL 12.60

(appr. EUR

18)

LVL 2.75

(appr. EUR

4)

within 3

working days

EUR 46

What is required in orderto create LTD in Latvia? • Passport

• Name of the LTD, which is not registered in the Commercial Register

• Foundation agreement

• Statutes

• Notice of legal address

• Application (Form no.: 4)

• Statement from the banks of the temporary opening of the account and capital contributions

• Document certifying payment of state duty and publication fee

State support instruments• Technological centres, technological parks, industrial

parks, business parks and business incubators• Innovation centres, business support centres,

consulting and information companies, innovation application centres and regional development agencies

• Extensive assistance is also available from the Investment and Development Agency of Latvia (LIAA)

• In addition, special government funding programmes are available to assist export-oriented business activities

What is a business

incubator?

Incubators as a policy tool:• Assist small firms during start-up period

• Serve as a network integrating: -high tech industries -universities -public organizations

-other related actors

• Assist SMEs in the use of their resources in more efficient ways

BI locations in Latvia

– Scientists with a new technology

– Students– Home-based

business owner ready to expand

– Serial entrepreneurs launching a new start-up company

– Interest groups– ....

An incubator client might be...

Business incubator is:• A facility and services to help start-up and young

companies;• Support process that accelerates the successful

development of these companies;• Provide an array of targeted resources and

services;• Help these companies survive and grow during

their start-up period;• Helps create new jobs and keep businesses in

community;• Find people with marketable ideas and turn those

ideas into companies;

Business incubator is:• Provide expertise in developing business and

marketing plans;• Coach and guide them so they can focus on

developing and growing their business;• Make them financially successful and freestanding;• Provide networking with fellow entrepreneurs.

Enterprise life cycle

What Incubators Offer

Help with financing

Help with business basics

Networking activities

Shared equipment & services

Marketing assistance

Business incubator support services

Basic services:

-Accounting services-Legal services-Recruiting services-Business plan preparation and evaluation services-Sales and marketing consulting services-Attraction of additional funding and different support instruments-Cooperation at local and international level

Infrastructure services:

-Premises rent and management-Legal address-Internet and telecommunications services-Secretary services

Specialized services:-Technology consulting services-Market research services-Patenting services-Use of laboratory equipment-Testing and certification services-International marketing and export promotion consulting services-Quality management systems implementation services-Product market positioning and design consulting services-Integrated marketing consulting services-Specific legal services

Support intensity• Joining business incubator means definate support

intensity will be granted to the new incubatee. In other words a specific discount to all services and consultations received during incubation period:

• 1st year from 55% to 85%• 2nd year from 35% to 60%• 3rd year from 15% to 40%• 4th year up to 10%

• Support intensity amount and changes are dependant on company age, operation duration in the incubator, as well as results from operations – the more active and successful company is, the higher support intensity will be granted.

Support intensityHigher support intensity will be granted to companies that fulfill the following criteria:

•The company is younger and it operates in the incubator for a shorter time•The growth potential of the business has been rated higher•The company generates better business results (amount of new work places created, turnover growth, tax amount)•The company operates in one or more prior fields•Annual turnover growth is 50% comparing to previous year•Company has created and launched at least one new product that has to be patented•Export turnover reaches 40% of total turnover

The selection criteria

Business incubatpr cannot support:•Manufacturing agricultural products•Fisheries and aquaculture•Coal industry•Shipbuilding•Financial intermediation•Trade•Commercial services•Transport•Manufacturing alcoholic beverages•Manufacturing tobacco products•Gambling

How to become a tenantSubmisson of application

Commission’s decision on qualifying for pre-incubation

Commission’s decision on qualifying for incubation

Conclusion of a contract

Up to 4 years

• Uzņēmumam vēl nav 2 gadi• Atbilst sīkā vai mazā komersanta

statusam• Inkubatorā var atrasties 4 gadus• Uzņēmums darbojas atbalstāmajās

nozarēs• Ir gatavs pastāvīgi attīstīties, uzrādot

pieaugošus rezultatīvos rādītājus

The selection criteria

Prior fields• Company cooperates with Vidzeme University of applied

sciences on (comercial-)realization of research results• Company offers solutions to the region’s industry on

technology modernization and export growth• Promote implementation of electonic and IT technologies in

educational, medical and social protection areas in region• Company offers environmentally friendly manufacturing

solutions• Promote growth of creative industries• Offers new and innovative solutions to the region's tourism

development• Business carried in IT, telecommunications and

manufacturing industries

Best practise examples• Wendi Toys, Ltd.• Services received:

- Web page – 1505,50 LVL- Marketing and export consulting – 10 230

LVL- Testing and sertification of products – 15

110,50 LVL

- TOTAL: 26 846 LVL (38 351,43 EUR)

- Financed by BI: 21 476,80 LVL (30 681,14 EUR)

- Co-financed by company: 5369,20 LVL (7670,29 EUR)

“80ART”Low budget audio adsCompetitive advanatges: time, price, individual

approach

“Mearra Latvia”• Ltd. "Mearra Latvia" is developing web projects that

are based on open source software Drupal

“MUUV”• Ltd. «MUUV" is developing web management systems

that are based on open source software Joomla

Valmiera Business and Innovation Incubator• VBII operates since 2007 • Located in Valmiera• Mixed portfolio business incubator• VBII operates in north-east of Latvia (Valmiera,

Gulbene & Valka districts)• In August 2009 VBII signed an agreement of 2,25

million euros in order to operate for the next five years

• VBII will incubate at least 103 companies creating at least 206 new working places in the region

Valmiera Business and Innovation Incubator• Premises of 2770m2 for offices and manufacturing

Valmiera Business and Innovation Incubator

Valmiera Business and Innovation Incubator

Valmiera Business and Innovation Incubator

CBR Home Market project• The Home Market project aims at enlarging the

market where SMEs operate from the local level to the level of the entire Central Baltic region, to unite the region so that it is viewed as one single market area

• Developing the guidelines for a regional cross-border incubation system and implementing the pilot projects amongst participating business incubator companies

Business culture in Latvia

Where to find information?• www.liaa.gov.lv• www.em.gov.lv• www.csb.gov.lv

• VBII marketing project manager Sanita Laiviņa– E-mail: sanita.laivina@vbii.lv– Phone: 26357065, 64250880

Contacts for further information

WEB: www.vbii.lvSkype: v.b.i.i.Twitter: VBII_inkubators