business plan for business incubator

Business Incubator Business Plan [Sample Template]

By: Author Tony Martins Ajaero

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Are you about starting a business incubator? If YES, here is a complete sample business incubator business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a business incubator. We also took it further by analyzing and drafting a sample business incubator marketing plan template backed up by actionable guerrilla marketing ideas for business incubators. So let’s proceed to the business planning section.

Business incubators are organizations that help start-up companies grow speedily as well as ensure that early stage companies become successful. In starting a business incubator, you would need to ensure that you have a high source of networks with angel investors, venture capitalists, state governments, as well as with other investors.

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This is also a business that requires you to pick a niche and understand the target market you intend to help accelerate towards success in order to become a success yourself.

Even though business incubators have often either been private non-for profit businesses, non governmental agencies or a government sponsored programme, there now exists business incubators that are private and are started with the intention of making profit.

As with starting any business, you need to conduct a feasibility study on if it is worthwhile going into this kind of business.

Most new start-ups usually hire a reputable business consultant, who understands the industry, to help them handle this phase. Using a business consultant is helpful as they would point out the obstacles you are likely to face during the course of starting or running the business and how best you can overcome these challenges.

Another serious aspect you shouldn’t overlook is in having a business plan, as it is vital to the success of your business. Below is one of such samples, a business incubator business plan template;

A Sample Business Incubator Business Plan Template

1. industry overview.

Business incubators came into existence in 1959 in the united states as Joseph Mancuso started the Batavia Industrial Center in Batavia, New York. This led to the growth of business incubators all over the country and as at 2006; there were more than 1,115 business incubators in the United States of America. Globally, there are more than 7,000 business incubators in existence.

Business incubators usually fall into several categories in order for the specific business incubator to be able to use best industry practices and evaluation to successfully determine outcomes for start-up businesses. The National Business Incubation Association has therefore categorized business incubators into five; mixed-use, service, technology, manufacturing, and other.

There are majorly two types of business incubators in existence; those that have a physical facility and an on-site management for clients to exploit. Also, business incubators that have a physical location usually offer start-ups space in which to operate their business.

Virtual business incubators on the other hand, do not offer clients on-site space for their business and may not even be located in the same geographic areas as the clients. They however usually have a central office in which activities are coordinated and clients can go to for conferences.

Business incubators started being judged based on providing best industry practices in the early 1990s as a determinant to ensuring successful programs for their clients. Another thing used to evaluate business incubators during this period was what value they added to client firms that ensured that these firms had improved outcomes and other economic benefits.

There have started emerging new business incubators that seek to help foreign firms enter the United States’ market. Even though these business incubators provide the same entrepreneurial services as traditional incubators, they also help foreign firms have easier access to the U.S market and resources or partnering with U.S firms.

These services offered usually include language training, translation services, cultural training, immigration and visa assistance, helping to obtain vital licenses (business and driving), as well as housing assistance. The immigration services offered are usually to help spouses and children so they find it easier to settle in their new intended location.

In the United States of America, most business incubators usually receive start-up funding as well as continuous support from donors and the government.

According to research, 85% of business incubation programs usually receive continuous public support for their annual operating budgets. However, more nonprofit incubators usually receive higher support in comparison to profit-based business incubators.

Also, the business incubator category that receives the most attention is that of technology especially if these incubators are close to universities and colleges. Most technology based business incubators are often located close to or with science/technology parks.

2. Executive Summary

Business incubators are usually programmes that are designed to ensure that start-up entrepreneurial companies are successfully accelerated towards successful development through diverse business support resources as well as services. Our aim is to ensure that we achieve a 90% success rate with all those who see our services here in Mountain View – California.

Our location in 1500 Amphitheatre Parkway, Mountain View, California is very strategic especially as there are several new businesses starting up every now and then as well new businesses already in existence; that require guidance on how to become a success as well as force in the industry they intend going into.

Our aim as a business is to ensure that we help our clients attain their goals by using best practices and providing the best evaluation tools and other form of guidance that will be helpful to our clients. We have set processes and structures in place that enable our team best interpret the United States’ economy and use this in helping our clients become the success they intend to be.

We now that there is no one best incubation practice that would suit all our clients and ensure that they become a success and so in this regard, we intend to have a synergy of multiple policies and services so as to have optimal outcomes that will be most suitable for specific clients’ needs.

To achieve all these, we have built a business structure that is guaranteed to ensure that our business runs smoothly and that we are able to achieve what we set out to do.

It is for this reason that we have sourced for and hired proficient and professional employees who are not only competent in their assigned responsibilities but also believe enough in the organization and are committed to seeing corporate goals achieved.

In order to ensure that we achieve a high level of productivity, we will ensure that our employees are well trained and undergo training regularly to ensure that they enhance their sills. We also intend to ensure that our employees work in an environment that is not creatively limiting and is also conducive.

Also, we have the best welfare packages for our employees’ that is the best across similar business incubator start-ups similar to ours here in Mountain View – California as well as across the entire industry in the whole of the United States of America. Also, our incentive packages for hardworking employees are also top notch.

Our owner, Brad Bradley has an experience of over 30 years in the business management and entrepreneurial solutions.

Both are Havard Business School alumni and have hands-on experience in several business incubators both private and state sponsored, and will therefore bring their experience to bear in the business and ensure that the corporate goals and objectives set are achieved.

3. Our Products and Services

Our intention at Bulb Business Incubator Inc, is to ensure that we offer our customers the intended services they require virtually especially as we are a virtual business incubator that intends to deal in the service based niche, even though we will have a central establishment in which to coordinate activities.

We intend to ensure that we whilst offering our core service that we also create multiple sources of income as well for Bulb Business Incubator Inc.

Our intention is to ensure that we generate revenue and also make profits from the several services we intend to offer in addition to our core service here as permissible under the laws of the United States of America. Therefore below are some of the services we intend to offer;

• Fees for mentoring and guiding of clients’ businesses
• Consultancy and advisory services for already existing businesses
• Provision of technical assistance
• Negotiators
• Marketing consultancy
• Training services

4. Our Mission and Vision Statement

• Our vision is to help our clients achieve their corporate goals of breaking into the market, securing investment or getting acquired. We hope to achieve a 90% success rate. We also intend to become the preferred brand for start-up and growth companies in our niche.
• To achieve our vision, we intend to ensure that our clients are provided with a low-impact fee structure, great mentoring as well as have competent employees to help them achieve success faster than they would have done on their own.

Our Business Structure

As a business that understands how to help new startups and growing companies achieve success, we know and understand the importance of having the right business structure for our business and are willing to go the extra mile. We therefore intend to go all out in ensuring that we build a business structure that aligns with our vision and corporate goals as a business here in Mountain View – California.

We intend to hire competent and professional employees who understand the industry thoroughly and who are also attuned to our company’s vision and are committed to ensuring that we achieve our corporate goals and also reach an intended standard for our business whilst positively projecting and promoting the business to clients – existing or potential.

We also intend to ensure that our employees are well paid across similar start-ups such as ours in the industry. This is so that they remain productive, motivated and committed to ensuring that we achieve our goals here at Bulb Business Incubator Inc.

Therefore, the business structures we intend to build at Bulb Business incubator Inc include;

Chief Executive Officer

Business Development Manager

Customer Service Executives

Business Coach

Human Resources and Admin Manager

Marketing Executives

Accountant/Cashier

Security Guard

5. Job Roles and Responsibilities

• Makes decision that will affect the strategic direction of the company
• Seek for funding on behalf of the company by approaching several sources
• Reviews policies that aren’t working or having much impact and remove or modify them in order to achieve organizational growth
• In charge of coordinating the management staff and ensuring that organizational policies are implemented
• Identifies areas in the company that needs an upgrade
• Liaises with management staff in order to know how best to move the organization forward
• Identifies new income sources for Bulb Business incubation Inc
• Drafts proposals on behalf of the business
• Works with manager to ensure that corporate goals are achieved
• In charge of ensuring that all clients’ inquiries and complaints are promptly attended to
• In charge of ensuring that customer database is accurate and updated
• Remain updated about industry trends and company policies so as to have the right information for the client
• Provides the required mentorship for new start-ups and growing businesses
• Reviews mentorship processes and continually upgrade so that clients can get the best
• Know what mix will best suit a client and how best to use the mix
• Sources for and recruits the right employees for the business and ensures that they undergo orientation to help them settle in
• Conducts training for the employees as well as performance appraisals in order to increase the productivity for the organization
• Ensures that all administrative tasks are smoothly conducted and that the policies of the management are implemented by staff.
• Conducts continuous market research on behalf of Bulb Business Incubator Inc in order to help identify new markets
• Helps new start-ups as well as Bulb Business Incubator Inc develop marketing strategies intended to generate more revenue for the company
• Conducts direct marketing on behalf of the organization
• Carries out an internal audit on behalf of Bulb Business Incubator Inc
• Serves as a temporary financial adviser and guide for new start-ups and growing businesses
• Prepares financial information and statement on behalf of the company and ensure that they are correctly reconciled with ban records at the end of the month
• Ensure that the facility is kept clean at all times
• Ensure that depleted cleaning supplies are re-stocked
• Carries out any other duties as might be determined by the human resources and admin manager
• Ensure that the premises is secure at all times especially after work hours
• Watch the surveillance cameras in order to monitor activities

6. SWOT Analysis

In order to better understand our business ideology and concept and how well it would help us fare in this environment, we deployed the help of a reputable business consultant in the service industry here in Mountain View – California, to walk with us through our concept and help us determine if we were going to succeed in the business environment especially in this location which we have chosen.

Having gone through our business plan and looked through our concept and processes, the business consultant deployed the SWOT (strengths, weaknesses, opportunities and threats) analysis that would help in determining our rate of making it in the industry.

Below is the result of SWOT analysis that was conducted on behalf of Bulb Business Incubator Inc;

Our strength lies in the fact that we have processes and structures in place to ensure that we achieve our goal of achieving a 90% success rate in helping our clients.

We also have put much emphasis on our business structure in the sense that we are careful in sourcing for and recruiting the right employees who are professionals and competent enough to ensure that we attain our corporate goals and objectives.

Also, we are strategically located in Mountain View – California as there are new start-ups cropping up every now and then in the service based industry often looking for guidance on how to succeed. Finally, the experiences that our owner, Brad Bradley is bringing to the table are more than likely to help us attain our corporate goals and objectives and succeed.

Our weaknesses lie in the fact that we are mostly a virtual business incubator offering services to our clients, and this might affect clients who are not in our geographical location.

Also, the service based industry is one that requires that we might have to intensely compete with other already established business incubators for clients; however we have put strategies in place that would ensure we create awareness for our business.

• Opportunities

The opportunities that abound for us as a business is in offering other new services that might crop up as the business and industry evolves leading to more streams of income. Also, there are many investors looking to invest in service based ideas and so we would not have a lack of investors for start-ups requiring this.

Every business is faced with threats every now and then and as a business we are prepared to face any threats that might crop up during the course of starting or running this business.

Therefore the threats we are likely to face are government policies concerning business incubators that are established for profits. Also, we are likely to face the threat of an arrival of a competitor in same location offering same services as we do.

7. MARKET ANALYSIS

• Market Trends

In the 1980s, even though business incubators were becoming the preferred means by which new start-up companies preferred seeing assistance from, there were only a handful of business incubators present. However as at 1992, according to the National Business Incubator Association on the state of the business incubation industry, it was found that business incubators had tripled.

The trend in the business incubator industry has it that majority of its operators; almost 90% are nonprofit entities and enjoy more state funding than the minority business incubators that were operating in the same industry.

Also, most of the incubators that receives higher attention and funding were those that were in technology-based. Incubators that have also received a fair share of attention are those that target disadvantaged populations such as minorities and women.

Business incubators especially those for small businesses have played a major role in economic development by enhancing the survival rates of companies.

Reports for the incubation industry have it that start-up companies that have used the services of business incubators have an 80% chance of remaining in existence 5 years after. This has led business incubators especially those for small businesses to be seen as an accepted economic development tool in the rural and urban areas all over the United States of America.

8. Our Target Market

In deciding the target market for our business incubator program so as to know what range of customers we would be likely serving here in Mountain View – California in reference to our niche category as well as all over the United States of America, we have conducted a market research that would help us in this regard.

The reason for the market research is so as to know what our target market would likely be expecting from us. This would allow us draft the best strategies that are not only effective but also necessary in ensuring that we rightly penetrate our target market.

Therefore form the result of the analysis; we are in business to offer our services to the following customers;

• New Start-ups in the service based industry
• Growing service based businesses in need of an accelerator
• Other business incubators

Our competitive advantage

Bulb Business Incubator Inc is being established to help our clients achieve their corporate goals of breaking into the market, securing investment or getting acquired. Our intention is to achieve a 90% success rate and also become the preferred brand for start-up and growth companies in our niche.

With this, we have come up competitive strategies that will allow us compete favorably as well as have an edge over our competitors.

First off, our virtual as well as physical location is opening us up to having more customers than we would have if we were strictly serving customers based on physical locations. Another edge we have is in the offering of standard services regulated by international best practices.

Our clients also get a dedicated and competent staff that helps them reach their intended goals. We have also hired competent and professional employees who now and understand the market well to help us achieve our corporate goals.

Our employees have the necessary expertise that will inspire our clients and an excellent customer service that will ensure that we get referrals from our successful clients.

We not only intend for our clients to work in a conducive and creative stimulating environment, but we are also paying them well better than most similar start-ups in the same industry here in the United States of America. This is aimed at motivating them to put in their best in ensuring that the business grows to the required standard.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Bulb Business Incubator Inc. is a private business incubator that has been established to help start-ups and companies still in their early stages whilst generating revenue and making profit here in Mountain View – California.

We intend to offer our clients various services that are intended to bringing in more revenue that will ensure the sustainability and growth of our business. Therefore, Bulb Business Incubator Inc will generate income from the following services;

10. Sales Forecast

Every business is established in order to make profit, sustain itself and grow, however not all know how to go about achieving this, which is why there would always be a need for business incubators. Our virtual as well as physical location is very strategic and will allow us to not only generate the needed revenue as it is less expensive to operate but also make profit within six months of operations.

In carrying out an accurate sales forecast on behalf of the business, we have conducted a critical examination of the business incubator industry in order to determine our chances in the industry. We garnered data from similar start-ups such as ours here in Mountain View – California.

Therefore, below are the sales projections for Bulb Business Incubator based on several factors:

• First Fiscal Year-: $300,000
• Second Fiscal Year-: $600,000
• Third Fiscal Year-: $1,200,000

N.B : It should be noted that above projections were carried out based on certain factors such as there won’t be an economic meltdown which will make it difficult for new businesses to start up and that we won’t have a competitor arrive at our location within the period of the above sales projections. However, a change in any of the factors would mean that the above projected figures might increase or decrease.

• Marketing Strategy and Sales Strategy

Before starting any business, it is important to ensure that the marketing strategies have been laid down so that there would be any hitches during the revenue generation process.

This is why we have conducted a market survey that will help us determine how we will best penetrate the market and attract the needed number of customers for our business while also favorably competing with our competitors here in Mountain View – California.

It is for this reason that we have hired a reputable marketing consultant that understands the business here in Mountain View and will help us develop marketing strategies that will allow us effectively attract the right customers and enable us gain a huge share of the target market here in Mountain View – California as well as all over the United States of America.

We have also empowered our marketing executives to ensure that the right strategies are adopted that are in line with our corporate goals and that will allow us achieve our intended objectives at Bulb Business Incubator Inc.   Below are some of the strategies we would use to market the services of Bulb Business Incubator Inc;

• Ensure that we place adverts about our services in local newspapers, business magazines as well as on radio and television stations
• Engage in direct marketing to target customers
• Encourage our satisfied clients to refer us to others
• Introduce our business formally to industry stakeholders, government agencies, private investors, as well as in campuses
• Ensure that our business is listed in online and offline directories
• Use our social media platforms such as LinkedIn, Twitter and Facebook and other Online business inclined forums to market our business.

11. Publicity and Advertising Strategy

Having the right publicity for our business is very essential as we aware of the benefits that publicity would bring to our business.

Publicity and advertising go hand in hand because the benefit of a business getting intense promotion is also revenue generation. This is why we would ensure that we intensify publicity for Bulb Business Incubator Inc here in Mountain View – California.

To ensure that we draft and implement effective publicity strategies, we intend to hire a reputable brand consultant who understands how best businesses such as ours can utilize publicity to maximum advantage. We would be using a mix of strategies in order to achieve our intended publicity and advertising strategies for Bulb Business Incubator Inc. Below are the publicity strategies we at Bulb Business Incubator Inc intend to adopt;

• Throwing a grand opening party that would create an awareness and make the right impression
• Attend business seminars and events in the service based industry and offer to address the audience. We would also use the opportunity to network
• Create a website and ensure that it is Search Engine Optimized (SEO) so that it can easily pop up on top of search engines
• Install bill boards in strategic locations in and around Mountain View – California
• Distribute fliers and handbills in strategic locations such as colleges and universities
• Broadcast our success rates on social media platforms such as LinkedIn, Facebook and Twitter

12. Our Pricing Strategy

Ensuring that the right prices are determined for a product or service is very important because using the wrong prices or rates without much research might lead to the business running at a loss and eventually failing. However, while it might be difficult determining the rates for an intangible product such as service, several factors have to be taken into consideration so as to ensure that the rates are fair to both the company as well as the client.

In determining the rates for our various services, we intend to ensure we take factors such as our overheads, what our competitors are offering as well as what kind of service our clients want into consideration. However, as we are just starting off the business, we would offer lower rates for all our clients so as to build a trust and achieve a level of success rate that will then lead to us increasing our prices.

• Payment Options

Because we would mostly be a virtual business incubator with one centralized location here in Mountain View – California, we intend to ensure that our clients have payment options that would be convenient for them as well as our company.

Therefore, the payment options we intend to make available to our different clients are;

• Payment via check
• Payment via cash
• Payment via bank draft
• Payment via equity
• Payment via credit card
• Payment via online payment portal

The above payment options were carefully chosen and will work for all our clients offering them a hitch-free transaction.

13. Startup Expenditure (Budget)

As with every business when starting up, there are several aspects of the business where one is expected to spend huge parts of the start-up capital. Creating a budget for our business is necessary so that we are able to determine what aspects would require huge money and which would require less. Therefore the key areas where we would spend our start-up capital on are;

• Fees for registering the business in the United States of America – $750
• Marketing expenses for general promotional activities as well as marketing expenses for the grand opening of Bulb Business Incubator Inc – $5,000
• Insurance coverage (General liability and Workers Compensation) – $2,250
• Obtaining of licenses and permits, as well as accounting software – $2,000
• Operational costs for the first 6 months (employee salaries, utility bills) – $100,000
• Cost of hiring business consultants – $2,500
• Leasing of office facility for a period of one year including renovations – $30,000
• Business program packaging expenses – $30,000
• Cost of purchasing stationeries, furniture, computers, printers, fax machines, phones – $12,000
• Cost of launching a website – $500
• Cost of our opening party – $5,000
• Miscellaneous – $10,000 

From the above budget breakdown, we would need the sum of $200,000 to be able to start and successfully run our business incubator business here in Mountain View – California. It should be noted that the above amount covers the salaries of our employees and payment of utilities for at least 6 months of operations. It also covers the leasing of an office facility for a period of one year.

