Corporate Incubators Popping Up in Europe

English: Diagram of venture capital fund structure for Venture capital (Photo credit: Wikipedia)

Programs offering office space, contacts with prospective clients and often early-stage investment

In an Art Deco office block on a side street in central London, groups of 20-something programmers and engineers sat hunched over laptops in teams of three or four people.

Surrounded by the trappings of a fast-growing start-up, including table tennis equipment and a fully stocked kitchen, the developers were tapping out computer code and planning marketing campaigns just like many other fledgling companies spread across the British capital.

Yet unlike other strapped start-ups, these small tech companies already have links to the corporate world.

That is because their shared working space here is run by Telefónica, the Spanish cellphone giant, which has pumped around 40,000 euros, or $54,000, into each of the dozen or so local start-ups as part of a program aimed at tapping into London’s growing tech scene.

The move is part of an increasing number of so-called corporate incubators — programs offering office space, contacts with prospective clients and often early-stage investment — that are popping up across Europe.

For start-ups, links with some of the Continent’s largest companies can open doors to potential new customers. And an early cash injection from corporate backers, which typically take minority stakes in the small companies, also may help persuade other venture capital firms to invest.

“The main reason for joining was because of the connections,” said Dan Strang, co-founder of Eventstagram, a photo-sharing service. The British start-up has signed several deals with Telefónica’s British business after joining the Spanish telecom company’s nine-month program in London. The company’s offices were visited last month by the country’s deputy prime minister, Nick Clegg. “We couldn’t have got that anywhere else.”

Operated by companies like Microsoft and the German telecoms giant Deutsche Telekom, these tech incubators provide large firms an entry into the Continent’s fast-expanding start-up communities in cities like Berlinand Dublin.

More important, they also offer large companies the chance to keep track of new technologies and trends that have the potential of upending their main businesses.

As the speed of innovation accelerates – and the cost of starting a company declines – some of the biggest tech firms have been caught off guard by new business models and inventions.

A prime example is Nokia, the struggling Finnish cellphone maker.

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