The Business Incubator Development (BID) Program was created in September 1997 by the International Technology Research Institute (ITRI) of Loyola College in Baltimore, Maryland. It is led by two Ukrainian-Americans, Dr. George Gamota (above left) and Dr. George Mackiw (right). The program was initially funded by a generous grant from the United States Agency for International Development, which administers the U.S. foreign assistance program providing economic and humanitarian assistance in more than 80 countries worldwide. 

The purpose of program is to establish small business incubators in several Ukrainian cities and to contribute to the development of Ukraine's small business sector, thus encouraging employment, private investment, and public recognition of the vital role small businesses have in the economy. By using staff with experience in establishing business incubators in the former Soviet Union and extensive experience in Ukraine; along with strong support from the Ukrainian Government and local organizations, the BID Program is designed to maximize chances of success.

Fig. 1. Signing the contract to operate the KievSBI in January 1998. Dr. Bohdan Budzan (l) signed for the International Management Institute, and Dr. Duane Shelton signed on behalf of Loyola College.

Loyola College began a 30-month pilot program funded by the US Agency for International Development (USAID) by establishing incubators in Kiev and Kharkiv. It also has additional plans to expand the incubator concept to Dnipropetrovsk and Odesa. Internationally recognized local organizations with experienced staff have agreed to assist creating the incubators and to sustain their operations after the initial funding ends. The project principals have extensive experience in operating the incubator program in Russia, managing US government and private sector funded technology transfer programs, and working in Ukraine.

Business incubator programs have been successful in creating small businesses in many countries, including China, Israel, Poland, Russia and the United States. The incubators select entrepreneurs who have passed a rigorous technical and business review. The incubators then provide resources to enhance their prospects, including training in business (practical marketing, finance, management, etc.), and connections to external sources of investment and working capital, sometimes as direct loans or loan guarantees. Normally the incubators either provide a physical facility for the entrepreneurs, or use a variant called an "incubator without walls," which allows of existing facilities. This is more appropriate for entrepreneurs who have special equipment or when a move of a company would be disruptive. The BID Program accommodates both approaches; space and logistical support are provided in a manner that best suits the entrepreneurs' needs

While business incubators can be effective in any economic sector, the rapidly expanding technology area offers the greatest potential for economic development, and the BID Program will target this area. The focus will be on the technology and light-manufacturing sector in a broad sense to reflect the opportunities that exist in Ukraine.

The BID Program staff includes American and Ukrainian professionals, experienced in small business creation and development. The methodology is modeled on that used in an USAID-supported business incubator project in Russia as developed by Dr. Alistair Brett, but one customized to suit the current conditions in Ukraine. Dr. Brett is one of the principals in this proposal and will serve as the Training and Selection Director. Mr. David Bailey, another of the architects of the successful Russian incubator, will serve as Director of Communications. Dr. George Mackiw will serve as the Chief Executive Officer, in charge of managing existing incubators. Dr. George Gamota is the In-Country Manager, in charge of external relations, particularly coordination of matching funds to sustain and expand the incubators. Gamota and Mackiw speak fluent Ukrainian.

The BID Program is a part of Loyola's International Technology Research Institute, directed by Dr. Duane Shelton. ITRI is well known for providing international technology studies for the National Science Foundation, Office of Naval Research, and other U.S. Government Agencies.

In the initial two cities in Ukraine, respected institutions have agreed to partner with Loyola. In Kiev, the International Management Institute will operate the KievSBI, under the direction of Dr. Vladimir Andreev. In Kharkiv, the partner is the highly successful National Academy of Sciences Institute of Single Crystals. Dr. Inna Gagaus will direct the KharkivSBI.

Additional support to the Loyola College on-site Ukrainian Coordination Office (UCO) will be provided by Academician Victor Baryakhtar, Dr. Oleksandr Slobodyanyuk, and Dr. Ihor Katerniuk. All have worked with Dr. Gamota for years on programs to assist Ukrainian scientists adapt to free market opportunities. Dr. Mackiw is organizing the BID Advisory Board; a distinguished group of American and Ukrainian businessmen has already been recruited, including Mr. Franklin Lindsey, former CEO of ITEK Corporation, as chairman.

Many Ukrainian and American individuals and organizations have agreed to support the BID Program, and letters of support and commitments have been received from 38 organizations. The recommended budget for this two and a half-year pilot program is $7,100.000 of which $3,100,000 has been received from USAID. Commitments for cost sharing of more than $2,000,000 have been obtained from the Ukrainian government. Additional investors are being solicited to provide the additional $2,000,000. These funds would be used to expand the BID loan and grant program, and to open incubators in Dnipropetrovsk and Odesa.

For more information, please call Dr. George Gamota at (781) 863-1320, or send email to itri.@loyola.edu.

The training program contains all the elements of an introduction to small business development: marketing, finance, management, etc. However, the theme of the course is the development of a professional quality business plan for each student's company or venture. The business plans will be used to make application for bank line of credit loans, with loan guarantees from the program.

See also: Ukraine BID Program Information