Generating Funding / Startup Capital for Bulb Business Incubator Business

Bulb Business Incubator Inc is a business owned and operated by Brad Bradley and Steve Cowell. They know how necessary it is to have funds for this kind of business and so they intend to see for funds from some sources. The areas below are where we intend to see for funds in starting our business incubator business;

• Generate part of the start-up capital from sale of personal stock
• Approach the government for a donation to our business
• Approach several private investors
• Apply for loan from bank

N.B : in searching for start-up capital for our business incubator business, we were able to generate the sum of $30,000 from sale of our personal stock. We also have approached the government for a donation to our business and were given the sum of $50,000.

After approaching several successful service entrepreneurs who were looking to invest in service based ideas, we got the sum of $50,000.

Finally, as part of having a contingency plan, we approached the ban for a loan of $70,000. The loan has been approved and will repaid back in 5 years at the rate of 2%. We have signed all the necessary documents and have been told that we would receive the amount into our account within the week.

14. Sustainability and Expansion Strategy

We have established a business that is not only intended to make profit but also remain sustained and even expand at a pace that would be determined by us. Due to this, we are aware that if our business is to be sustained, we would need to ensure that we hire the right employees, have a high success rate and also have an investment strategy for the business.

To help achieve our intended corporate goals and objectives, we have sourced for and hired employees who are not only professionals and competent enough but also have identified with the company’s corporate goals and will ensure that it remains committed in ensuring that these goals and objectives are achieved.

On our part, we would ensure that our employees are well paid and that they will work in an environment that will not stifle their productivity and creativity. We would also ensure that they remain updated about industry trends and receive continuous training that will help our clients attain their own goals.

The only thing that can ensure that our business incubator program is sustained for a long time is our success rate. We have plans, processes and structures in place that are constantly being reviewed every now and then to ensure that we achieve a 90% success rates for clients that patronize our services.

This will lead to more referrals for our business as more new start-ups and growing businesses will prefer to use our services in order to reach the height they intend for themselves.

Finally, we intend to continually invest in our business, by ploughing a percentage of the profits made back into the business, to ensure its growth and sustainability. We know that if we focus on these three factors we are likely to successfully sustain and expand our business.

Check List / Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales (POS) Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Conducting feasibility studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Opening party / launching party planning: In Progress
• Establishing business relationship with vendors – wholesale suppliers / merchants: In Progress
• Purchase of trucks: Completed

• Get started

A Comprehensive Guide to the Startup Incubator Business Model

Discover the ins and outs of the startup incubator business model with our comprehensive guide.

Are you an aspiring entrepreneur looking for the perfect environment to grow your business idea? Look no further than the startup incubator. In this comprehensive guide, we'll cover everything you need to know about the business model, including what exactly a startup incubator is, the key components of the model, and the benefits of joining, as well as types of incubators and the application and selection process.

Understanding the Startup Incubator Business Model

Starting a business can be a daunting task, especially for first-time entrepreneurs. There are countless decisions to be made, from the initial concept to the final product, and everything in between. This is where startup incubators come in.

Definition and Purpose of Startup Incubators

A startup incubator is a program that provides mentorship, resources, and support to early-stage startups to help them grow and succeed. The primary goal of incubators is to help startups reach a point where they can stand on their own two feet and become profitable.

Incubators typically provide startups with a physical space to work, access to a network of experts, and the opportunity to connect with other entrepreneurs who are going through similar challenges. They also offer educational workshops, seminars, and networking events to help entrepreneurs grow their businesses.

Startup incubators can be found in many different forms, from university-affiliated programs to privately funded initiatives. They are often run by experienced entrepreneurs, investors, or business professionals who have a passion for helping others succeed.

Key Components of the Incubator Model

The key components of the incubator model are mentorship, resources, and a community of like-minded individuals. Mentorship is perhaps the most important component of an incubator, as it provides entrepreneurs with access to experienced professionals who can offer guidance and advice. Resources may include office space, equipment, funding, or other resources needed to help startups grow. The community aspect of an incubator is also essential, as it allows entrepreneurs to connect with and learn from their peers.

One of the benefits of being part of an incubator is the ability to access a wide range of resources that may not be available to individual entrepreneurs. These resources can include legal and accounting services, marketing and branding support, and access to funding through venture capitalists or angel investors.

Another key component of the incubator model is the focus on education and training. Incubators often offer workshops and seminars on topics such as business planning, financial management, and marketing strategies. These educational opportunities can be invaluable for entrepreneurs who are just starting out and may not have a background in business.

Differences Between Incubators, Accelerators, and Co-working Spaces

It's important to note the differences between incubators, accelerators, and co-working spaces. While all of these programs provide resources and support for entrepreneurs, incubators tend to focus on providing long-term support and mentorship, while accelerators offer a shorter-term program that focuses on fast-tracking startups to launch. Co-working spaces, on the other hand, simply provide a shared workspace and access to resources.

Incubators and accelerators are similar in many ways, but there are some key differences. Incubators tend to focus on providing support for early-stage startups, while accelerators are designed to help startups that are further along in the development process. Accelerators often provide funding, mentorship, and resources in exchange for equity in the company.

Co-working spaces are a popular option for entrepreneurs who are looking for a more flexible workspace. These spaces provide a shared office environment, which can be a great way to connect with other entrepreneurs and freelancers. However, co-working spaces may not offer the same level of support and resources as incubators or accelerators.

Overall, startup incubators are an important part of the entrepreneurial ecosystem. They provide a supportive environment for early-stage startups to grow and thrive, and offer a wide range of resources, mentorship, and educational opportunities to help entrepreneurs succeed.

The Benefits of Startup Incubators

Starting a business can be a daunting task, and many entrepreneurs struggle to get their ideas off the ground. Fortunately, startup incubators offer a range of benefits that can help early-stage startups succeed. In this article, we'll explore some of the most significant benefits of joining a startup incubator.

Access to Resources and Mentorship

One of the most significant benefits of joining a startup incubator is access to resources and mentorship. Entrepreneurs who are just starting out often lack experience and may not know where to turn for guidance. Incubators offer experienced mentors who can help entrepreneurs navigate challenges and make informed decisions. Additionally, startups may not have the resources they need to grow, such as office space or equipment. Incubators often provide these resources at a discounted rate or for free.

For example, some incubators provide access to co-working spaces, which can be a great way for startups to save money on rent and utilities. Others may offer access to specialized equipment or software that would be too expensive for startups to purchase on their own. By providing these resources, incubators can help startups grow and thrive.

Networking Opportunities

Another benefit of joining a startup incubator is the networking opportunities it provides. Incubators typically bring together a community of entrepreneurs, investors, and mentors, providing an excellent opportunity to meet potential partners, investors, or customers. Networking events and workshops can also help entrepreneurs gain valuable insights into their industry and learn from experts in their field.

Networking can be especially valuable for startups that are looking to raise capital. By connecting with investors and other entrepreneurs, startups can increase their chances of securing funding and growing their business.

Structured Support and Guidance

Incubators provide structured support and guidance to help entrepreneurs achieve their goals. They often have a curriculum in place to help entrepreneurs develop their business plan, build their team, and launch their product. They can also provide access to legal, accounting, and marketing services to help startups get off the ground.

For example, some incubators may offer workshops on how to pitch to investors or how to create a marketing plan. Others may provide one-on-one coaching sessions with experienced entrepreneurs or industry experts. By providing this structured support, incubators can help startups overcome common challenges and achieve their goals.

Increased Chances of Success

Perhaps the most significant benefit of joining a startup incubator is the increased chance of success. Incubators provide entrepreneurs with the support they need to grow their business and overcome challenges. They also provide access to resources that startups may not have been able to afford on their own. Overall, the resources, mentorship, and guidance provided by incubators can significantly increase the chances of success for early-stage startups.

In conclusion, joining a startup incubator can be an excellent way for entrepreneurs to get the support they need to succeed. From access to resources and mentorship to networking opportunities and structured support, incubators offer a range of benefits that can help startups grow and thrive.

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Types of Startup Incubators

Startup incubators are organizations that provide resources, mentorship, and support to early-stage startups. They are designed to help entrepreneurs overcome the initial hurdles of starting a business and increase their chances of success. There are several types of startup incubators, each with its own unique focus and benefits.

Industry-Specific Incubators

Industry-specific incubators focus on providing support and resources to startups operating in a particular industry. For example, a biotech incubator may provide resources specifically designed to help biotech startups overcome unique challenges, such as regulatory hurdles and securing funding from investors. These incubators often have a network of industry experts and mentors who can provide guidance and advice to startups. They may also offer access to specialized equipment or facilities that are essential for startups in that industry.

University-Based Incubators

University-based incubators are run by colleges or universities and are often connected to the research or innovation departments. They typically provide mentoring, resources, and office space to startups, and may also offer educational programs or classes to help entrepreneurs develop their skills. These incubators are a great option for startups that are focused on developing new technologies or products, as they can provide access to cutting-edge research and development facilities. They also offer the opportunity to connect with academic experts and potential investors.

Corporate Incubators

Corporate incubators are run by corporations and are designed to foster innovation within a company. They often provide support and resources to both internal teams and external startups, with the goal of developing new products or services that can benefit the company. These incubators offer startups access to the resources and expertise of a large corporation, including funding, mentorship, and market insights. They also provide corporations with a way to stay competitive and innovative in their industry.

Non-Profit and Government-Sponsored Incubators

Non-profit and government-sponsored incubators are designed to support entrepreneurs who are working on social or environmental problems. They may provide access to funding, mentorship, resources, and events that focus on building a sustainable, socially responsible business. These incubators are a great option for startups that are focused on creating positive social or environmental impact, as they offer access to a network of like-minded individuals and organizations. They also provide startups with the opportunity to connect with potential investors who are interested in socially responsible investing.

Overall, startup incubators are a valuable resource for entrepreneurs who are looking to start and grow a successful business. By providing access to resources, mentorship, and support, these incubators can help startups overcome the initial challenges of starting a business and increase their chances of success.

The Application and Selection Process

Joining an incubator can be an exciting and transformative experience for startups. However, it can also be a competitive and rigorous process. To help you better understand what to expect, let's take a closer look at the application and selection process.

Eligibility Criteria for Startups

Each incubator has its own eligibility criteria for startups. While the criteria may vary from one incubator to another, there are some common factors that most incubators consider. In general, startups that are just getting started and have a high potential for growth are the most likely to be accepted. Some incubators may have specific industries or sectors that they focus on, while others may be open to startups working in any industry. Startups may also need to have a minimum viable product or a proof of concept to be considered.

Aside from these general requirements, some incubators may also have specific eligibility criteria. For example, some incubators may prefer startups that have a certain level of funding or revenue, while others may prioritize startups that have a strong social or environmental mission.

The Application Process

The application process for each incubator varies, but generally, startups are required to submit an application online. The application may include information about the product or service, the team, the business plan, and financial projections. Some incubators may require startups to go through an interview process or to give a pitch presentation to a panel of evaluators.

It's important to note that the application process can be very competitive, with many startups vying for a limited number of spots. Therefore, it's important to put your best foot forward and ensure that your application is as strong as possible.

Selection Criteria and Evaluation

The selection criteria and evaluation process also vary by incubator. Generally, startups are evaluated based on their potential for growth, the strength of their business plan, their team, and their market opportunity. Incubators may also consider factors like the level of innovation, the potential for social or environmental impact, and the compatibility of the startup with the incubator's mission and goals.

During the evaluation process, startups may be asked to provide additional information or to participate in interviews or pitch presentations. The evaluators may also conduct research on the industry and market to better understand the potential of the startup.

Ultimately, the goal of the selection process is to identify startups that have the highest potential for success and growth. Once a startup is accepted into an incubator, they can benefit from a range of resources and support, including mentorship, networking opportunities, and access to funding.

Startup incubators provide a valuable resource for entrepreneurs who are just getting started. By providing mentorship, resources, and a community of like-minded individuals, entrepreneurs can gain access to the guidance and support they need to grow their businesses. Whether you're operating in a specific industry, working on social or environmental problems, or simply looking to get your startup off the ground, there's an incubator out there that can help you succeed.

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Business incubators: A guide for startups

Startups begin with an idea that founders can then formulate into a business plan. However, building and growing a viable business is difficult and requires help from others. To address this, entrepreneurs often look to incubators to help fill the gap between ideas and a real product.

To decide if a business incubator is right for you, let’s dive into what it is and how it helps startup development. The article also covers how to choose the best one for your startup needs.

What is a business incubator?

A business incubator is a workspace designed to give a startup company the resources it needs to succeed. The perks of a business incubator vary from each program, but it often includes mentorship and other professional services. The goal of a business incubator is to turn a promising idea into a developing startup with a strong chance of success.

What is the role of an incubator?

Business incubators are often sponsored by universities or non-profit organizations. Private ventures may also fund incubator programs. Startups can spend a few months or a few years in an incubator before they “graduate.”

Incubators play many roles in startup development. They aim to nurture early-stage companies into sustainable businesses. Incubators provide a range of support, depending on the program. They may help your startup company with:

• Office space — Incubators are frequently housed in a shared workspace with other startups in the program. The office space and equipment are either included or offered at below-market rates. Utilities like internet services are also part of the incubator
• Mentorship — One of the key benefits of an incubator is having top mentors available to you. They can provide guidance and share their expertise to help you navigate challenges
• Education and training — Incubators offer workshops and other programs to help a startup develop the skills it needs to succeed
• Access to investors — Some incubators may arrange pitch meetings with investors to help companies secure funding. Other incubators may offer funding in exchange for equity in the company. Some incubators are prestigious with a high reputation which can gain your company favor from investors
• Networking — Incubators provide a space for startups to meet potential partners, mentors, and investors. Through networking, startups gain a wider network of support and potential business opportunities
• Revenue growth — Achieving revenue growth is easier when your company participates in an incubator. It can lower overhead costs and help you connect with investors
• Professional services — Many incubators provide professional services like legal counseling or accounting. These services can help your company get started on a positive note
• Support from other entrepreneurs — Sharing your incubator experience with other startup companies means you can learn from each other. The inspiration may help you launch your company quicker and more smoothly

Why do startups need incubators?

As you begin to take the first steps to developing your business idea, you may wonder if applying for an incubator is the right choice. Your startup could indeed develop into a successful venture without an incubator. However, a business incubator can provide many opportunities that you wouldn’t get otherwise.

For starters, an incubator can provide tailored support for your startup. As your business plan evolves, your mentors are right there with you to provide guidance and structure. They can also provide advice on how to avoid common pitfalls in your industry. Mentorship is a valuable tool, and you shouldn’t overlook it.

What is the difference between incubators and accelerators?

Incubators and accelerators are often used interchangeably. To be fair, they both provide support to companies, but incubators and accelerators have different key characteristics. If you’re not sure if you should join an incubator or an accelerator, evaluate these factors:

• Venture stage — If you have a minimal viable product (MVP) and a business model, then an accelerator is a better fit for you. If you have an idea and a detailed business plan, then an incubator is ideal
• Founding team — Accelerators prefer a fully functioning team when evaluating companies. Meanwhile, an incubator is more willing to work with solo entrepreneurs or minimal team members
• Funding and equity — Accelerators often provide funding in exchange for capital. Incubators are less likely to have this arrangement and charge a fee instead
• Timeline — Accelerators are often intense programs that take a few months to complete. Incubators have longer timelines and it’s not uncommon for startups to stay for a couple of years or more. However, the timeline will vary from program to program
• Application process — Both incubator and accelerator programs need proof that your idea or product has high potential. For an incubator, you’ll need a strong business plan. An accelerator application will need you to prove product-market fit and a developed business model

The biggest difference between an incubator and an accelerator is the venture stage. Incubators are more willing to work with early-stage startups, even if all they have is an idea and a business plan. Meanwhile, accelerators expect you to have an MVP and already be operational on some level.

Successful startups from incubators

Incubators often give startups the resources they need to succeed. Here are some examples of startups that went through an incubator and are successful today:

Don’t think you need a fully developed product and business model to have success. Popular startup program Y Combinator says on average, 40 percent of the companies it funds are just an idea.

How to choose the right incubator

There are many incubators available to startups. The International Business Innovation Association (INBIA) estimates that 1,400 incubators are running in the U.S.

It’s not hard to find an incubator, but it’s difficult to get accepted. Top-tier competitive programs can have an acceptance rate of 1-2 percent . For comparison, the Harvard University acceptance rate for the Class of 2027 is 3.4 percent.

Beyond creating a competitive application, a startup needs to choose an incubator that fits its needs. Not all incubator programs are alike, so it’s essential to evaluate a program’s value before applying. Here are a few things to consider:

• Do extensive research — Make sure you have looked at an incubator’s resources, structure, and services. Is it what you need to succeed? If you are willing to relocate, you may also want to consider incubators in other areas. You’ll also want to consider the experience of the mentors and the weekly time commitment of the program
• Consult alumni — No one knows the value of an incubator better than the alumni. You may want to consider contacting companies that the incubator has helped
• Assemble your team — While incubators may consider a solo applicant, you may also want to consider finding a co-founder or other team members. It’s essential to prove to incubators that you have the skills necessary to build your idea
• Prepare a pitch — Incubators want to know why you think you can succeed. Prepare a well-researched pitch that shows why you are different and how you are a match for the program

Key takeaways

Incubators are a valuable resource for startups with a developed idea that need guidance on what to do next. You don’t need an MVP to apply for an incubator, but you should prepare a strong business plan and a solid pitch. Your goal is to show that your idea has potential.

Choose an incubator that has the resources that are best fit for your needs. The lessons, personalized feedback, and networking opportunities are crucial for building your company.

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How to Get Your Startup Up and Running with a Business Incubator

Published: June 28, 2019

Starting a company can be a lonely process for the first-time entrepreneur. There’s a lot of hard work, self-discipline , limited feedback on priorities, and process fraught with potholes -- some critical to the success of the enterprise itself.

Over the last decade, founders and startups have turned to business incubators and accelerators to scale their business. The concept makes a lot of sense for entrepreneurs or early stage founding teams that want to leverage a defined process for success and transition to a sustainable enterprise. But what is a business incubator?

Business Incubator Definition

A business incubator is a company that helps startups and new businesses accelerate their growth and success. Incubators do this by providing support in a variety of areas including management training, office space, capital, mentorship, and networking connections.

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Incubators can be sponsored by different types of organizations including venture funds or private companies, municipal economic development organizations, and even colleges or universities.

Business Incubator Models

Some incubators are focused on different types of companies (i.e., fintech startups), vertical markets (i.e., the energy market), or geographic locations (i.e., companies in Arizona).

In fact, the National Business Incubation Association (NBIA) categorizes incubators into five models:

• Academic institutions
• Nonprofit development corporations
• For-profit property development ventures
• Venture capital firms
• A combination of the above

Companies usually spend one to two years in a business incubator -- a span determined by need and/or obligation. A benefit of the business incubator model is that it creates a shared learning experience and supports collaboration.

The ability to receive quick, accurate information from incubator executives, mentors, instructors, or fellow entrepreneurs can have a significant impact on your ability to focus on the right priorities and make the right decisions to grow your business.

What is a Small Business Incubator?

