The Incubator Operating Model In China And How It Affects Financial Performance

In recent years,a series of business incubator has sprung up across China.Especially in 2014 when China's State Council issued opinions to instruct the public on "mass entrepreneurship and innovation" and to boost and encourage national entrepreneurship and innovation gene,a large group of co-working space,startup cafe,maker space and incubator has emerged around China.These spaces are able to echo the trend as startup teams' office place.However,it has appeared that a majority of domestic incubators are in co-working space model,which is to provide office and service for startups and charge them rent and service fee in return.This situation has led to homogenization phenomenon in this industry and is consequently unable to achieve multiple profit models.As for investment-oriented incubator,relying on investment return has caused cash flow problems at earlier stages of business due to unrealized exits.Thus the incubator is difficult to carry on.How should incubator choose a proper operating model in order to achieve sustainable operation?The study selects the famous incubator-Innovation Works as an example for further research in order to have an in-depth study on how the business model has affected its financial performance.The goal of this study is to explore the financial performance of such incubator business model and what financial performance could be achieved if to compare with other business model.Three-dimensional financial statements and financial indexes are used to elaborate these questions.There are 6 chapters in this study.The first chapter is an introduction of this study,which mainly introduces research background,topic basis,research contents and overall structure of the study.Chapter 2 showed the current research direction and conclusion of incubator industry.Chapter 3 explained the development course and status quo of global business incubator,focusing on China,U.S.and Israel's incubator situation especially China's current incubator model and its existing problems.Chapter 4 focused on describing the Innovation Works' current business model,and three-dimensional analysis is used to illustrate Innovation Works' overall financial situation.Chapter 5 conducted very detailed research and analysis on Innovation Works' financial indexes,aiming at explaining how Innovation Works' operating model would have affected its financial performance and the pros and cons of such operating model.Chapter 6 is the conclusion section of this study,which summarized the study and tried to come up with solution to Innovation Works' problems.