Financing models for university-related incubators are changing. Until recently, most emerged from economic-development efforts by states, regions, or localities. Now, private investors are playing a bigger role. A new incubator at the University of Pennsylvania, PenNetWorks, is being financed by a venture-capital company called the Redleaf Group. As an entry fee, companies allocate a 5-percent ownership stake of their company to the incubator, which is then split between Redleaf and the university.
Companies also pay annual rent based on the number of employees they have.
University officials sought the arrangement because it creates an outlet for entrepreneurial talent. Redleaf, in turn, gets a chance at a stake in early-stage companies. The company is looking to create similar relationships with other universities and says it is close to striking two such deals. Most other university incubators are not now asking for equity stakes in companies in their incubators, but it is a possibility down the road. Ms. Adkins, of the National Business Incubation Association, believes that after recent instability in for-profit incubators, and the cutbacks in corporate spending on research and development, universities will more commonly be hosts for incubators.