Many business incubators support small businesses or startups. So, if you're looking for a "small business incubator," you're likely simply looking for a "business incubator" that provides support for business infrastructure, training, and capital.

Note that business incubators are different than business accelerators. While incubators exist to nurture the growth of a new business, accelerators are generally geared towards helping entrepreneurs transform their ideas into products or services that are ready for market quickly -- in as little as a few months.

It's important to know the difference between these two models and to discern which is right for your company or idea.

What Does a Business Incubator Do?

An incubator should provide diverse benefits to startup entrepreneurs. These benefits can include:

• Office space - Some incubators offer office space for free or below-market rates to their portfolio companies. This solves several problems for startups. Mainly, it allows them to find a professional space for their employees to work without having to sign a lease -- especially helpful when the company is unsure how quickly they’ll scale production or headcount.
• Specialized equipment - Some incubators invest in specialized equipment, like modeling software, 3D printers, prototyping equipment, or software development labs. This is a huge advantage for scaling companies in their infancy. Access to costly equipment and simulation programs can be crucial.
• Experienced mentors - It’s important for startups to limit critical mistakes while scaling. Most incubators offer an experienced staff of savvy industry executives to help the core team stay focused and avoid mistakes. Incubators usually employ mentors with specific startup experience that can help explain process, planning, and decision criteria -- all while steering new entrepreneurs away from costly mistakes they made or witnessed.
• Group training and education - Many business incubators offer an array of important business training spanning from legal advice on startup documents, incorporation terms, or IP issues to general business challenges like how to ship a product, establish a quality culture, or establish sales and marketing processes.
• Software discounts - From accounting to project management, incubators typically offer business software that helps their startups scale. Pricing and education are typically vetted and negotiated for a standard rate allowing portfolio companies to get right to work. HubSpot offers this type of arrangement to more than 1000 startup partners worldwide .
• Shared business services - Much like leveraging software availability and selection, many incubators offer accounting, banking, marketing, and manufacturing services to help companies scale.
• Community - One of the best attributes of business incubators are the intangibles. Working with a group of like-minded entrepreneurs, using connections for connecting with prospects or customers, and learning from others in your cohort are invaluable parts of incubator life.

Is My Startup a Good Fit for a Business Incubator?

According to HubSpot for Startups’ Christian Mongillo, “The most important criteria is fit. Find a business incubator that works economically and allows you to expand as your team expands.

Look for one that has a selection process and is searching for similar types of companies. It’s not just a coworking space. The best incubators have a great mentor network and produce good results. They also have free wifi.”

Are all companies good fits for incubators? “Not necessarily,” says Mongillo. “If you’re a lifestyle company, a second-time entrepreneur, have access to office space, or want to build your own company culture, it might not be a good fit.

Some incubators require companies to give them an equity stake. So, if you don’t need the special services, you might be better off on your own.”

How Do I Get into a Business Incubator?

Being accepted into a business incubator can and should be a process. Most incubators have an admissions process and require companies to apply for acceptance.

Criteria for acceptance into an incubator varies, but most require you to present a feasible business idea and professional business plan. Here are a few steps to get started finding an incubator that’s right for your business.

• Review your options geographically or vertically - Because of the sheer volume of available incubators, you might have more than one option to choose from. By doing a quick regional search, you can understand and rank the incubators that might be a good fit. Always review the website and ask for references from successful companies they’ve helped as well as a few from companies that have dropped out to get an overall view of fit.
• Review criteria for admission - Most incubators have defined criteria for which types of companies they’re prepared to help. Some require certain milestones or criteria, like headcount, capital, entrepreneurial experience, background, revenue, or product fit. Others require contractual obligations from the accepted companies, so reviewing the application and understanding what’s is crucial to ascertaining fit.
• Prepare a business plan - A business plan might not be required during the application process, but it’s helpful in determining whether the incubator is a good match. I’m a big fan of the three-page business plan rather than an unabridged version. A simple overview of business name, team build, value proposition, competitive advantage, addressable market, go to market strategy, product or service, and a 12-month forecast can help you differentiate your company.
• Be prepared to work with a screening committee - In most cases, incubators will accept initial applications for companies meeting basic criteria. Some incubators require a video submission to explain the basic business model, vision, and mission of the company. The second stage is usually to meet and discuss your goals, plans, strengths, and weaknesses with a screening committee. This might take the form of an application, pitch or interview, and a series of meetings to set expectations for each side.

Best Startup Incubators

• Parallel 18
• Founder's Co-op
• DreamIt Ventures
• 500 Startups
• Y Combinator
• The Hatchery
• Excelerate Labs
• Capital Factory
• EnterpriseWorks
• New Venture Challenge

1. Parallel 18

2. founder’s co-op.

Helping new companies in the Pacific Northwest stack the deck in their favor.

3. DreamIt Ventures

Focused on startups with revenue or pilots ready to scale in the areas of healthtech, securetech, and urbantech.

4. Seedcamp

“Europe’s seed fund” invests in founders who attack large, global markets and solve real problems using technology.

5. 500 Startups

Diversity is a core value for this incubator. 44.5% of their portfolio belongs to racial minorities and they have scholarships available for underrepresented investors.

6. Alchemist

For founders whose revenue comes from enterprises, Alchemist offers funding, access to marquee customers, and highly rated mentors.

7. Amplify LA

Aims to help technology entrepreneurs grow their startups into successful companies. They like to invest early.

8. Y Combinator

Twice a year, they invest $120k into a large number of startups. These startups move to Silicon Valley for three months for intensive mentorship and support.

9. TechStars

A three-month program helping companies gain traction through mentorship, rapid iteration, and fundraising preparation.

10. The Hatchery

They’ll help you find customers, unite founders, and build your product. You might also receive funding from them.

11. Excelerate Labs

Mentor immersion, business acceleration, and finance and demo day preparation -- all based in Chicago.

12. Capital Factory

A Texas-based incubator that introduces startups to investors, employees, mentors, and customers.

13. EnterpriseWorks

A University of Illinois incubator focusing on biotechnology, chemical sciences, software development, and materials sciences.

14. AngelPad

With programs based in NYC and San Francisco, AngelPad spends three months working intensely with a small number of companies.

15. New Venture Challenge

Recently names the #1 University Accelerator Program in the Nation, New Venture has helped more than 200 companies successfully.

Choosing the right business incubator is a big decision. Use the criteria in this article and our Ultimate Guide to Entrepreneurship to jumpstart your journey and your success.

Need a little funding to help get your idea off the ground? Check out our list of the best crowdfunding sites to launch your business or product .

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Small Business Trends

What is a business incubator.

Incubators have been around for quite a while, but the concept only began to gain traction in the 1980s after an influx of higher education institutions decided to launch school-affiliated business incubators in order to offer students better employment prospects.

That being said, there are plenty of non-industry-specific business incubators, too. Incubators like The Research Park at the University of Illinois and the MGE Innovation Center in Madison, Wisconsin are recognized as two of America’s top incubators because they place emphasis on what they’re able to offer tenants – rather than who it is they’re offering those resources to.

What Does a Business Incubator Offer?

Bearing in mind that a huge number of incubators continue to enjoy affiliation with area colleges and universities, tenants can also typically expect some sort of access to higher education resources – perks normally include discounted access courses or library access.

What is the Goal of a Business Incubator?

What are the benefits of a business incubator.

Based on the typical offerings, the implications for a startup taking up residence at a business incubator are clear. Unrivalled access to funding, mentors, skills development programs and a collaborative work environment can make a world of difference to your success. There are less obvious benefits, though.

Advantages:

What are the drawbacks of a business incubator.

Furthermore, business incubators aren’t quite as intensive as accelerators – which means the support you receive from an incubator will be a bit more ad hoc and spaced out.

Challenges:

The importance of business incubators for startup growth.

By bridging the gap between idea and execution, incubators ensure startups have a solid foundation for success. They help entrepreneurs refine their business models, connect with potential investors, and gain insights into effective market strategies.

Choosing the Right Business Incubator

Navigating the Business Incubator Application Process

How to Leverage Business Incubator Resources for Maximum Impact

To make the most out of a business incubator, startups should actively engage with the community, participate in events and workshops, and seek constant feedback from mentors.

Future Trends in Business Incubation

Specialized incubators focusing on niche markets or specific technologies such as AI, blockchain, and clean tech are also becoming more prevalent. Furthermore, there’s a growing emphasis on social entrepreneurship, with incubators supporting startups that aim to solve societal challenges.

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• Learn a brief history of business incubators.
• Compare incubators to other innovation tools.
• Learn the benefits of participating in a business incubator.
• Learn the underlying theories behind business incubators.
• Walk through how to build a business incubator.
• Explore business incubator metrics and KPIs.

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A Brief History of Incubators

The very first incubator hatched from an egg.

Amidst a robust poultry industry in the 1960s, the Rochester-based Mount Hope Hatchery was trying to meet the growing demand for poultry and was in need of 80,000 square feet to house surplus chickens. That led them to the Batavia Industrial Center close to Rochester, New York.

The Mancuso family, well-known and respected local business owners, had bought a defunct old farm machinery plant and its warehouse in Batavia, which had closed leaving thousands of local residents out of work. The family wanted to use the warehouse in some way, to help boost the local economy ideally, and planned to find tenants to lease the space. Mount Hope Hatchery’s chicken coops were some of the early businesses tenants in the space.

The idea was straightforward: lease out excess commercial space to growing businesses poorly served by existing markets. No one could foresee that the Mancuso family’s actions would become a model for diversification and innovation. As quoted in an  article by Justin Peters in Wired , Mancuso family legend has it that while giving a tour of his complex in 1963, Mancuso said to reporters: “These guys are incubating chickens ….  I guess we’re incubating businesses.”

Far from its humble roots, the incubator concept first seen in Batavia has since transcended regional and national boundaries to become a  global phenomenon .

Incubators Compared to Other Tools

Figure 1:  Comparison of startup support institutions

Image Source: Source:  Cohen (2013) and Hathaway’s adaptions (2016)

Incubators share some characteristics with corporate accelerators: they interact with startups;  provide physical space; and offer education programs, mentorship, and networks. But the goals and operation of these programs are much different.

Incubators operate over a longer cycle than accelerators. Startups participating in these programs tend to work on more experimental ideas and require more time to develop their product and business model. Because of these traits, the majority of incubators are non-profits, often working with local governments or universities.

This shouldn’t discourage corporates from building this tool. In the same way non-profit incubators succeed in building innovation ecosystems in local communities, corporate incubators strengthen innovation ecosystems inside companies. They also help companies commit to long-term strategy in a world focused on short-term gains.

But long-term strategies are hard to sell to leadership. Understanding the incentives for building incubators will help prospective incubator leaders secure buy-in.

Why Participate in an Incubator?

There is significant risk for companies that invest in incubators (or  accelerators ). There are upfront costs, and the time horizon for ROI is long. But a long-term commitment to experimentation is essential if companies are to stand a chance. Incubators can house these types of ideas.

Business incubators leverage the unique advantages and perspectives of startups, which established companies often lack. For example, Eddie Yoon and Steve Hughes explain in the Harvard Business Review that  startups are better at  detecting  and unlocking emerging and latent market demand  perhaps because they are consistently monitoring the pulse of a specific market area. Where startups often stumble, however, is when it comes to scaling their concept.

Big companies often make the mistake of creating what they can rather than what people want. They lack the agility and creativity of early-stage startups, but these big companies are more experienced at scaling. They also have advantages in logistics, such as procurement, distribution, and manufacturing, and established sales and marketing advantages.

The two entities complement each other; they can perfect a product and hold off on the scaling until the market is ready.

Large companies can benefit from and support startups’ capability to provide proof of concepts through early stage funding and later-stage M&A. But timing is everything. There are plenty of companies looking to invest in a promising startup, but there are far fewer promising startups. Yoon and Hughes  explain :

“there are more buyers than sellers; if the first time an established company is made aware of a startup is by receiving a deal book from an investment banker, it’s already too late.”

Companies must stay ahead of the curve and find complimentary startups for partnerships, experimentation and acquisition.

The following list outlines some of the benefits of a corporate incubator for startups and their corporate sponsors.

Benefits for Startups

• Possible access to later venture funding
• Lower personal and financial risk
• Ready-to-use infrastructure such as office space, IT tools, and administrative business support services
• Mentorship and training, which can include individual coaching, presentation, and negotiation skills
• Assistance with business management, technology, and legal services
• The opportunity to build relationships with potential investors, suppliers, and industry experts
• If a startup is sponsored by a host company, it will likely receive funding, skills, expertise, peer support, and R&D knowledge from the host

The figure, below, summarizes the rationale for business incubators, highlighting the value derived from networks in terms of knowledge resources, access to financing, and community support.

Image Source:   Wiggins & Gibson, 2003

Criticisms of the Business Incubator Concept

The results of business incubators can be hard to quantify. Ernesto Tavoletti notes that in  incubators “tend to fail” in supporting entrepreneurship , innovation, and regional development and are not proven policy instruments despite their popularity and the funding and promotion they receive.

Tavoletti also notes that studies that claim that incubators create jobs often originate from incubator associations and only measure the intended effects, not the unintended effects. These studies often fail to consider that firms would most likely have received funding without participating in an incubator. In some cases, studies include companies that moved into incubators later in their development to take advantage of facilities or funding.

On the other hand, a 2017 study finds that  firm performance is greatly enhanced by an incubator . This study by Ayatse, Kwahar, and Iyortsuun, published in the Journal of Global Entrepreneurship Research finds that revenue growth, job creation, venture funding, networking, and alliance building all improved after the incubation process. Interestingly, the study also finds that tenants should not overstay their time in an incubation program because that could reduce their chances of survival once they graduate.

The truth here is that every incubator is different. Each requires strategic planning from people who both know the tool and know the organization. It’s important to understand the theories behind incubators, the various models, the different tenant profiles, and to hear the perspectives of incubator critics.

The Underlying Theories in Support of Incubators

In a 2012 white paper, Mathew J. Manimala and Devi Vijay of the Indian Institute of Management Bangalore presented  seven theories  that explain and conceptualize incubator functions.

Structural Support Theory

The structural support theory proposes that new ventures can overcome the problems associated with startups, such as being new and small, if the cost of their infrastructure and overheads can be reduced. According to this theory, “pooling resources, as occurs in an incubator context, leads to efficiencies because the central pooling of resources can significantly reduce overhead costs and thereby increase operating efficiencies.”

Structural support can include office space, communication technology, managerial assistance, access to laboratory and equipment, research facilities, and expert staff. According to this theory, the venture stands a better chance of survival if support in these areas is pooled.

Cluster Theory

The cluster theory was developed by Michael E. Porter and described in The Harvard Business Review in 1998. The theory places incubators within a broader ecosystem with other entities. Clusters are “ geographic concentrations of interconnected companies and institutions in a particular field .”

The clusters are composed of industries and other linked entities important to competition. Fundamentally, they are networks and include, for example, component providers, machinery providers, services suppliers, and providers of specialized infrastructure. The advantage of being part of an incubator within a cluster is that it is easier to access resources within this environment, which increases efficiency and productivity.

According to Manimala and Vijay, the cluster theory builds on structural support theory and suggests that high-tech firms with similar characteristics in the same value chain cluster stimulate faster knowledge dissemination and synergistic growth using each other’s capabilities.

Social Network Theory

This theory posits that the effect of internal and external network connections and social networks increase the client firm’s network density and positively affect the development and growth of the startups.

“[S]ocial networks and contacts,” according to Manimala and Vijay, “facilitate access to capital, credibility and respectability because of the association with the incubator and its sponsor institutions, and they provide techno-managerial assistance through the incubator’s professionals and/or network.”

New Venture Creation Theory

With the new venture creation theory, network access and community support for entrepreneurs increases their legitimacy and the chances of venture funding and survival.

A 2004 study by Neck, Meyer, Corben, and Corbett found that incubator organizations, spin-offs, informal and formal networks, physical infrastructure, and the culture of the region where the incubator is located  interact to form an ecosystem conducive to high-technology entrepreneurial activity . Additionally, the authors found greater rates of new venture formation were found following critical moments in the life of incubator organizations.

The Resource-based View

This theory states that incubators provide both tangible and intangible resources to client firms. These resources—knowledge sources in the form of universities, for example—and market proximity spur growth through a community effect. This is not unlike the cluster theory in that incubators benefit from proximity and access to networks and logistics.

Gassmen and Becker used two levels of analysis in 2006—the resource flow between the corporate incubator and the technology venture and the resource flow interface between the corporate incubator and the technology venture—to develop  a model that can determine “how corporate incubators function  as specialized corporate units that hatch new businesses.” They emphasize that tangible resources are all visible and easy to measure, whereas intangible resources, such as tacit knowledge and branding, are more difficult to quantify and assess.

Dyadic Theory

The concept behind this theory is that entrepreneurs  “operate in an inter-dependent co-production dyad”  where business assistance is provided by the sponsor. According to Hackett and Dilts (2004), incubation co-production stimulates developmental assistance in independent incubator-client dyads.

This co-development is of mutual benefit and increases the likelihood that startups survive and that the sponsor and regional economies benefit.

Real Options Theory

Real options theory borrows concepts from the finance literature. The theory states that the selection of startups or entrepreneurs for the incubator creates an option, and the injection of required resources, monitoring, and assistance are also options. The real options methodology was initially applied when evaluating technological assets such as R&D.

In 2004, Hackett and Dilts used  real options theory to predict whether new ventures will survive  the early stages of development. The incubator is conceptualized as an entrepreneurial firm that sources and manages the innovation process within emerging organizations. The incubator is the unit of analysis while incubation outcomes, measured in terms of startup growth and financial performance at the time of incubator exit, provide indicators of success.

Theory is one thing, but the best way to learn is by doing. The following outlines the steps to building an incubator.

How to Build an Incubator

Step 1. select the incubator model.

“For incubators to live up to their full economic potential, they need to overcome two pitfalls: they need to provide real value, not just office space, and they need to measure success in more than just outside funding.” —  Harvard Business Review , 2013

Internal corporate incubators

Internal corporate incubators are the most common type of incubator. They are built inside the corporation, often without walls, and the startups are often spun out when they graduate. These incubators increase the chances of intrapreneurial success, and the corporation often receives equity ownership as though they were founders of the startups.

Entrepreneurs are typically recruited to manage the startup, and internal employees may join the new company. However, not all incubated concepts are spun out, and companies use these incubators to create breakthrough products for growth and revenue. PwC states that while typical R&D seeks incremental development,  incubators build company initiatives that have market viability . Incubators strive to go from concept to market.

Internal corporate incubators nearly always focus on the sectors relevant to the parent company. TechCrunch lists the following examples of  successful corporate incubation programs and startup spin-outs:

• McDonalds’s spin out of Red Box (acquired by Coinstar for over $150 million)
• Google’s spin out of Niantic Labs and Pokémon GO (reportedly worth $3.5 billion)
• Oracle Labs’ development of the Java programming language
• Amazon’s Lab 126 creation of the Kindle, Echo, and Fire products

External corporate incubators

External corporate incubators provide external entrepreneurs and startups with a location, infrastructure, and resources to pursue potential ideas. Host organizations seek out startups that they believe have potential in their business area in the hopes of later financial gain and an ongoing relationship, if not an ongoing investment.

