(Yicai) Jan. 16 -- A proposal co-signed by 15 members of Shanghai’s political advisory body to leverage the strengths of leading enterprises in improving the development and operation of sci-tech incubators was named an outstanding proposal at the city’s ongoing Two Sessions, the annual meeting of its top legislative and political advisory bodies.

The scientific and technological incubators set up by big companies and industry leaders tend to achieve higher success rates, mainly because of their stable management and operations and their forward-looking vision, said You Minjian, a member of the Standing Committee of the Shanghai CPPCC and one of the 15 behind the proposal.

This year, Shanghai’s Two Sessions are concerned with developing the city into an international sci-tech innovation center, with several proposals to hasten the establishment of enterprise-led sci-tech innovation systems and deepen financial services for technological innovation.

Building incubators involves much investment and slow returns, and comes with high risks, so having top enterprises head them would be a significant advantage, noted You, who is also a lawyer at Co-Effort Law Firm.

The management of incubators owned by state-owned enterprises or the government could be entrusted to leading businesses or industry giants, with the government investing in infrastructure based on market demand while companies take responsibility for professional operations and management, Yu said.

Yu also suggested that Shanghai should encourage state-owned venture capital firms to work with leading firms and industry titans to establish multi-level, multi-model funding systems centered around the sci-tech industrial ecosystem, as well as support the special funding needs of incubators.

"For incubators, proof of concept is the most critical and riskiest phase of converting technological achievements,” You said. “Enterprises often hesitate to proceed at this stage.”

He recommends that the city’s financial department set up a dedicated fund to provide support and guidance for concept validation projects within incubators.

Shanghai issued a plan in 2023 stating that it aims to have cultivated at least 20 high-quality incubators by the end of this year, which will serve as models to drive at least 200 other incubators toward specialization, branding, and internationalization. As a result, more and more financial institutions are actively taking part in incubating sci-tech innovators.

The plan called for strengthening guidance on the investment-incubation link, including encouraging high-quality incubators to collaborate with municipal-level fund of funds, establishing early-stage hard-tech investment funds, and deepening the exploration of proof of concept and equity investment.

Many incubators in Shanghai have already developed various fund models, including proprietary incubation funds, joint funds, and early-stage support funds.

Editor: Futura Costaglione