During the five years that Ebba Fåhraeus has been CEO of SmiLe, the life science incubator has transformed into a ‘company generator’ with strong business focus. The success factors have been a new business model for the incubator, a strengthened brand, international cooperation, the community, strong industry expertise in the team as well as focus on investor relations.
‘Having a viable business model in place is the most important thing to succeed. That’s what we tell our startups and that was true also for the incubator! I quickly realized that we needed to change our business model to be able to help more entrepreneurs. We could no longer base our finances on renting out premises to the companies. Instead we freed money to recruit more senior business developers with expertise from the industry’, says Ebba Fåhraeus, CEO of SmiLe Incubator at Medicon Village, Lund since early summer 2015.
With a corporate background in economics and marketing, Ebba Fåhraeus was not the most obvious choice to run a highly specialized life-science incubator but her sound business focus has completely transformed the once small, regional incubator. By revising the business model, re-branding and focusing on business coaching and processes, she has navigated from financial meltdown to ‘Excellent Incubator’ status, and more than doubled the funding from Vinnova in five years.
In 2015, what was then called Lund Life Science Incubator, was a slim organization; five part-time employees, heavy laboratory focus and very little business coaching. Despite a good infrastructure, processes and routines needed developing, the business model based on leasing facility space to the incubator companies, was a huge financial liability and the brand needed a complete make-over.
‘One of the first things I did was to call the CEO’s of all the incubator companies to a meeting to announce that I would be terminating the leases with the contractual 3-month notice and that they were welcome to renew them – with a 10% increase. Perhaps not the most popular decision but it was absolutely necessary to create the initial financial leverage we needed to be able to focus on developing the incubator.’
In parallel, a complete re-branding process was launched to create a platform for strengthening the incubators’ position, not only in the Life Science industry but also among potential incubator companies, investors and media. As a result, the SmiLe brand was born.
As Vinnova unexpectedly withdraw its funding in late 2015, the incubator was plunged into a financial crisis. To save it from bankruptcy, the management team had to launch a thorough internal business review process and take radical actions. The business model was revised so the incubator companies no longer leased their facilities from SmiLe but directly from Medicon Village. A new digital booking system was introduced to manage the use of lab resources, and costs for consumables were charged to the incubator companies according to factual use.
‘Looking back, this was a defining moment for SmiLe. The fact that we were forced to scrutinize everything from strategy to daily operations helped us streamline the operations and gain control over expenses already at an early stage. Thanks to this we not only survived, we were left in a significantly better financial position and could kick-start a radical transformation already in 2016’.
With the help of an experienced business developer from a renowned incubator, documentation processes improved, new coaching tools were introduced and meeting structures were established. A comprehensive training program for the incubator companies was launched along with the first E-health initiative – a 3-month accelerator program, ‘Health2B’, to attract E-health companies.
Senior business developers with experience from working with big pharma and medtech companies were recruited to strengthen the business coaching part. In addition, experts in investor and industry relations were recruited – a success factor associated with some of the most reputable international incubators.
In addition, a business strategy with a comprehensive set of KPI’s was developed to help visualize goals and keep track of progress.
These initiatives not only resulted in a renewed funding from Vinnova in 2017 but they laid the foundation for the future development. Today, the SmiLe team consist of 18 people with 8 different nationalities, representing more than 250 years of life science experience.
The initial incubator has been extended with a number of programs and has grown into a dynamic community of members, sponsors, investors and experts. In June 2020, Vinnova granted SmiLe 11.8 MSEK – more than doubling funding – due to the large number of high-quality life science companies in the portfolio.
‘By applying sound business thinking and running SmiLe like a proper company instead of in a sense depending on grants, we have come a long way. Not only have we been able to grow business and deliver on our KPI’s – we also want to serve as best practice examples for our members in commercializing their innovations. The recognition from Vinnova is the ultimate proof that we have found the right formula to develop and support startups. Our next goal is to be one of the top life science incubators in Europe in a few years time’ , says Ebba Fåhraeus.
SmiLe Incubator is a life science business incubator based in Medicon Village in Lund. SmiLe helps entrepreneurs to commercialize their ideas. There are currently more than 20 companies in SmiLe, which together with alumni companies, have attracted more than EUR 300 million in venture capital to date since 2014. SmiLe offers business coaching, a large network of contacts and a dynamic community, as well as well-equipped laboratories which is unique of its kind in Sweden. SmiLe is a non-profit organization and receives basic funding from Region Skåne, Lund Municipality, Lund University and Medicon Village. SmiLe´s sponsors are Agilent, Sparbanken Skåne, Awa, Høiberg, Prevas, Setterwalls, Zacco, Aqilion. SmiLe’s listed alumni companies have a market capitalization of almost EUR 750 million (Q4 2019). www.smileincubator.life