This is based on the idea of “open innovation. Originally coined by Henry Chesbrough, open innovation is the concept that companies must open themselves up to the external world for the creation and development of new products and ideas. The following table from Henry Chesbrough’s writing in MIT’s Sloan Review compares open innovation to closed innovation:

Here are some  examples of open innovation  provided by  ideXlab :

• Audi launched the  Audi Innovation Award , a contest where participants submit their concepts for the car of the future. The winner earns a $25,000 worth of consultancy.
• Procter & Gamble  published a list of technical problems that their team failed to solve on the company website. Readers were asked to provide a workable solution, no matter how out-of-the-box it may have seemed.
• GE launched  Ecomagination Challenge , which requests ideas from anyone who has ideas related to energy problems.
• Hewlett Packard created open innovation laboratories where researchers worldwide collaborate and create partnerships between internal teams and external scientists.
• Local Motors  is a crowdsourcing startup created in 2007 by Jay Rogers, a former Marine. The model avoids the typical financial cost and time involved in designing and creating a new car because participants provide the industrial design. The winners of the design contests can also receive royalties from the car sales.

Incubators can provide the infrastructure for cooperation with the external ecosystem. The cooperation between the two entities can vary in its intensity. However, the goal is always to partner, learn, and build a successful new business that can be scaled independently either as a joint commercial venture or integrated into the host corporation.

Among external and internal incubators, there are various models and types. The U.S. Department of Commerce separates them into incubators “ with walls” and “without walls .” Incubators with walls provide a separate space and location for projects, and incubators without walls (or “virtual incubators”) house the incubator within the corporate environment and use the existing infrastructure and communication systems.

Evangelos Simoudis, founder of Synapse Partners, describes the following four incubator models in his piece “ Using Corporate Incubators and Accelerators To Drive Disruptive Innovation. ” I suggest that a corporation should adapt these models to their needs. 

The Incubator/Accelerator Model

This model includes both intrapreneurs (entrepreneurs within a corporation) and entrepreneurs. The incubation period for this type of model is typically between four to 18 months. Teams, if deemed of a high standard, are invited to join the corporation, or to “spin in.” Such teams are retained for longer with additional sponsor investment to keep them going, or they are required to work outside the corporation, as a “spin out,” with an investment from either the sponsor’s VCs or perhaps in conjunction with external VCs. Alternatively, the teams can be left to raise their own funding from external VCs or other funding sources.

This model is appropriate when a sponsoring business wants access to early stage concepts, is looking at the long term—ideally, seven to 10 years—for concept development and potential disruption, has appropriate metrics set up to measure the startup’s performance, and is open to the risks involved in mentoring and supporting an early-stage startup.

The unique benefits of this model are that there is a long-term commitment to disruption, which is crucial. Concepts need time to morph into products, time to reach the market, and time for adoption, which means that there may be some delay before there is significant ROI. Another benefit is that entrepreneurs and intrapreneurs work side-by-side and may eventually join the sponsor’s business units.

But entrepreneurs should be aware of the downsides to the model. According to Wharton Magazine, the sheer number of incubators is increasing, and not all of them are up to snuff. Some have weak investor relationships, which means that fundraising for the startups might be difficult come demo day. In addition, new programs have not had sufficient time to build a reputation or track record, which is not conducive to ready investor funding in a competitive startup market.

Wharton magazine also suggests that the time that entrepreneurs must spend at social events, building networks and discussing initiatives with potential investors, is time taken away from engineering, experimenting, and problem-solving toward a better end product.

Samsung and Telefonica are examples of firms that have applied this model.

The Pay-it-forward Model

For this model, the corporate incubator provides facilities and training while the teams work with external entrepreneurial teams. The idea is to expose teams to real-world problems in the industry and to provide resources and experts to help them solve those problems. This type of program typically lasts from six to 12 months, and the sponsoring corporation receives no equity from the startup.

This model is appropriate when the corporation wants to expose its executives to startup thinking and practices, attract entrepreneurial talent, and access new ideas and early-stage concepts from other resources to solve existing problems.

The unique benefits to corporations for this type of incubator are access to startup teams and their thinking and the creation of goodwill. A downside to this model that entrepreneurs might want to consider is that there may be a significant bias toward the interests of the corporation.

Allianz and Turner have applied this model.

The Developing Intrapreneurs Model

LinkedIn, Google, and Starbucks use this model where entrepreneurial teams incubate solutions and test business models within the organization; hence the term “intrapreneur.” This strategy works for companies that can’t pursue ideas using existing business units, so they set up a separate unit. This model fits when an organization is strongly committed to long-term concept building to achieve disruption.

The unique benefits of this model are that new products and business models can be rapidly developed. Resources are allocated to strengthen intrapreneurship and permit risk taking with out-of-the-box thinking.

One downside, according to Sean Silverthorne of Harvard Business School, is that if a  startup is working on a product or service that competes in some way  with the business of the company, the effort could be perceived as a threat to many inside the company.

The New Work Environments Testing Model

This model, applied by ATT Foundry and Standard Chartered Bank (SC Studio), describes creative work and the testing of new solutions or environments by the innovators.

The new work environments testing model is an incubator without walls. The sponsoring corporation does not offer on-site space for clients although they may have a central office through which to coordinate services, house the management staff, meet with clients, and perhaps even conference rooms. This is a suitable model for a corporation that wants to test startups but does not want to assume the risk of creating an external startup team.

The unique benefits to the new work environments testing model are that the corporation can use existing structures, such as flat management and open communication tools, to experiment with ideas, which reduces costs and may lead to better performance within the organization.

The New Incubator – Soft Landing for International Programs

Although a goal of incubators has been to boost local economies and ideally the national market, not all are focused on domestic markets. Many startups now use the incubator environment to reach beyond domestic boundaries.

According to the U.S. Department of Commerce,  international business incubators provide the same set of entrepreneurial services as a typical incubator , but they also provide a “soft landing” for international firms seeking to enter the U.S. market.

These types of incubators often provide specialized services. For example, the University of Florida’s soft landing program  helps both domestic and international firms integrate into the Central Florida business community .  The program helps with short-term leased office space, networking with the Central Florida business community, domestic market research, and provides access to experts on legal, government, regulatory, and press and media matters.

The  University of Toronto has partnered with the Chinese firm Diantou.net  to help companies who are entering the lucrative Chinese market. According to The Impact Centre at the University of Toronto center, Diantou.net will “provide start-ups with legal, marketing and other support services” while the Toronto center will offer entrepreneurship courses to Chinese students, researchers, and startups.

Other similar incubators offer translation services, language training, assistance with documentation such as obtaining business and driver’s licenses, cultural training, assistance with visa and immigration, and housing assistance.

Consider these examples and design a model that best suits your organization and its goals.

Step 2. Select Your Industry Focus

Most incubators are  focused on a specific industry  such as digital education, green technology, homeland security, fashion, or food. An industry focus ensures that the available skills and resources are optimized and targeted.

Technology incubators are specifically focused on emerging technologies such as software, biotechnology, robotics, or instrumentation. A service incubation program, as the name implies, focuses on entrepreneurial firms in the service sector, for example, landscapers, graphic designers, accountants, and internet-based companies. However, mixed-use incubators, or general-purpose incubators, nurture the growth of all types of companies and may not fit into any specialized niche.

According to Nola Hewitt-Dundas, incubators are increasingly oriented  toward knowledge-intensive activities  such as knowledge dispersion among collaborating actors and a more open collaborative model. While customers and suppliers have traditionally been valuable contributors to incubator projects, universities are now also increasingly involved.

Step 3. Select Your Program Length

While corporate accelerators generally  stick to a 3-month program , corporate incubators  don’t have a strict duration . According to Accion, many incubators require a  one- to two-year time commitment that includes incubator training and workshops . At the Polytechnic Institute at New York University, entrepreneur teams typically spend 18 months in the program while other incubators take much longer.

The SPARK Regional Incubator Network in Ann Arbor is structured so that  compani es graduate from the incubator in two to three years. Clients initially c ommit to a standard one-year lease. If the business meets their desired milestones, the lease is renewable for one or two additional one-year leases.

The duration of internal incubators depends on how long the company expects the concept to take to see quantifiable value,  according to Robert Wolcott of Kellogg Insight . But that’s the tricky part when it comes to early stage concepts. Wolcott explains that a startup may not see any returns for four or five years. Therefore, to retain the commitment of a host corporation, startups must demonstrate some other quantifiable value. Wolcott estimates that this must be achieved within 18 months to keep a corporate board happy.

The reason for this “need to produce” is the budget cycle. According to Wolcott, not much is expected of an incubator startup in the first three or four months. But, after a year, financiers are itching for positive indicators. With no results to speak of after 18 months, a startup might have a target on its back if it doesn’t come up with some proof of positive impacts.

Step 4. Select Your Location

Location considerations are similar to those of  corporate  accelerators .

Brad Feld, co-founder of Techstars, suggests that business incubators can thrive in any location. His opinion is that because many incubators are “virtual” and lack walls, incubators do not have to be in the same geographic area as the host organization. Rather, it might be better for the incubator to be located where there is optimal access to knowledge and physical resources. Close to a university, for example.

In the case of tech startups, and in the case of Silicon Valley, tech incubators benefit from the networks and events in the local area. According to  Michael Seibel of Y Combinator , the Valley offers “money and good valuations. We can introduce them to tons of other companies that can be mentors and customers, and we can introduce them to the pace of the Valley … We can’t do that anywhere else.”

According to the U.S. Department of Commerce,  graduating entrepreneurs tend to stay in the same geographic region as their incubator organizations  and, in most technical industries at least, entrepreneurs usually start businesses related to their previous work. Thus, because most entrepreneurs do not move to start a business, the possibilities for high-technology startups may be limited in some locations.

Where virtual incubators are concerned, they may be able to build a thriving ecosystem of their own, remote from the host organization—particularly if the location provides valuable external networks and resources.

Visual Representation of a Virtual Business Incubator

Image Source:   World Business Incubation , 2015

Step 5. Select Your Learning Program

Business incubators and accelerators are fundamentally engines for learning. But the type of learning that you require, as well as the knowledge and skills that each startup team requires, will differ. A diagnostic process can help you to determine how best to allocate resources for learning so that both entities are served.

A model developed by Campbell, Kendrick, and Samuelson shows  four basic areas or “services” where incubators contribute  – revenue growth, employment or job creation, venture funding, networking, and alliance-building. The value addition activities begin with a diagnosis of needs, which is applied to prospective incubatee’s new business proposals. Once this diagnosis is complete, you can tailor the learning experience for participating startups. For more on learning programs, see our piece in  corporate accelerator design .

Step 6. Select Your Tenant

Just as there are different incubator types and models, there are also different types of tenants who may or may not be viable participants in one or more of the incubator models. A lot depends on the support and the resources that you, the host company, are willing or able to provide and whether the startup is in the same industry vertical as the sponsor.

When seeking a tenant, consider their maturity and readiness. Ernesto Tavoletti describes  four types of incubator tenants .

• Anchor tenants  are typically mature entrepreneurs and can contribute financially to the incubator. They do not require input from the corporate host. Examples of this type of tenant include accounting companies, law and financial services firms, economic development agencies, or university offices.
• Long shots  are early-stage startups that require a nurturing environment from the corporate host. These entrepreneurs are aware that they lack resources and require co-production efforts from their host to reach their potential.
• Up-and-comers  also have significant resource gaps that can be addressed through co-production. These companies are one step ahead of long shots in terms of maturity and are operated by entrepreneurs who are aware of the gaps but are on the verge of being able to engage with resource assistance.
• Superstars  have matured beyond the up-and-coming stage, and they are ready to engage with minimal co-production efforts from the host. They have resolved problems, can withstand crises, and expect to imminently graduate from the incubator. These companies can act as role models for up-and-comers and long shots.

Step 7. Manage Your Incubator

Given the long-term nature of incubators, they require strategic management. 

The U.S. Department of Commerce found that  successful incubators have adopted certain practices  such as crafting a written mission statement, selecting clients based on cultural fit, their potential for success, reviewing client needs at the entry stage, showcasing clients to the community and potential funders, and charging for rents and service fees.

These factors all stem from successful incubator leadership.

Incubator Leadership

When first creating an incubator, it’s crucial to identify and hire a strong entrepreneurial leader. According to a  white paper  by the Aspen Institute and National Entrepreneurship Network of India, cost concerns could derail the incubator at the outset if they inhibit hiring someone of the right caliber.

To give some idea of leadership experience, according to the U.S. Department of Commerce, on average,  incubator managers have 8.1 years of experience in the business incubation industry including 7.5 years  at their current position. Over 50 percent of the time of these managers’ is spent delivering client services, building internal and external networks for the program, and facility management.

A study by Monsson and Berg (2016) found that incubation managers had a  moderately positive influence on incubators  in terms of facilitating access to important actors, assisting with practical advice, and the daily management of the incubator program. According to the authors, the “modest role” played by managers reflects a preoccupation with operational tasks rather than a greater role creating partnerships and synergies.

Financial Commitment and Risk

Incubators and accelerators are a financial commitment. In addition to private funding and investors, public funding of incubators is common.

In Canada, for example, governments provide funding for incubators. However, in Canada,, Sunil Sharma, the chair of the board of the Canadian Acceleration and Business Incubation Association, expressed to The Globe and Mail the concern that  there’s already too much government money going to programs that support tech startups.

According to Sharma, “It’s time to really take stock of how much funding has been put into supporting entrepreneurs in Canada and really measure it against the outcomes that we should have been able to show by now.”

According to the U.S. Department of Commerce,  there is a significant correlation between the size of a business incubation program’s budget and program success ; that is, the bigger the budget, the greater the success. However, it is also important to look at revenue sources and how the incubator uses its resources. This research found that receiving a large portion of revenues from client rent and service fees is positively correlated with outcome measures, although the effect is only statistically significant for three client firm outcomes. On the expenditure side, the more programs invest in staffing and program delivery—relative to building maintenance or debt servicing—the higher the probability of improved client firm outcomes.

Incubation program budgets range from  revenues of $33,000 with expenses of $17,000 to $2.8 million in revenue with expenses of $2.5 million , according to the U.S. Department of Commerce, but data is scarce on this subject. The lack of quantitative data on the value of incubators emphasizes that the risks should be carefully weighed against the potential gains. 

Step 8. Conduct a Post-Program Assessment

The success of incubators and accelerators depends on how the program is managed after startups graduate. Networks and relationships make or break these programs. Successful startups give back to the program, and startups succeed partly because of continued contact from incubator hosts. See our piece on  post-program  strategies  for corporate accelerators  for more.

Measuring Incubator Success

“In addition, the business models of many for-profit dot-coms failed to consider that, on average, it takes slightly more than three years to successfully incubate a client firm—and perhaps up to six years or more for that firm to realize significant growth. However, interviews with former managers of dot-com programs suggest that their business plans speculated that clients would begin to turn a profit in 12 to 18 months—or even as few as six months. This flaw in the model most likely contributed to the rapid decline of the dot-com incubator.”  —  US Department of Commerce , 2011

Incubators have similar timeframes with corporate accelerators. While working with startups may imply faster growth, both accelerators and incubators start to create true value after they’ve had time to develop, generally within four to seven years. Incubators, in particular, are harder to quantify during their early stages. Compared to accelerators, the lack of time constraints and PR efforts limit short-term results. (We dive deeper into the time frame for these tools in our article on  corporate accelerator management .)

Combine this reality with the risks involved, and it can be difficult to get buy-in from the board. Corporate decisions are based on an annual schedule while, according to Dave McClure of 500 Startups,  startups live and die  within that period.

To secure buy-in, incubator leaders must think critically to align the implicit benefits of incubators with business goals.

Incubator Metrics and Kpis

The research is mixed when it comes to measuring the success of incubators, much of it claiming that past metrics and performance are either impossible to measure, or the studies suggest using varying metrics. The table below highlights some of the literature findings.

As evidenced by the past incubator studies, these tools are often studied through a policy lens. This is because the  majority of incubators are non-profits . While building local entrepreneurial ecosystems is good for the company in the long term, it’s not the best metric for selling these tools to corporate leadership.

Ayatse, Kwahar, and Iyortsuun’s 2017  review of existing incubator literature  found that there is no objective performance measure that can be applied across business incubators. Instead, firms and researchers must make up their own. Metrics identified during their research were the following:

• venture capital funds
• graduation from incubation program
• firm survival
• networking activity
• innovative firms
• organizational or firm growth
• job creation
• sales growth
• profitability
• patents registered
• number of patents application
• technology transfer
• employment growth
• technology growth or development
• research and development productivity
• ability to share knowledge and technology
• high-tech employment.

The above bullet points can give incubator leaders some ideas for KPIs, but it is up to the individual organization to decide how to best serve business goals. For more on balancing business goals with startup engagement programs, see our article on  corporate accelerator management .

What Does Success Look Like for Corporate Incubator?

According to EY, studies show that approximately  90 percent of a company’s development efforts never result in commercialized products or services . This could imply that a successful incubator is nothing more than a random incident because there are few defined consistent metrics with which to measure or benchmark incubators.

Bakkali, Messeghem, and Sammut  suggest the balanced scorecard , developed by the Harvard Business School, as a particularly useful  tool to measure the success of incubators .

The balanced scorecard approach first determines what overall success of the company looks like (ROI, reputation for excellence, growth in market share, etc.) and derives measurable activities that reflect these goals. The activities are categorized by strategic focus, as seen in the diagram below.

Image Source:  QuickScore , 2020

Bakkali, Messeghem, and Sammut (2013) explain that incubator managers insist on risk reduction because they focus excessively on short-term economic indicators. According to the authors, the balanced scorecard is fundamental to the learning process regarding incubator impacts.

What Does Success Look  Like for the Startup?

Incubators are proven to be beneficial for participating startups.  For instance, Eric Harwit, a Fulbright fellow, published a report in 2002 that found that 87 percent of firms that graduated from an incubator were still in business.

Hackett and Dilts (2004) offer more concrete metrics and define the outcome of the incubation process according to  five mutually exclusive outcome states  that are measured in terms of growth and financial performance at the time of incubatee graduation. These outcome states are the following:

• The incubatee is surviving and growing profitably.
• The incubatee is surviving and growing and is on a path toward profitability.
• The incubatee is surviving but is not growing, not profitable, or is only marginally profitable.
• Incubatee operations were terminated while still in the incubator, but losses were minimized.
• Incubatee operations were terminated while still in the incubator, and the losses were large.

A white paper by the Aspen Institute and National Entrepreneurship Network of India (2013) provides in-depth information on the problems of measuring incubatee success. The paper discusses  exit factors as metrics  but emphasizes that what might be a successful exit for one incubator will be different for another. A high-growth technology start-up may consider raising a certain amount of capital as a successful factor for exit, whereas a medium growth start-up may consider positive cash flow and profits a successful factor for exit.

For this metric, the incubator would need to define its successful exit factors based on the type of start-ups that it would incubate. Other suggested exit factors are the following:

• During a one to three-year incubation period—customers/user base, capital raised, product launched, valuation, revenue, jobs
• At graduation after a one to three-year incubation period—revenue growth, valuations, jobs, total capital raised, social impact

What Does Success Look Like for Non-profit Incubators?

The goal of a non-profit incubator is to set up a robust entity that can sustain the creation of value in a local economy. Possible metrics include ongoing impact in the form of new entrepreneurs created, jobs created, and revenue to fuel local economies. According to the Aspen Institute and National Entrepreneurship Network of India (2013) white paper, however, these developments typically take between four to five years to mature and require a ifferent focus, resources, and outcomes along the way as the incubator progresses.

Over the long term, revenue and jobs are goals of an incubator but, according to the white paper, they may also be useful as active indicators to determine the immediate success of the startup.

Ultimately, tracking jobs, revenue, return on investment, and societal impact over a period of four to six years is ideal for measuring impact. This would include the period of incubation (1.5 to three years) and post-incubation (one to three years).

When comparing incubators, additional exogenous factors to consider are geographic location and the local economy—for example, the value of a company and the jobs it creates in a tier 1 town versus a tier 2 town—and the impact on the lives of the people in the community. The impact of a company in terms of education, livelihoods, and life expectancy might differ greatly depending on the location.

The Aspen Institute and National Entrepreneurship Network of India (2013) white paper outlines key challenges that incubators face to become successful—decision implications for partners, funders, and policymakers. Successfully implementing the right metrics and milestones would enable higher motivation, strong incentives, and the propagation of best practice knowledge for greater success of incubators as an industry.

However, classifying incubators and analyzing their metrics helps highlight some key challenges that must both be recognized and dealt with to ensure a higher chance of success.

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Research and Development

What Is an Incubator? A Complete Guide for Startups

If you’re an entrepreneur looking to get your startup off the ground, you have probably heard the word “incubator” thrown around. More than just a buzzword, incubators can be a vital tool in a startup's rise to stardom. But what is an incubator in business and how does it work?

Startup incubators are specialized hubs that can help early-stage ventures and startups navigate some of the most challenging aspects of running a business.

By the end of this comprehensive guide, you will know all about the different types of incubators, how they can help your business, and how you can get your business into an incubator.

In this article:

How does a startup incubator work?

The pros and cons of a startup incubator.

• What are the different types of startup incubators?

Could an incubator help my business?

• What do incubators want from a business?

How can I get my business into an incubator?

Startup incubators are unique organizations that function as a springboard for early-stage businesses and startups with the goal of providing specialized tools needed for startups to grow and innovate.

The resources and services they offer can vary, but often include access to office space, mentorship opportunities, business education classes, and community networking events. The structure of an incubator is much like a corporate office space and can include mandatory meetings, strict deadlines, and even a direct supervisor.

The idea for incubators began just over 60 years ago in Batavia, New York. With a family-owned factory at his disposal, Joseph Mancuso, an emerging entrepreneur, saw an opportunity to help other like-minded individuals get their small businesses off the ground. From there, he began recruiting emerging enterprises to operate in the low-cost office space located in his massive factory.

Today, there are over 7,000 incubators across the world , according to the International Business Incubation Association. This means that there’s an incubator for every type of business in practically every corner of the globe. All you need to do is find one that fits your needs and apply.

Startup incubator examples

Incubators can come in all shapes and sizes and meet all types of different needs a particular startup may have. Whether you’re looking for seed funding, networking opportunities, or mentorship, there is a startup incubator that can help.

Some examples of incubators you may or may not be familiar with include:

• Founder Institute is a global network that helps companies at every level, from startups at the idea stage to developed companies with a product and customer.
• Entrepreneurs' Organization is a peer-to-peer network of founders and builders from more than 60 countries.
• Harvard Innovation Labs is Harvard’s own entrepreneurial ecosystem of support for its students and alumni.
• Endeavor is a global organization that focuses on businesses and startups in emerging and underserved economies.
• LaunchVic’s The Good Incubator is a Melbourne-based nonprofit incubator helping people with disabilities create or grow their businesses.
• Communitech Hyperdrive is a Canadian incubator focused on technology, with a network of 28 regional innovation hubs across the country.
• MaRS is a Toronto-based hub that provides office space, advisory support, and even access to investors.
• Plug and Play is a global platform that connects blue-chip companies with startups to promote innovation.
• Station F is a Paris-based hub offering a number of perks, services, events and workshops.
• Capital Factory is an Austin-based co-working and event space dedicated to entrepreneurs, providing local founders access to mentoring and accelerator programs.

Are incubators and accelerators the same?

While they have a lot in common, incubators and accelerators have some key differences to be aware of before committing to a program.

The primary differences between incubators and accelerators are:

• Venture stage : Startup incubators generally cater to very early-stage businesses, often without a product or team. Accelerators, on the other hand, look for companies that are more built out. They generally require a business to have a minimum viable product and a team of their own.
• Funding : Incubators come with a lot of perks, but they don't always invest directly into a business. For accelerators, however, seed funding is their bread and butter.
• Time frame : Incubators offer fairly flexible timelines, typically ending only once a company has a product pitch ready for investors. Accelerators operate on a much shorter timeline. The entire goal of an accelerator is rapid growth and a fast turnaround on their investment in a company.

Did you know that only 51% of businesses survive past the fifth year ? That’s a pretty surprising statistic and can be a jarring realization for many ambitious entrepreneurs.

Businesses fail for a number of reasons. Whether they’re lacking funding, struggling to keep up with rising costs, or the managers lack the necessary experience, keeping the doors open can be a tricky feat. But this is exactly the kind of help startup incubators provide.

There are many benefits that come with joining a startup incubator, though there are some downsides as well. Let’s have a look.

What are the benefits of a startup incubator?

Startup incubators can provide startups with a number of valuable tools, from workspaces to seed funding and more.

Here is a quick look at some of the tools a startup incubator can provide and how they can help your business:

• Office space can help small companies save on rent and create unique networking opportunities with other enterprises.
• Seed funding can assist startups in tackling bigger goals and taking their businesses to the next level.
• Mentors can guide owners and managers to become more confident and efficient leaders.
• Equipment and software vouchers can provide some extra financial relief for tech startups in particular.

What are the downsides of a startup incubator?

While the benefits of startup incubators are plenty, there are some downsides to consider before committing to an incubator.

Top startup incubators can be extremely selective. Incubators can provide great financial benefits, so making sure their investments are going to pay off is a top priority.

It’s estimated that there are as many as 305 million startups created every year , while there are only 7,000 incubators. That means you’re going to have a lot of competition.

Some incubators may require a commitment of up to two years, or even until you have a product that is ready to launch.

When joining a startup incubator, you’re committing to more than just the perks — you’re committing to a culture and way of doing things with which your company may or may not align.

What are the types of startup incubators?

There are a number of different types of startup incubators all specializing in different fields, offering different perks, and with different funding models. Rest assured, however, knowing that no matter what kind of incubator you choose, they all have one common goal: to help you grow your business.

Whether you’re looking for a nonprofit organization or a VC-run incubator, it's important to understand what each type of incubator does and what they might expect from you to ensure you’re choosing the right hub for your project.

The most common categories for incubators include:

University startup incubators

Nonprofit startup incubators, corporate startup incubators.

Now, more than any other time in history, students no longer have to decide between pursuing higher education and kick-starting a business. University startup incubators (UBIs) can help with both.

University incubators are usually university- or student-run and can receive funding from donations or venture capital support. They may also invest in students’ projects and use the proceeds to fund new endeavors. These programs can provide pupils with all types of assistance and mentorship, from access to costly technology to logistical solutions.

UBIs provide students with an opportunity to chase their dreams in a financially secure and safe environment. These startup incubators are rethinking the businesses of the future.

One of the top academic incubators in the world, University of California, Berkeley’s Berkeley SkyDeck , offers students’ companies up to $200,000 after being accepted. It also provides support with logistics, customer development, and even marketing and advertising.

Some startups set out to change the world without taking a profit. For this reason, nonprofit startup incubators are just as valuable as other incubators.

Nonprofit incubators are programs and work spaces that cater exclusively to — you guessed it — nonprofit businesses. These incubators leverage their networks, know-how, and resources to provide nonprofit startups with the tools they need to grow and accomplish their goals.

Resources can include things like office space or technology, which can prove to be a major benefit for nonprofit businesses that often struggle to secure these costly tools.

An example of a top nonprofit startup incubator is MassChallenge , a global organization helping early-stage companies solve some of the world’s most pressing challenges. Their program covers industries such as health and financial tech, sustainable food, and even space commercialization, just to name a few.

Corporate incubators are typically in-house programs or independent business units built to curate and develop ideas within their own company. These incubators, like others, focus on early-stage ideas, sometimes with the goal of creating an entirely new business or product. Corporate startup incubators have the advantage of leveraging business assets to create brand-new revenue streams and create a hub for innovation within their own company, all while helping employees feel like they’re part of something bigger. One of the most notable corporate incubators is Google’s Area 120 —a radical idea built to help employees pursue their own radical ideas. Google’s in-house incubator features over 120 teams working on all kinds of projects, from AI customer support agents to a new tool that helps creators easily dub their content to expand their audience.

Starting a business is hard work and incubators come with a lot of perks, though it is important to remember that not all incubators are the same and not all businesses are a good fit for an incubator. Determining if an incubator is good for a startup can be a tricky task. Before diving headfirst into a time-consuming and competitive incubator application process, you may want to ask yourself a few questions:

• Am I ready to give up equity in my business?
• Does the incubator I’ve chosen align with my business’s core values?
• Can I commit to a rigorous schedule set by someone else?
• Do I really want to answer to someone else?

By asking yourself these questions, you make a more informed decision as to whether or not the perks of a startup incubator are worth the cost.

No first-time entrepreneur has the business network of contacts needed to succeed. An incubator should be well integrated into the local business community and have a steady source of contacts and introductions.

It should come as no surprise that the resources startup incubators provide are highly sought after, and that entry to a startup incubator is a complicated and competitive process. But that doesn’t mean you can’t be prepared.

Here are a few tips that can help you in your application process:

• Explore your options . The world is a big place, and with over 7,000 incubators scattered across the globe, it’s worth checking out different options.
• Find the right fit . Think about your goals and what exactly you’d like from an incubator. Every incubator is different and finding the right match is imperative.
• Be aware of the required milestones . Incubators typically help individuals create something from the ground up, but that doesn’t mean you’re applying to a program empty-handed. You should have an idea of what milestones you hope to achieve and a time frame in which you plan to meet your goals.
• Create a killer business plan . Doing a deep dive into your business, your value proposition, and your projections will help you better understand what you’re looking for from an incubator. Additionally, it will help an incubator better understand exactly why they should accept your business.
• Brace yourself for a grueling application process . Patience is the name of the game when applying for a startup incubator. The interview can be exhausting and time-consuming, so it’s important to remember why you’re there in the first place.

Startup incubators are some of the most sought-after programs in the startup universe. They can help build a business from the ground up, offering a number of huge benefits, especially for early-stage ventures.

Deciding which startup incubator is best suited for your startup can be a difficult task, but now you’ve got a better understanding of some of the ins and outs of the process.

It’s on you to make the next move, but we’re here to help. Building a business is a daunting task, and your tech stack shouldn’t make it harder. Apply to HubSpot for Startups today and gain access to all the tools you need to increase leads, accelerate sales, and streamline your startup.

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Home » Business Model

Business Incubator Model – Everything You Need to Know

Do you want to start a business incubator? If YES, here is everything you need to know about the business incubator model plus example of successful companies. Business incubators are organizations that are geared towards helping startups and early stage organizations speed up their growth. Incubators also help their mentee businesses secure capital from angel investors, state governments, economic-development coalitions and other interested investors.

Business incubation programs are often sponsored by private companies or municipal entities and public institutions, such as colleges and universities. Their goal is to help create and grow young businesses by providing them with necessary support and financial and technical services.

Incubators are very essential in the life of a new business as they provide numerous benefits to these businesses. First off, their office and manufacturing space is offered at below-market rates, and their staff supplies advice and the much-needed expertise for the developing business. They equally create great marketing plans for these businesses so that they can easily access funding.

Companies usually spend an average of two years in a business incubator, during which time they often share telephone, secretarial office, and production equipment expenses with other startup companies, in an effort to reduce everyone’s overhead and operational costs, and make limited finances to go far.

Benefits of a Business Incubator

A business incubator provides diverse benefits to startup entrepreneurs so much so that they can no longer be ignored when starting a business. These benefits can include:

Space to work

Some incubators offer office space for free or below-market rates to their portfolio companies. This solves a lot of problems for startups. Mainly, it allows them to find a professional space for their employees to work without having to sign a lease. This is especially helpful when the company is unsure how quickly they’ll scale production or headcount.

Access to specialized equipment

Some incubators invest in specialized equipment, like modeling software, 3D printers, prototyping equipment, or software development labs. This equipment help greatly in scaling companies in their infancy. Access to costly equipment and simulation programs can be crucial when starting off.

Experienced mentors

It’s important for startups to limit critical mistakes while scaling. Most incubators offer an experienced staff of savvy industry executives to help the business team stay focused and avoid mistakes. Incubators usually employ mentors with specific startup experience that can help explain process, planning, and decision criteria, so as to steer new entrepreneurs away from costly mistakes they made or witnessed.

Expert training

Many business incubators offer an array of important business training spanning from legal advice on startup documents, incorporation terms, or IP issues to general business challenges like how to ship a product, establish a quality culture, or establish sales and marketing processes.

Software discounts

From accounting to project management, incubators typically offer business software that helps their startups scale. Pricing and education are typically vetted and negotiated for a standard rate allowing portfolio companies to get right to work. HubSpot offers this type of arrangement to more than 1000 startup partners worldwide.

Multiple business services

Much like leveraging software availability and selection, many incubators offer accounting, banking, marketing, and manufacturing services to help companies scale.

Access to like-minded entrepreneurs

One of the best attributes of business incubators are the intangibles. Working with a group of like-minded entrepreneurs, using connections for connecting with prospects or customers, and learning from others in your cohort are invaluable parts of incubator life.

Role of Business Incubators

Incubators provide various venture capitalists, angel investors as well as other mentors for entrepreneurs. By helping the startups set up office spaces or legal expertise, they allow the startup to focus more on the running of the core business so as to achieve success in record time. A business incubator provides businesses the much needed support to develop their new startup. This support can be in the form of:

Infrastructure

Startup incubators provide office workspaces, workshops for startups to get the initial prototype phase up and running.

Incubators help multiple startups simultaneously. When these startups work under one roof, they get connected with entrepreneurs working in the same industry which helps them gain insights to improve their product. Many incubators even arrange startup networking meetings to help entrepreneurs increase their network.

Financial advisory/ Intellectual property teams/ Legal advisory

Business incubators lend their financial advisors, IP teams and legal advisors to the entrepreneurs so that they can make well-informed decisions.

Contacts for potential investors

Business incubators have been in the field of launching startups to become a legitimate business. Because of this, they have multiple contacts with previous and potential investors. They even help the entrepreneurs in developing a perfect pitch deck.

Manufacturing

Many startup incubators have tools and equipment to manufacture prototypes, 3D models and even final products.

Initial financial support

Some business incubators provide a minimal fund to set things into motion and begin with the initial phase of pitching the idea and developing the concept.

Training and guidance

Business incubators provide training from market experts on how to begin, develop and implement ideas. They follow your progress closely and guide you how to improve your reach and get to the target market.

How Do Business Incubators Benefit?

Business incubators help their student entrepreneurs to nurture their ideas and successfully convert them into business models. This is done to entice potential students to sign up to their services.

Some existing companies incubate ideas to develop an eco-system around their existing product line thus making the market tilt towards their favour. Other private incubators help entrepreneurs by providing them support in exchange for equity.

How Incubation Benefits the Society

Incubators have been created with the intention of achieving a wide range of objectives, primarily those which are needed by small businesses, such as creating jobs, developing innovative ideas, diversifying the local economy, and broadly generating activity and wealth in a region by creating a vibrant small business sector. However, bioentrepreneurs may well ask whether they actually achieve such goals.

As a test case, in 2001, UK Business Incubation measured the impact of incubators on the local economy and work force in the united kingdom. The survey revealed that an incubator’s client businesses provided an average of 167 jobs (full-time equivalents) per incubator and were home to an average of 30 client businesses.

Most (60%) incubators also operate “outreach” services, helping and advising companies located outside the walls of the incubator. Incubators operating outreach activities supported an average of 106 additional businesses. Across the sample, an average of 75% of client companies turned over up to £500,000, but only 1.5% had a turnover of more than £5 million.

More importantly, companies housed within UK incubators had an average success rate of 80% compared with the national average of 50% of all small- and medium-sized companies registered and trading in that year. Around 70% of incubators attempted to measure the impact of their client businesses, for example, on the basis of jobs created and financial performance. Such indicators have also influenced government policy and funding in this arena.

Such studies do highlight the support for incubators, as well as their potential contribution. In particular, they highlight the usefulness of incubators in identifying and supporting potential growth businesses, helping technology transfer, developing innovation, and expanding the range of local businesses.

However, because incubation has been operative for only a relatively short time, there is less evidence that they are generators of jobs and wealth. Perhaps this is to be expected given the nature of these facilities, which is to offer longer-term approaches to immediate startup deficiencies.

7 Things to Know About Business Incubators Before Getting into It

Know why you need them.

Incubators work with early-stage companies or baby businesses, helping them access resources and support to get them to the point of self-sustainability. When people decide they want to become entrepreneurs, but are not sure where to turn for help, the incubator can provide mentoring, coaching, collaboration (with like-minded people), access to networks, and even physical office space. If your business is past the baby stage, then maybe you ought to look elsewhere.

Look at an Incubator’s Track Record Before Signing Up

Just as investors look at traction for a startup before they invest, you should look at the success of previous startups at a particular incubator. The success of an incubator should be measured by how well startups have done after graduation. Does the incubator have a track record of successful startups? Has the incubator assisted startups in raising their seed rounds after graduation?

Look for those you share similar objectives with

Ultimately your assessment should be based on what you need. If you are lacking in encouragement or mentorship, if your business plan is close to working, an incubator can be a great avenue to get that little nudge and the social support to help your business reach a new level. When looking out for one to sign up with, you should look out for those that complement your business objectives.

Don’t jump in head first

Before joining an incubator, consider what’s going on in your life, your commitment level to your company, the location of the incubator, and what the requirements are. Don’t overcommit.

Ask yourself if you are ready to be a client. This means showing up and participating in the program; being teachable and being under someone; accepting input from the incubator’s leadership; and all the while continuing to grow as the leader of your own company.

Know the Difference Between Early-Stage and Late-Stage Incubators

Early-stage incubators are valuable for helping an entrepreneur turn an idea into a step-by-step roadmap for building a business. The key ingredient in such incubators is mentorship from experts in the areas of building a business plan, financial strategy, management, operations, branding, pitching to investors, marketing strategy, etc.

Late-stage incubators and accelerators for businesses that can show initial market traction can provide important access to angel investors and opportunities to pitch to venture capitalists. Incubators and accelerators also help build important networks of contacts that can prove instrumental for financing and partnership prospects.

Be wary of hidden fees

Incubators typically provide inexpensive office space and basic business needs, such as Internet connectivity, in exchange for a fee. Entrepreneurs should understand exactly what the program offers and at what cost.

The upside of incubators is easy and inexpensive access to essentials, such as office space, telecommunications tech, conference rooms, and mentors. The downside is that incubators can often be more focused on generating lease fees instead of building value for the entrepreneur’s business – that is, there seems to always be another tenant waiting in line.

How to Get Accepted into an Incubator Program in 4 Steps

Being accepted into a business incubator can and should be a process. Most incubators have an admissions process and require companies to apply for acceptance. Criteria for acceptance into an incubator varies, but most require you to present a feasible business idea and professional business plan. Here are a few steps to get started finding an incubator that’s right for your business.

Review your options geographically or vertically

Because of the sheer volume of available incubators, you might have more than one option to choose from. By doing a quick regional search, you can understand and rank the incubators that might be a good fit for your company needs. Always review the website and ask for references from successful companies they’ve helped as well as a few from companies that have dropped out to get an overall view of fit.

Review their admission criteria

Most incubators have defined criteria for which types of companies they’re prepared to help. Some require certain milestones or criteria, like headcount, capital, entrepreneurial experience, background, revenue, or product fit. Others require contractual obligations from the accepted companies, so reviewing the application and understanding what is crucial to ascertaining fit.

Get your business plan ready

A business plan might not be required during the application process, but it’s helpful in determining whether the incubator is a good match. A simple overview of business name, team build, value proposition, competitive advantage, addressable market, go to market strategy, product or service, and a 12-month forecast can help you differentiate your company. Keep it simple at this stage.

Know that you will be screened

In most cases, incubators will accept initial applications for companies meeting basic criteria. Some incubators require a video submission to explain the basic Business model, vision, and mission of the company.

The second stage is usually to meet and discuss your goals, plans, strengths, and weaknesses with a screening committee. This might take the form of an application, pitch or interview, and a series of meetings to set expectations for each side. So you should endavour to prepare for it. If you make it through the screening stage, you are most likely to get accepted.

50 Successful Companies Operating on Business Incubator Model

One of the largest accelerator programs in the game is Techstars. They choose over 300 companies annually to join their three-month, mentorship-driven program. Techstars invests $120K in each startup and provides hands-on mentorship and access to the Techstars Network for life. Techstars hosts dozens of accelerator programs across different cities and industries.

Capital Factory

Capital Factory’s accelerator gives startups a competitive advantage in attracting talent, advisors, investors and customers. Its focus is on helping startups raise funding and increase customer growth by providing coworking space, hosting credits, a Startup Evangelist to advocate for your startup and access to a mentor network of the top investors and entrepreneurs in Texas.

Tech Ranch Austin

Tech Ranch equips entrepreneurs and ecosystems with insights, proven techniques, tools and processes that develop both the community and the entrepreneur. Tech Ranch has been recognized as a 2015 Top 3 Social Impact Incubator by UBI Global and 2015 & 2016 Top 20 US/Canada Accelerators by Gust’s Global Report. Its programs have influenced more than 6,000​ ​entrepreneurs in 42+ countries with more than 750​ solutions deployed.

MassChallenge

Headquartered in the united states with locations in Boston, Israel, Mexico, Switzerland, Texas, and the UK, MassChallenge strengthens the global innovation ecosystem by accelerating high-potential startups across all industries, from anywhere in the world for zero equity taken.

Specifically for women-led startups, MergeLane aims to support a diverse startup community through virtual mentoring, personal coaching and a curriculum targeting early-stage business issues and topics that specifically affect women leaders. The program takes place in Boulder, Colorado, but companies are only required to be there in person for part of the 12-week program. Some of the program can be completed virtually.

Chicago Blockchain Center

The recently launched Chicago Blockchain Center is an accelerator focused on blockchain-enabled technologies. In collaboration with the State of Illinois, the Chicago Blockchain Center provides a platform for education, innovation and development with help from top Chicago companies and entrepreneurs.

New Venture Challenge

Launched in 1996, the Edward L. Kaplan New Venture Challenge is recognized as one of the top-ranked accelerator programs in the US. Through the NVC, the Polsky Center of the University of Chicago has graduated more than 230 startup companies and created thousands of jobs for the economy. NVC startups have achieved more than $13 billion in mergers and exits, and include household names such as Grubhub, Braintree/Venmo and Simple Mills.

WiSTEM is a 12-week accelerator program that connects women to capital, community and technology resources. The program, co-created by 1871 and Ms. Tech, has found success since launching in 2015, helping over 50 women-founded companies who have raised almost $10 million in funding and have created hundreds of jobs.

Funding from JPMorgan Chase has led to a recent expansion of the program, which is built around peer-to-peer learning, knowledge sharing and a fundraising strategy curriculum.

The Brandery

The Brandery is a nationally ranked accelerator that leverages the expertise of the Cincinnati region, namely with branding, marketing and design. In addition to an elite mentor network, startups are paired with world-class creative agencies and gain access to some of the biggest companies in the world, including Procter & Gamble and Kroger. The Brandery runs one 16-week accelerator program per year for five companies. The participating startups each receive $100K, a year of free office space and more than $200K in additional benefits.

Make in LA is an accelerator program that focuses on hardware startups. The Los Angeles-based program involves four months of hands-on work, from building prototypes to preparing pitches for investors. Innovative hardware startups can apply online during the yearly application period.

MuckerLab works with no more than ten companies per year, doing whatever is necessary, for as long as necessary, to ensure that each and every company achieves the operating milestones required for the next round of financing. Its hands-on, boutique approach has allowed for them to achieve extraordinary success rates and founder satisfaction scores. MuckerLab was recently ranked the number two accelerator in the US.

Its bespoke model allows the company to deeply embed themselves as adjunct operating executives in companies at their earliest stages, as well as those going through major inflection points.

AngelPad is a seed-stage accelerator program based in NYC and San Francisco. Since 2010, it has launched more than 140 companies. Every 6 months, they select around 15 teams from a huge pool of applicants (usually around 2000) to work with. AngelPad was recently ranked as the number one accelerator in the US (based on a study from MIT/Brown University). AngelPad has been called the “Anti-Y Combinator” due to its strategy of working with fewer teams on a yearly basis.

Betaworks (Camp)

Camp combines Betaworks’ building and investing experience into thematic accelerator programs for startups in frontier technology. Camp themes reflect the areas on which they are most focused and evolve along with their investment theses. This cycle’s theme is livecamp: everything around live streaming, esports, etc.

Blueprint Health

Blueprint Health invests time and $20K into 20 healthcare IT companies each year. The staff and mentors work intensively with the companies for three months to help them meet their individual business goals. Typically these goals include gaining customers, raising capital, building marketing and sales collateral and refining an investor pitch. But Blueprint Health doesn’t end after three months – they continue to help their alumni founders build and grow their companies and offer them additional resources that the community can provide.

Cofound Harlem

Cofound Harlem is an accelerator program in New York City that aims to build 100 companies in Harlem by the year 2022. The accelerator provides mentorship, education and other support to Harlem-based startups and companies that want to make a real impact on the community.

Dreamit Ventures is an early-stage venture fund that accelerates startups building transformative tech products in the fields of healthcare, real estate/built environment and security. Dreamit identifies and invests in startups with market-ready products looking to more rapidly gain customers, initiate new partnerships and raise their next round of funding. Startups participate in one of Dreamit’s three industry verticals: UrbanTech, HealthTech, or SecureTech.

Entrepreneurs Roundtable Accelerator

Entrepreneurs Roundtable Accelerator combines seed capital, hands-on help and a great coworking location with an expert team to positively impact the trajectory of early-stage startups. ERA runs two four-month programs per year. They are New York City’s largest accelerator program as well as its deepest and strongest mentor network with 400+ expert investors, technologists, product specialists, marketers, customer acquisition strategists, sales execs and more, across all major industries represented in New York.

Fintech Innovation Lab

The Fintech Innovation Lab is a highly competitive 12-week program that helps early- to growth-stage startup companies refine and test their value proposition with the support of the world’s leading financial service firms.

MetaProp NYC

MetaProp and Columbia University collaborate to bring together some of the most innovative and influential real estate institutions and other industry PropTech visionary companies to lead the MetaProp Accelerator at the Columbia University Consortium.

New York Digital Health Innovation Lab

The New York Digital Health Innovation Lab, previously NY Digital Health Accelerator, is an annual program run by the Partnership Fund for New York City and the New York eHealth Collaborative for growth-stage companies that have developed cutting-edge technology products targeted at healthcare organizations.

Startup52 is an early-stage accelerator program in New York City that is focused on promoting diversity. The accelerator accepts startups in various industries, but puts a big emphasis on the capabilities and diversity of founding team members. Accepted startups receive one-on-one mentorship, coworking space and other support tailored to each startup.

VentureOut is a New York City-based program that is a one-week hyper-accelerator. It brings in startups from around the world and connects them to members of the startup and technology communities in NYC. The VentureOut program features sessions on subjects ranging from leadership to sales, and ends with individual meetings and new client meetings at the end of the week.

For startups that focus on retail and consumer goods, XRC Labs provides an innovative, design-centric accelerator program in New York. Participants get mentorship, access to capital, operational support and workspace on the campus of the Parsons School of Design at the New School. XRC Labs runs two 10-week programs each year.

AlphaLab is a nationally ranked software accelerator in Pittsburgh. They help early-stage tech companies quickly figure out the best way to build and grow in an immersive 4-month program that includes funding opportunities.

BoomStartup

BoomStartup is a seed, early-stage venture growth fund and virtual accelerator program. They provide entrepreneur boot camp basics like custom accelerator plans, extensive mentoring from seasoned professionals, personalized mentorship, investor introductions and pitch development. The program uses lean startup methodologies to launch a number of business startup programs such as early-phase tech, software, EdTech, product, and biotech startups.

Capria is a valuable Seattle-based investment firm and accelerator program focusing on global impact startups. The program aims to work with startups that develop innovative solutions to global problems, specifically those operating in emerging markets.

500 Startups

Probably one of the most well-known accelerators, 500 Startups’ 4-month seed program gets your company access to mentorship, hands-on sessions with startup experts and an office space where you’ll work with other talented founders from around the world. They invest $150K in exchange for 6% in equity. They charge a $37.5K fee for participation in the program and it takes place in both San Francisco and Mexico City.

Alchemist Accelerators

The Alchemist Accelerator is an accelerator exclusively for startups whose revenue comes from enterprises, not consumers. The accelerator focuses on enterprise customer development, sales, market validation and a structured path to fundraising.

Boost VC invests $50K – $100K in exchange for 7% of the company. They seek passionate technologists from around the world for their accelerator in Silicon Valley. They give their companies a place to live and work, an unparalleled network and time to focus on their startup.

Founders Embassy

Founders Embassy is elevating, inspiring and educating international and immigrant founders by offering them unprecedented access to Silicon Valley through its immersive, bootcamp-style acceleration programs, impactful events and thought leadership – all without any exchange of equity. To qualify for the program, it is not required for the startup to be based outside of the US. However, if the company is based in the US, they do require for one of the founders to be either an international citizen or an immigrant living in the US.

Illumina Accelerator

For startups involved in clinical research and applied sciences, especially in the area of genomics, Illumina Accelerator provides extensive mentorship, financial support lab space and more. Founders accepted into the program must work full-time in the Bay Area during the six-month program.

Matter is a 20-week accelerator program that focuses on design thinking. Based in both San Francisco and New York City, participants immerse themselves in a collaborative culture where they are taught to focus on creating human-centered offerings in order to fail fast and bring products to market sooner. The application process includes a pitch, project and finalist round that startups must go through in order to be selected.

Upwest Labs

Upwest Labs offers $20K in funding over a four-month period for small businesses based in Silicon Valley. In addition to seed funding, small businesses can gain access to investors, mentors and more through the comprehensive small business development program that Upwest Labs provides.

Le Camp is a Québec-based incubator-accelerator that is dedicated to tech businesses growth and mentorship. They offer a diversity of services adapted to companies’ development stages, from pre-startup to internationalization.

Creative Destruction Lab

Creative Destruction Lab helps innovators transition from science projects to high-growth companies. Its focus is as a seed-stage program with the goal of helping companies go through the transition phase from pre-seed to seed-stage funding. Thalmic Labs, Nymi, Charge Spot and Pet Bot are some examples of the companies that CDL works with.

DMZ is a world-leading accelerator for tech startups in Canada. They help startups build great businesses by connecting them with customers, capital, experts and a community of entrepreneurs and influencers. They aim to create an environment where companies can focus on scaling their businesses. DMZ is ranked as the #1 university-based business incubator in the world by UBI Global. They have a strong commitment to helping high-growth tech startups scale, fostering a vibrant startup community and fueling innovation in Canada.

Extreme Accelerator

Extreme Accelerator is the most active Canadian pre-seed fund that invests, sponsors immigration and accelerates global startups. They are mainly looking for international startups relocating or expanding to Canada, with an aim to target a global or North American market. They also require demonstrated product-market fit through revenue and validations by accelerators or other parties.

Ideaboost is a Toronto-based business accelerator and startup community for companies that are building the next generation of technology-based media and entertainment products, services, and brands. This accelerator is an initiative of the Canadian Film Centre’s Media Lab, in partnership with Corus Entertainment. It provides high-potential Canadian startups with seed investment, mentorship and access to its network.

Launch Academy

Launch Academy is a tech incubator that provides the mentorship, resources, network and environment entrepreneurs need to launch, fund and grow their startups. Launch Academy offers three comprehensive programs, depending on a startup’s needs and growth stage.

Accelerate Tectoria

Its mission is simple: to increase the number of successful technology companies that start and grow in the Greater Victoria area. With input and funding from its partners, Accelerate Tectoria provides a structured venture development service designed to guide, coach and grow ambitious early-stage technology entrepreneurs.

CSI Kickstart

Known for their mentorship, impressive toolbox spilling over with resources and the ability to connect projects with the right investors, possible investors, mentors and more, CSI has it all. The incubator offers everything from human resources to knowledgeable entrepreneurs with an in-house production company — and even a virtual candy drawer!

This global incubator is wholly digital and aspires to help one million entrepreneurs achieve one million dollars in annual revenue within the next four years. This will lead to up to ten million jobs. Based on online educational programming, you’ll experience video lectures and get connected with online strategies and mentors. Aspects of this virtual incubator are free, but only approved members can access the entire program.

Based at Missouri State University, recipients are startups that aren’t physically nearby but are a good match for the program goals. Emerging businesses, startups and job creation are the goals of the eFactory. You can access the incubator program for support services, counseling, admin support and shared equipment. Mail services, virtual conference rooms and access to mailing lists and mentorship are at the heart of this program.

DreamIt Ventures

DreamIt focuses on the trifecta of the startup world — startups themselves, investors and corporate innovators. It’s one of the 20 most active incubators in the country, DreamIt is all about helping entrepreneurs scale via securing capital and customers. The incubator also partners with brands and corporations to help with pilot programs and tech advancement. Top angel networks and venture capitalists also connect with DreamIt for a healthy startup ecosystem.

Focused on tech startups, Amplify LA understands that not all startups are equal — and that means their goals and paths aren’t the same. Adopting a flexible approach is at the center of the program, with an accelerator customized to each project.

There’s no catch-all calendar or required schedule for all. Instead, mentors watch a startup’s performance and offer support. On-site support in Venice Beach is an option, but with the flexible mentorship approach, mandatory requirements are slim.

If someone in your startup has a connection to Stanford, you can qualify for the Accelerator Program. Your connection can come from your undergraduate or graduate years, but only one person needs to have such a connection. Otherwise, on-site incubator options are available, including a visiting professorship.

CodeLaunch, produced by Frisco, TX,  is a competition conducted annually between people as well as groups on technology startup ideas. This competition has been the source of success for at least 7 startups which won it. This competition targets “embryonic” stage and “very early” stage startups through established startups can also participate but won’t be the primary focus.

The main goal of this event is to create a medium through which people and their ideas can connect with investors and also for the investors to find ideas which they wish to support. Key2Close was one of the finalists of the 2015 edition of the competition.

India’s largest incubator for startups is T-Hub also known as Telangana Hub. On 5 November 2015 the first phase of T-Hub was set in operation by E. S. L. Narasimhan, Governor of Telangana and Ratan Tata, Chairman Emeritus of Tata Sons, and Telangana IT & Panchayat Raj Minister K. T. Rama Rao. Housed in a 70,000 square foot building called CatalysT, it is entirely dedicated to entrepreneurship.

Centre for Digital Innovation in Hull

The Centre for Digital Innovation in Hull, popularly known as C4DI is a digital incubator based in Kingston upon Hull, England. For providing assistance to startups, this company has created links with Amazon Web Services, PwC, Kingston Communications as well as other firms. The C4DI accelerator was launched in May 2014.

Y Combinator

Twice a year, they invest $120k into a large number of startups. These startups move to Silicon Valley for three months for intensive mentorship and support.

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What Is a Business Incubator? Definition and Guide

A business incubator is a workspace created to offer startups and new ventures access to the resources they need, all under one roof. In addition to a desk or office, incubators often provide resident companies with access to expert advisors, mentors, administrative support, office equipment, training, and/or potential investors.

A business incubator is a workspace created to offer startups and new ventures access to the resources they need, all under one roof.

In addition to a desk or office, incubators often provide resident companies with access to expert advisors, mentors, administrative support, office equipment, training, and/or potential investors .

Most incubators are created as temporary launching pads for new businesses, with the expectation that participants will eventually graduate and move out. However, not all graduates are successful, and some decide their business concept wasn’t viable and shut down instead.

Incubators vs. accelerators

Many people use the terms “incubator” and “accelerator” interchangeably. However, the two types of program often have different goals and different timeframes.

Incubators vary, but most exist to help a founder or team determine if a business concept is viable and then set them up for success. Some incubators put a time-limit on how long a company can stay in the space, but one to two years is fairly typical. Some incubators take an equity stake and others simply charge a fee to be in the space and tap into the many available resources.

Accelerators, on the other hand, are short-term, fast-paced, structured programs lasting 3-4 months. Many accelerators are competitive, limit the number of participants, and may provide a cash infusion up front or on achievement of a milestone. Most companies hope that an accelerator will put them on an aggressive growth trajectory.

Incubators are typically partnerships or collaboratives sponsored by one or more pro-business organizations, such as:

• Local colleges and universities
• Government entities, such as municipalities
• Economic development organizations
• For-profit ventures, including investment-related

Types of incubators

While the term “business incubator” generally refers to commercial space provided to new businesses, many incubators specialize in a particular industry or type of business and work to bring similar companies together. Some specialized incubators cater to:

• FinTech, or financial technology
• Green technology
• Homeland security

Other incubators are generalist spaces and welcome a wide variety of businesses, rather than companies that serve a particular market or industry.

Finding a local incubator

The International Business Innovation Association   (InBIA) serves incubator sponsors worldwide. A member directory lists many of the incubators currently in operation.

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What Is a Business Incubator? FAQ

What does a business incubator do, what is the example of business incubator.

• Techstars: Founded in 2006, Techstars is a global network of business incubators headquartered in the United States. It has offices in over 20 countries and has helped over 2,000 startups since its founding.
• Y Combinator: Y Combinator is a famous Silicon Valley-based startup accelerator that has helped launch over 2,000 companies. It provides seed funding, mentorship and access to its network of investors.
• Startupbootcamp: Startupbootcamp is one of the largest networks of business incubators, with 20+ programs across the world. It provides mentorship, access to its network of corporate partners, and investment opportunities.
• The Brandery: The Brandery is a Cincinnati-based business incubator focused on helping startups in the consumer product space. It provides mentorship, resources and access to its network of investors.

What is an incubator and how does it work?

What are the 3 key factors that make a good business incubator.

• Network and Connections: A good business incubator should have an established network of mentors, investors, and other resources to support the success of incubated businesses.
• Education and Training: A good incubator should provide educational opportunities and resources to help entrepreneurs develop their business skills and learn best practices.
• Resources and Facilities: A good incubator should have access to resources such as office space, technology, and other infrastructure to help entrepreneurs get their businesses started.

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What Is a Business Incubator – The Ultimate Guide

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No matter what’s your reason for starting a business , you want your new startup to grow and be successful. Sometimes, new entrepreneurs need some help when they start a business . That’s where a business incubator comes in. 

There are approximately 1,400 business incubator programs within the US , according to data provided by InBIA (International Business Innovation Association). A business incubator could be the ultimate solution you need that will help your business reach new heights. So, what is the role of a business incubator and how can it help you as a new entrepreneur? 

What Is a Business Incubator?

A business incubator is an exclusive program that is designed for new entrepreneurs to help their businesses grow. These programs offer education, mentorship, access to potential investors, and workspaces for startups.

With the help of these valuable resources, startups can improve their operations while working at a lower cost in the initial stages of incubator entrepreneurship. There is an application process in order to join. Plus, a certain level of time commitment is required. 

How Does a Business Incubator Work?

Participants have to go through a specific admission process in order to join an incubator program. This process is as follows:

• Apply : Businesses that are interested need to fill out an application and explain their objectives and experience
• Submit your business plan : Several incubator programs ask their participants to send their business plan to be considered
• Interview : Participants get interviewed where they talk about the program and share what they are looking to achieve for their business. These interviews take place either virtually or in person, based on the participant’s location
• Final decision : The representatives of the business incubator program will contact the participants through email or a phone call

After getting accepted into an incubator program, you will have to make some living arrangements, as you will be spending a significant amount of time in the program. Typically, businesses spend around one to two years within an incubator, but this depends on the business and the speed of its growth. 

During the program, you might have to share office space, utilities, and production equipment with other businesses. This is going to help reduce your costs. Moreover, you will be able to thoroughly plan for your business’s future while in the program and learn from the experts. 

Services Offered in an Incubator Program

Business incubator programs offer numerous services to help accelerate the growth of new businesses. Some of these services are as follows:

• Training opportunities
• Networking opportunities and helping businesses connect with other strategic partners
• Guidelines to build better business foundations
• Market research help
• Operational services and utilities, such as phones and the internet
• Assistance with how to finance your business and access to several funding sources, like venture capital, loans, angel investors, and so on
• Help with hiring the right staff
• Business training programs development
• Guidance on professional etiquette and best practices
• Support for regulatory compliance

Examples of a Business Incubator

Business incubator programs have greatly evolved since the ‘50s. There are various types of incubator programs with a common goal of helping a business grow. Listed below are some types of business incubator programs currently out there.

1. Academic Institutions

Many universities offer incubator programs or are academically affiliated with them. Certain programs also work with the students of the universities, while others focus on accepting new businesses to their programs.

2. Non-profit Development Corporations

Government agencies and non-profit organizations use incubator programs to help with economic development. Programs like these prefer accepting companies that work for public welfare. 

3. Profit Property Development Ventures

Bigger corporations are known for creating numerous business incubator programs. This is because these programs are used as investment opportunities in order to develop technology, find new partners, or fund subsidiaries.

4. Venture Capital Firms

There are venture capital firms that work on developing incubator programs as a form of investment opportunity. These programs might invest in new businesses in exchange for funding or equity further along in the program.

How to Choose a Business Incubator?

Dedicating your time to an incubator program is a massive decision. Therefore, it’s crucial that you choose the right program for your new business. Listed below are the different factors you should consider when choosing an incubator entrepreneurship program. 

What Are They Offering?

Do your research on the incubator program you’re thinking to join. Are they offering something substantial to your business? Get all the relevant information about the services and resources the program offers. Take a look at the program’s advisers to see if their skills, networks, and expertise is something your business needs. 

Check the Program’s Curriculum

Several incubator entrepreneurship programs come with rigorous schedules and training. Take a look at the program’s curriculum to see if it teaches you what you need to succeed in your business. Are you willing to take everything on while running daily operations?

Review the Business Incubator’s Track Record

Check to see how well other businesses, which were part of the incubator’s program in the past, have performed. You can contact those businesses to get their input, if possible. You can find a list of the incubator’s graduate companies on the program’s website.

What Are the Costs of the Incubator Program?

Take a look at the costs it will take to use the equipment and workspace. Check to see the equity percentage that the incubator will take or the loan terms being offered, if applicable. Are you willing to sacrifice your time for these costs?         

The Location of the Incubator Entrepreneurship Program

You will be attending classes during an incubator program, which means you are required to be on campus or live close by. This might mean that you have to relocate if you’re unable to find a business incubator nearby. 

The Pros and Cons of Joining a Business Incubator

Here are the pros and cons of joining an incubator program.

Pros of a Business Incubator Program

• Little to a no-cost workspace that helps in reducing overhead costs
• Benefits that help grow your business, like mentorship, administrative support, different services, office space, advisers’ expertise, production equipment, and even capital
• Business development programs like panel discussions and workshops
• Access to potential investors
• A structured curriculum and environment to help the growth of a business in the right direction

Cons of a Business Incubator Program

• A competitive application process
• Long time commitment (one to two years)
• A tough schedule to follow
• Having to report to someone regarding your progress in the program

What Is an Incubator in Business – Final Thoughts

Business incubator programs come in all shapes and sizes. Therefore, you need to do your research and look for an incubator entrepreneurship program that’s right for your specific business and meets its needs. 

If you want more information about incubator programs located in your area, go to International Business Innovation Association’s website . You can also contact the colleges, universities, and the local economic development agency to see if there are any business incubator programs located nearby. 

Do you want to know more about starting a business? Read our article about the legal requirements for starting a small business or learn how you can open your business bank account .

About the author

Dr. Gabriel O'Neill, Esq.

Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.

As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.

The 6-Step Business Incubator Process

Jun 23, 2021

Are you ready for this? According to National Business Capital & Services, around 90% of all startup companies fail. Yep, nine out of ten new businesses don’t make it. When you look at a number like that, you may be tempted not even to begin. But what can make the difference between success and failure are business incubation programs? 

The business incubator industry helps with job creation, the local economy and turns good ideas into successful businesses. But what’s the business incubator process, and how can it help you beat the odds?

Table of Contents

What is business incubation?

You have a good idea but don’t know what to do with it. This is where business incubators can make a real difference. The concept of business incubation identifies the potential of new startups in the early stages and puts into place fundamental mechanisms for success. These “mechanisms” include strategic planning, learning environment, and financial management.

All business incubation programs have the end goal of ensuring the long-term survival and growth of the company. They help bring resources and support to develop products and services for those who otherwise wouldn’t have access to these benefits.

What is the business incubator process?

A successful incubator has three distinct stages in the process. The initial step is to begin the admission process and includes specific steps.

When applying to a business incubator, look closely at the requirements and what you need to submit. You may need to have a business plan in place and a well-developed idea to compete.

After submitting your application, you may have to interview with the incubator manager. So, being prepared for the interview is key to acceptance. Try to find out what they are looking for ahead of time and be prepared to prove why you’re the best fit for the incubator. 

Depending on the incubator admission process, you may have to wait a few weeks before you hear the answer. In the meantime, keep working on your business operations and strategy. This way, you’re even more prepared when you’re accepted. 

What happens once you start?

This stage is the heart of the incubator process and depends on the type of incubator and end goals. Incubator participants in the ShiftPixy Labs incubator go through a series of challenges and a carefully crafted curriculum. Plus, they gain access to mentors and opportunities to network.

Network with other startups

One of the hallmarks of Incubator development is networking with other startups. Cohort-based incubators pool like-minded entrepreneurs in a group to move through the process together. 

Without the incubator, startups may find it hard to create sustainable business networks that can help get the business off the ground and offer support in the years after the incubation ends. 

Start to Learn and Grow

In a sense, an incubator provides business assistance and crucial educational content that inspires companies to learn and grow. It’s like getting a business masters without having to pay the high tuition. 

Find Funding

When you participate in an incubator, you have more opportunities to meet an angel investor or secure capital financing. Business incubators understand that startups need access to funds and help candidates find investors or secure loans.

At the end of the program, incubated companies go through a demo day. Prospective investors learn more about the incubated concepts and decide whether the startup is worthy of investment. It’s the startup’s chance to show viability and proof of idea.

What happens once the incubation ends?

After completing key challenges successfully, the startup is now ready to launch the company. Financing and a solid business plan are in place. 

What are the benefits of business incubation?

You may have an idea of the benefits by now, but it’s worth mentioning them again. A successful business incubator can provide the following advantages: 

• Complimentary office space
• Access to mentors and expert advice
• Help with product development
• Ability to network with similar startups
• Access to different finance options
• Accelerated time frame to ensure success
• Help to get the concept running

Having the benefit of being in an incubator is highly desirable for any starting business. Strategic planning and business management support give entrepreneurs and restaurateurs the necessary edge for success. 

Is a business incubator right for me?

The business incubation model has been around for years. But in the last few years has had a surge in popularity. Knowing if it’s right for you may depend on the incubation model and business goals. In the incubation industry, there are different types of incubators, including: 

• technology incubators
• startup incubators
• corporate incubators
• kitchen incubators
• virtual incubators
• academic incubators

The above examples are by no means finite. You can find any industry-specific incubator to fit your company’s product or goals. But some incubators are better than others. 

Apply to ShiftyPixy Labs Ghost Kitchen Incubator Program Today

ShiftPixy takes the kitchen incubator concept to a whole new level. The groundbreaking new approach takes aspiring restaurant operators from their early ideas to fruition. All of which culminate into a ghost kitchen setup. 

Ghost kitchens were taking off before the pandemic, but the number of people ordering food online for delivery has soared since then. People no longer need to visit a restaurant to experience yummy cuisine. The trend towards delivery is only going to increase. 

What matters is the quality and how fast it’s delivered. Ghost kitchens have no storefront, work from a commercial kitchen, and don’t rely on foot traffic. Locations don’t have to be trendy or in an up-and-coming neighborhood. Instead, ghost kitchens harness the power of technology and native delivery to build an empire. ShiftPixy Labs shows restaurateurs how to do it with style. 

The first step is to download the ShiftPixy Labs app and start the application process. Right now, we’re offering incubators for restaurant folk, but as we grow, so will the types of businesses we add to our incubator programs. Now is the moment to make your dreams a reality. If not now, when?

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Cashflow and Business Plan Templates

An effective business plan serves at least four useful purposes:

• It helps entrepreneurs focus their ideas
• It creates a track for management to follow in the early stages of the business
• It creates benchmarks against which the entrepreneur and management can measure progress
• It provides a vehicle for attracting capital to help finance the business

Feel free to use the Business Plan Template and Cash Flow Worksheets below.  Download and save the files on your computer. 

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Leveraging Business Incubators for Startup Success: A Comprehensive Guide

Unlock the power of business incubators: From seed funding to mentorship, discover how incubators propel startups to success in a dynamic ecosystem.

March 22, 2024

In the fast-paced and ever-evolving world of startups, the journey from concept to market leader is filled with hurdles. Challenges like securing essential funding, understanding market dynamics, and crafting a niche can be daunting. That's where the magic of business incubators comes into the picture, offering a ray of hope and a robust support system for emerging ventures. 

A business incubator isn't merely a concept; it's a dynamic ecosystem meticulously crafted to nurture innovation and expedite startups' growth trajectory. These incubators are a powerhouse of critical resources—think of seed funding as the initial fuel for your engine, mentorship as your navigation system, office space as your base camp, and networking opportunities as your gateway to the world. 

This guide serves as your compass in the wilderness of business incubation. We are here to assist you in understanding the selection process of the right incubator, comprehend the numerous benefits available to you, and effectively utilize these resources. Our goal is simple: to equip you, the entrepreneur, with valuable insights and knowledge to confidently navigate these waters, make informed choices, and propel your startup toward the success it deserves.

Understanding Business Incubators

The foundation of every thriving startup is a great idea . However, turning this concept into a successful business requires more than just enthusiasm - it requires a supportive environment that can only be provided by a business incubator. Imagine a place where your budding idea is warmly welcomed and encouraged, with all the necessary resources, mentorship, and community support to help you reach new heights.

What Exactly Are Business Incubators?

Business incubators can be compared to guardian angels for startups. Whether nonprofit or profit-driven, these organisations offer a wealth of resources and services to serve as a springboard for your venture. They work closely with universities, government bodies, and corporations to help bring your dream to life.

Core Functions and Offerings

The essence of a business incubator is to be the wind beneath the wings of startups. Here's how they do it:

• Collaborative Workspaces: Incubators provide more than just a desk. They offer a community where shared labs, workspaces, and facilities foster innovation and significantly reduce operational costs.
• Expert Guidance: With access to seasoned entrepreneurs and industry mavens, mentorship within an incubator can pivot your journey toward success.
• Networking: The adage "It's not what you know, but who you know" rings especially true here. Incubators open doors to potential customers, partners, and investors, broadening your horizon beyond measure.
• Funding Assistance: While not direct benefactors, many incubators play a crucial role in connecting startups with seed funding, grants, or the right investors to fuel their growth.

For insights on amplifying your startup's potential, explore our guide on Maximizing Incubator Opportunities.

Diverse Incubator Landscapes

Finding the perfect incubator is akin to matchmaking for your startup. Here's what the landscape looks like:

• University-Based Incubators: Leveraging academia's rich resources and networks to support ventures birthed within their corridors.
• Nonprofit and Community Incubators: Focused on uplifting startups with a mission towards social or community impact.
• Corporate Incubators: Where innovation meets enterprise, these incubators seek to nurture startups that can synergize with their core business.
• Regional and Sector-Specific Incubators: Offering specialized support tailored to your industry or geographic location.

The Incubation Journey

Joining an incubator isn't just about signing up; it's a journey that starts with:

• Application: Articulating your vision, team, and goals is step one.
• Interview: A deep dive into your startup's ethos, viability, and team spirit.
• Selection: The right fit is crucial, with incubators seeking startups that show promise and align with their mission and industry focus.

Your relationship with an incubator should be symbiotic. Choosing one that elevates your strengths and addresses your weaknesses lays a solid foundation for growth and success. 

Benefits of Joining a Startup Incubator

Starting a new business can be like exploring uncharted waters. It's exciting, but it can be difficult, especially for new entrepreneurs. In the early stages, startup incubators can be very helpful by providing resources to guide new companies toward success. In this article, we'll take a closer look at how these incubators can help your startup.

Comprehensive Support and Resources

Imagine having everything you need to grow your startup without the high costs . Incubators provide essential resources like modern office spaces, advanced technical infrastructure, and specialized equipment. This reduces your expenses and creates an environment that nourishes your business. With all the tools at your disposal, your business will thrive.

Mentorship from Industry Veterans

The startup landscape can be overwhelming and confusing. However, receiving guidance and mentorship from experienced individuals who have already navigated through such terrains can act as a beacon of hope and steer you away from potential missteps. Incubators can introduce you to industry experts with invaluable wisdom on strategic planning, leadership skills, and operational efficiencies. This knowledge can be instrumental in helping you avoid any pitfalls and make calculated decisions, making it worth its weight in gold.

Networking and Collaborative Opportunities

Joining an incubator offers many benefits, one of which is becoming part of a lively and diverse community. This network is a hub for potential investors, business partners, and customers and provides opportunities for collaboration that can help propel your startup to success.

Enhanced Credibility and Visibility

Choosing a trustworthy business incubator is like getting a stamp of approval on your startup. This helps attract investors and customers and also brings opportunities for media exposure and positive public relations, which can significantly enhance your startup's reputation in the market.

Access to Funding and Increased Survival Rates

Incubators provide startups with a tremendous financial boost. They offer seed funding and connections to venture capitalists. Incubated startups tend to have a higher survival rate, which shows that these ecosystems are effective. Incubators are support systems and launchpads that can propel startups to success. 

They are vital to the entrepreneurial world and can help turn your ideas into successful businesses. If you need help finding your way in the startup world, consider looking into an incubator. They can guide you and provide the support you need to make your dreams a reality. And remember, you're not alone on this journey.

Choosing the Right Incubator for Your Startup

For any entrepreneur dreaming big, finding the right startup incubator is a step you must take. This guide is about helping you match your startup's unique needs with what the best incubators out there offer.

Identifying What Your Startup Needs  

Before you enter the vast world of incubators, consider what your startup needs to soar. Is it expert mentorship , access to the latest technology, or connections to potential investors? Pinpointing your needs will help you filter through incubators to find one that's just right for your business's stage, industry, and specific hurdles.

Doing Your Homework on Incubators  

Start researching incubators that cater to your sector and are highly recommended. Look for those with solid track records, successful alumni, and a vast network. Dive into what they offer regarding mentorship, funding, and day-to-day support.

Understanding What's Expected of You  

Remember, incubators are all about give-and-take. They're looking for startups ready to engage fully with their programs. This means being prepared for a fair share of networking, mentoring sessions, and giving back to the community. Ensuring your startup's culture jibes with the incubator's vibe is key to a fruitful relationship.

Navigating the Application Jungle  

Getting into an incubator can be a walk in the park. The application process usually involves detailing your business plan, going through interviews, and sometimes presenting your idea in front of a selection panel. It's a chance to sharpen your pitch and gain invaluable feedback, so embrace it.

Learning from Those Who've Been There  

Don't just take the incubator's word for it. Chat with alumni and current participants to get the inside scoop on what it's like. Their experiences can offer you a clearer picture of the benefits and hurdles of joining. Investigating the incubator's financial health, leadership, and strategic partners is smart.

Making Your Choice  

Choosing the right incubator could be the catalyst your startup needs. It's about more than just resources: mentorship, community, and support. By thoroughly evaluating both your needs and what potential incubators offer, you can find the perfect partner to help launch your startup into the stratosphere.

Maximizing the Benefits of Incubation

Joining a startup incubator can be a game-changer for entrepreneurs looking to jumpstart their ventures. Incubators provide many resources, including access to seasoned mentors, networking opportunities, and essential business tools. To truly benefit from an incubator, it's important to actively seek advice and absorb wisdom in key areas like strategic planning, leadership, and personal development. 

Being receptive to feedback and ready to adapt based on expert advice can significantly enhance your venture's prospects. Engaging in an incubator program opens the door to a unique ecosystem where entrepreneurs , investors, and industry veterans gather. By diving into networking events, workshops, and seminars, you can build a strong network that could lead to valuable partnerships, customer leads, and even financial backing. 

Incubators also offer tangible assets like office space, technical support, and seed funding, which are crucial for speeding up product development, refining your business model, and boosting operational efficiency. Making the most of these resources is critical to hitting your business milestones. A crucial aspect of being in an incubator is using the available resources to confirm that your product meets market needs. As you prepare to graduate from the incubator, it's vital to have a solid growth strategy in place. 

This plan should cover scaling your operations and broadening your market presence. Taking a proactive and thoughtful approach to your incubation period is essential. Focus on gaining from mentorship, expanding your network, leveraging resources to their fullest, validating your product and market fit, and planning for life after the incubator. Contributing to the community and establishing your startup as an active and valuable member will lay a strong foundation for long-term success and growth.

Challenges and Considerations

For startups contemplating joining a business incubator, it's vital to consider a few challenges and make informed decisions. This strategic approach can significantly boost their journey towards success.

• Understanding Selectivity and Competition: Getting into a renowned incubator is a challenging walk in the park. Thanks to their strict selection criteria, these institutions look for businesses that show promise and can scale up. Prepare to demonstrate what makes your startup stand out and its growth potential.
• Finding a Cultural Fit: A startup's values and work ethic must resonate with those of the incubator. A mismatch can lead to disagreements and hinder the benefits you might gain. Take the time to learn about the incubator's environment and decide if it fits you.
• Considering Equity and Ownership: Joining an incubator might mean giving up a slice of your company's equity. Think carefully about this exchange and ensure it aligns with your long-term objectives. It's about finding a balance that works for both parties.
• Preserving Independence: While incubators offer invaluable resources, startups should strive to maintain their autonomy. Developing the ability to operate and grow independently ensures long-term sustainability, even after graduating from the incubator.
• Managing Time Wisely: Participating in an incubator program requires a significant time investment. Startups must juggle this commitment with the need to run their daily operations. Prioritizing and balancing these aspects is key to leveraging the incubator's full advantages while maintaining your business fundamentals.

Startups eyeing incubator opportunities should tread carefully, ensuring a good fit with the incubator's culture, expectations, and agreement terms. This careful consideration is the cornerstone of reaping maximum benefits and laying a solid groundwork for future success.

Success Stories and Case Studies

Startup incubators have a track record of turning small ideas into industry-leading companies. A startup's journey from its early days in an incubator to becoming a household name offers invaluable insights into these programs' potential.

Tech Giants Beginnings  

Take Dropbox, for example, which started in the Y Combinator program in 2007. With the help of Y Combinator's mentorship, seed funding, and networking, Dropbox honed its product and strategy to become the cloud storage giant we know today. This journey underscores the significant role incubators play in a startup's development.

Industry Transformers  

Airbnb's story is another testament to the power of a good incubator. Also a Y Combinator graduate, Airbnb disrupted the traditional hotel industry with its unique home-sharing model. The early support from Y Combinator was crucial for Airbnb to navigate its entry into the market, setting it on the path to becoming a global powerhouse in the vacation rental space.

Pioneers in Sustainability  

Beyond Meat's journey began in the UCLA Anderson School of Management incubator, highlighting the incubator's emphasis on sustainable and innovative solutions. This support system helped Beyond Meat fine-tune its groundbreaking plant-based meat products, leading to its successful public offering and widespread adoption.

Healthcare Revolutionaries  

PillPack, which has redefined pharmacy services, benefited greatly from its time with Techstars Boston. The incubator's resources and mentorship were instrumental in helping PillPack navigate the healthcare industry's complexities, culminating in its acquisition by Amazon and revolutionizing prescription delivery.

A Super App's Rise  

Grab, Southeast Asia's leading super app started in a government-backed Malaysian incubator. The incubator's resources were vital in expanding Grab's offerings beyond ride-hailing to include food delivery, digital payments, and more, significantly impacting the region's digital landscape.

These stories show a common thread: incubators provide more than a workplace space. They offer a nurturing environment where startups can access vital resources , mentorship, and networks. This foundational support is crucial for startups to refine their products, strategize their business models, and ultimately secure funding or acquisitions. These success stories celebrate the startups' achievements and highlight incubators' pivotal role in fostering innovation and market fit.

In conclusion, business incubators serve as crucial catalysts in the startup ecosystem, propelling small ideas into industry giants through comprehensive support, resources, and mentorship. From tech pioneers like Dropbox and Airbnb to innovators in sustainability like Beyond Meat, the stories of startups nurtured by incubators showcase the transformative power of these environments. Incubators provide the tools and networks necessary for growth and instill a culture of innovation and resilience vital for success. 

For entrepreneurs embarking on the startup journey, selecting the right incubator is a strategic step that can significantly influence their path. By understanding the unique offerings of each incubator and aligning them with their startup's needs, founders can leverage these platforms for maximum benefit, turning their visions into viable, thriving businesses. This guide underscores the importance of incubators in the startup landscape, illustrating how they are indispensable in shaping the success stories of tomorrow.

Key Takeaways

Incubator Diversity and Selection: Startups must choose incubators that align with their industry, growth stage, and specific needs, ranging from mentorship to investor connections, to maximize growth potential.

Comprehensive Resource Access: Incubators provide startups with essential resources like office space, mentorship, and networking opportunities, significantly reducing overhead costs and fostering growth.

Mentorship and Strategic Guidance: The guidance from experienced mentors within incubators is invaluable, offering insights into strategic planning, leadership, and overcoming business challenges.

Networking for Opportunities: Incubators facilitate vital connections with investors, partners, and customers, expanding startups' networks and opening doors to new business opportunities and collaborations.

Success and Growth Trajectory: Successful incubator alumni like Dropbox and Airbnb illustrate the transformative impact of incubators on startups, leading to industry revolution and substantial growth.

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Start » startup, what is a business incubator .

If you’re a new or developing business, you should look into joining a business incubator program to quickly grow.

If you’re a small business or startup that is looking to find external methods to scale and grow, it’s worth looking into a business incubator program. These programs are designed to speed up the startup process of new businesses while fleshing out and sharing new ideas. They are created by private companies or public institutions, such as universities, and provide entrepreneurs with financial and technical services.

If you believe your business idea or startup would benefit from being a part of a larger system through a business incubator, you’ll want to familiarize yourself with how it works. We’ve outlined the process and pros and cons of being a part of one.

[Read: 5 Thriving Startups that Bootstrapped Their Way to Success ]

How business incubators work

No two business incubators are alike as they all have different processes and timelines. While companies will typically spend two years in an incubator, the amount of time could vary based on the program. Other variables include the types of resources shared, production expenses and office space.

While every business incubator program is different, they all start with some sort of application process. Each of these processes is unique, though they typically have the same steps:

• Apply: Every application will ask you for your professional and business information, as well as some questions to get to know you better. The application will likely also ask you for your business plan and your previous business experience.
• Interview: Once your application has been accepted, you’ll be asked to interview with the program. These usually occur over a video conference and are an opportunity for the leaders of the program to learn more about you and your business plan.
• Final decision: After a few weeks, you should hear back from the incubator about their decision of whether you got accepted or rejected. Generally, you’ll hear back fairly quickly, though some take longer than others.

Examples of business incubators

There are a few different types of business incubators which aim to promote growth for new businesses. They include:

• Academy institutions . Colleges and universities will often work with their students or recent alumni to help develop their business ideas.
• Non-profit development corporations . There are nonprofit agencies whose goals as incubators are to help stimulate economic development. These nonprofits typically search for business plans that are in service to the public's well-being.
• For profit development ventures . Tech companies and major corporations develop in-house incubators for various purposes, including investment opportunities, or as a way to develop a new business or product from one of their employees.
• Venture capital firms . Often these firms will create business incubators as a means of an investment opportunity. When working with a venture capital business incubator, they often look for equity in exchange for their service and funding.

[Read: 12 Food, Fitness and Gaming Startups That Are Thriving Amid COVID-19 ]

There are nonprofit agencies whose goals as incubators are to help stimulate economic development.

Business incubator vs. business accelerator

Oftentimes the term “business incubator” and “business accelerator” are used interchangeably, and while they both share a goal of growing a business, their processes are different. Business accelerators are for businesses at any stage of their lifespan, not just startups. While a business incubator program tries to define a business's ideas and plans, a business accelerator operates within a specific timeframe to deliver a set of goals. Business incubator programs typically last a couple of years, while business accelerator programs last only several months.

Pros of business incubators

Business incubators can be beneficial for startups in many different ways. Here are some of the advantages you can expect:

• Free/low-cost workspace . Incubator programs typically offer a free or reduced rent for a working space, saving you that money as you begin to grow your business.
• Access to benefits . The reason you apply to a business incubator program is the many benefits they offer you including mentorship, capital, office space, networking and development programs — all of which are hard to obtain in one place outside of these programs.
• Structured environment . There is no right way to start a business, nor is there an exact step-by-step process. When you're in a business incubator program, you'll be devalued and groomed by experienced business development professionals who have seen through the growth of many different types of businesses. Instead of feeling confused as to what the next right step is, they'll guide you and keep you focused on the right ways to grow.

[Read: 5 Crowdfunding Sites to Fund Your Startup ]

Cons of business incubators

While there are great advantages to business incubators, there are some negative side effects to consider.

• Competitive application process . Because of the opportunities they grant their participants, business incubators have an incredibly high degree of selectivity, especially the ones with good reputations. You may have to apply to many programs before you even hear back from one.
• Rigid schedule . An incubator program requires strict attendance and attention, all on top of the demands of running a new business or even working a full-time job while starting a new business. Some people just don’t have all the hours in a day to get it done.
• Long duration. As the name implies, incubators are not fast-paced programs, especially compared to accelerator programs. An incubator program can last a couple years to fully develop a business idea or plan.

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Rewiring business incubators for success.

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Heidi Davidson is the Co-Founder of  Galvanize Worldwide , the world’s largest distributed network of marketing and communications experts.

The number of business incubators created to support startup entities has grown over the years, and I can see why: The National Business Incubator Association told Business News Daily that 87% of incubator-supported startups survive after five years. That's nearly double the success rate of startups that are on their own. Furthermore, 84% of incubated startups stay in the same community as the incubator, which is an appealing proposition for communities trying to grow their business innovation or drive economic development. 

However, many incubators struggle to remain competitive and understand how they can attract, retain and graduate the best and brightest startups. Over the past few years, I have been conducting doctoral research with Dr. Noushi Rahman, professor of management at the Pace University Lubin School of Business, on business incubators, and I have compiled the following list on how I believe incubators can rewire their practices for the greatest startup success.  

1. Selection Shifts

Incubators routinely select startups based on their idea. They weigh whether the idea has merit and whether they have enough expertise to support the startup’s idea. While these factors are important, they're not enough. I recommend considering two additional components of evaluation: engagement level and founder characteristics.

• Engagement: Because startups are often selected based primarily on their idea, many incubators soon learn the founder has a full-time job or is generally not available for critical components of the incubator’s programming. In order to succeed, incubators should make sure the founder has the ability to stay focused, engaged and committed to the process. In fact, this level of engagement is so important that I would recommend shorter incubation periods (e.g., four months vs. the traditional six to nine months) in order to ensure engagement levels can be sustained. 

• Characteristics: It’s not enough to have a great idea and engagement from founders if the founders themselves won’t allow for participation and the application of their newly learned knowledge to their startup. Assessing the "Big Five" personality traits — openness, conscientiousness, extraversion, agreeableness and neuroticism — can give you insight into a founder's ability to be successful in an incubator setting. 

The first trait to look for in founders is the presence of openness to new experiences, intellectual curiosity and adventure. The second is the presence of conscientiousness and their ability to control goal-oriented behavior and stay organized, dependable and self-disciplined. Be on the lookout for startup founders with a great idea, high engagement availability and high levels of openness and conscientiousness because they might just be your secret to success.

2. Programming Potential

The success of startups within an incubator setting used to be about the appeal of the physical space, free breakfast and lunch, free access to tech and internal tech support. This is no longer enough. Now, incubators should be spending their time and budget making sure they have compelling programming.

While your business incubator should continue to have training programs across leadership, finance, legal, marketing, sales, product design, etc., the most important component of your programming roster should be the quality and number of network services and network events offered. These events can bring startup founders together with mentors, customers, advisors, potential investors and more. From my perspective, those incubators with better networking events and services have the potential to generate better results from their startups.

3. Incubator Manager Mandate

Great selection criteria and programming need to be coupled with a dedicated support resource for the startups within the incubator. Far too often, I've seen that no incubator manager exists at all or only a part-time incubator manager is present. But I believe cutting back on the incubator manager role or having a dual-purpose incubator manager and reception desk administrator gives you efficiency at the cost of effectiveness.

The incubator manager role is a critical component to overall incubator and startup success. Serving as the incubator operator, as well as a mentor and advisor to the startups, is critical. The incubator manager should be monitoring and setting expectations for participation, reporting outcomes for the startups and intervening when necessary. 

4. Culture Configurations

In the incubator setting, I've seen two types of incubator culture: competitive and collaborative. In a competitive setting, startups compete for advisory time, resources and financial rewards through pitch competitions. In a collaborative setting, the cohort is tightly bonded with group learning and support, there's brainstorming and they share resources and leads; individuals are generally supportive of one another.

I believe a combination approach to incubator culture is the most effective. For example, you can design a competitive framework for startups to participate in programming events, as this could help fuel critical participation. Then, you can adjust to a collaborative framework that creates a supportive environment for the application of programming-specific learning in the incubator.

Finally, the founders themselves should assess the cultural environment at the incubator before joining to understand if they can be successful there.

5. Measurement

I've found the way incubators have been measured over time has changed. Incubators used to be measured in terms of their occupancy capacity, the number of startups in their cohorts and the number of startups that graduated. 

With fierce competition among incubators to attract the best startups, this is no longer adequate. Instead, I believe incubators should look to measure startup participation in the events and programming provided, number of jobs created, increases in revenue, number of sales completed (or clients), outside investments received, whether the business plan was advanced, overall satisfaction with the incubation experience and the fundamental metrics of good incubation processes. 

It’s an extraordinary time for startup innovation, and the business incubator model can be effective at cultivating successful innovation. With increased scrutiny and a higher number of options for startups, incubators must keep innovating to ensure they’re staying competitive and creating an operating model that drives the greatest startup success.

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What is a startup incubator?

If you own a small business, a new startup, or a company that needs a boost, consider looking into the variety of startup incubator options out there. A business incubator is a program designed to bring a collaborative atmosphere to small businesses. An incubator helps small businesses figure out the right answers to common startup questions.

The majority of startup incubators are nonprofits, and a large number of these are associated with business schools or university business programs. In addition, civic groups, governments, and entrepreneurs who have been successful have created business incubators.

The incubation process

When you’re considering working with a business incubator program, keep in mind that you need to find the right incubator for your company. You will need to apply to become part of the incubator program. There are no set requirements, and every startup incubator may require different things from your company, such as a working business plan or feasible ideas.

Once you are accepted into an incubation program, you’ll quickly find that you have a variety of services available to you. Many incubators offer shared administration and office space . Help with the physical space your company uses is an important part of the growth of your company.

The amount of time your company is a part of the incubation process varies and depends on several aspects. First, the incubator program you work with may require a set time commitment. In some cases this is a minimum time, while other programs have a maximum length. Another factor is your business expertise and the type of business you are building. Businesses that require more research or a longer production time generally are in incubation programs longer than fast production- or service-based businesses.

Finding an incubator

When you’re considering working with a startup incubator to help grow your business, there are several places to look. Talk to the administration or professors at local colleges and universities. If they do not currently have an incubation program, it is something they may be working toward. Keep in mind that to become a member of an educational institution incubation program, you may need to be currently or previously enrolled in the school. This is not always the case, but it is an important consideration.

Talk to other business owners in the area. If you know local entrepreneurs, talk to them about networking with others who may be part of, or even run, startup incubators. Having a good network is certainly not necessary to finding and working with a business incubator, but it can help if you’re having trouble.

Don’t forget to check online for a large variety of incubators. Some will be localized, while others are national or even global. In addition, some incubators provide locations for you to visit, work through, and get mentorship, while others are solely online, and only offer their services to startups through the internet. It’s important to decide what you’re comfortable with and how you would like to interact with your incubator.

If you’re having trouble finding an incubator or want to look into several incubators at once, check out the state directories and search engine available through the National Business Incubation Association. Another option for finding local programs is to visit your local Small Business Association office.

Get ready to apply

Before you apply to work with a business incubator, you need to make sure that your business is at the right development stage. While it’s beneficial to find an incubator early in your business, there are a few steps you should take first.

Make sure you do your research on the different incubators you find. Not all incubators are the same, and they certainly don’t offer the same services and options. Find an incubator that works within your chosen industry. Learn more about what your chosen incubators offer in terms of services and physical resources. Is there a cost to being involved with the program? Does the incubator require you to relocate? It’s also important to make sure that you understand the requirements you’ll have, such as trainings, seminars, and curriculum you’ll need to go through to be an active part of the program.

Along with your research on the incubator, take some time to check in with alumni. Consider getting in contact with other companies that have worked with the incubators you’re interested in to find out the specifics of what they did while in the program.

Get your team onboard. While it’s possible to go through an incubator program alone, you are less likely to get chosen for one of these programs if you don’t have a strong team. Your team needs to work well together and be able to show this to the incubator panel. In some cases, incubators may take a strong team over a strong idea, since the people you have in place are generally more important than the ideas of the company you want to form.

Don’t forget to prepare your pitch. Before you even apply for an incubator program, you need to make sure you know what you’re going to say and how you will tailor it to each program.

Business incubator

There are a number of services and help that a business incubator can help with. As you’re building your business, consider getting help from a startup incubator when you are hindered by the business aspects below.

Have you ever found yourself getting stuck on the basics? This is one of the many things that a startup incubator can help you with. Whether it’s simply creating your business plan or understanding everything you’ll need for your company, your incubator allows you to touch base on the basics of your business.

Another huge benefit of working with a startup incubator is that you’re able to expand your networking opportunities. Incubators frequently get startups and established businesses together. This helps ensure that companies that need each other are able to easily work together. As you’re working with an incubator, you may be invited to business get-togethers, parties, and outings. The more of these that you go to, the more people and businesses you’re able to network with to help grow your business.

Financial assistance

In some cases, your startup incubator will also be a financial help for you. Incubators may become investors, or introduce you to possible investors. They will work with you to help you understand the accounting and financial management your company needs to succeed in your chosen field. On top of this, working with a startup incubator is a great way to get access to loan funds, bank loans, and guarantee programs that you otherwise may not have access to. In some cases these incubators may even offer grants to help keep your business afloat.

Depending on the field your business falls under, you’ll likely have a variety of compliance and regulations you need to adhere to. However, navigating these can get confusing and frustrating. In addition, knowing everything you need to comply with as a small business is difficult. The startup incubator you work with can help you get through all the paperwork and problems you may encounter when trying to comply with the regulations. When you work with an incubator that is specific to your field, you can be comfortable with their knowledge of compliance regulations.

Presentations

Are you putting together a presentation and need a little help? Reach out to your startup incubator for tips, tricks, help, and a pre-presentation audience. Mentors will help you tailor your presentation to the company, investor, or whoever else you’re presenting to. Tailored presentations help you land the business you need to grow and keep your business going. When you work with an incubator on your presentations, you’re better prepared for your next meeting.

Higher education resources

Since many incubators are run through higher education programs and schools, frequently you can find higher education resources through your incubator. These resources can vary, and may include the option to access seminars, find employees through the business program, and more.

Incubator programs are a great asset to small businesses and new startups around the world. Whether you’re looking for help with the physical office space your company needs, mentorship, or more, a startup incubator can help elevate your company to greater heights.

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