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?
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.
Incubators can be sponsored by different types of organizations including venture funds or private companies, municipal economic development organizations, and even colleges or universities.
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:
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.
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.
An incubator should provide diverse benefits to startup entrepreneurs. These benefits can include:
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.”
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.
Helping new companies in the Pacific Northwest stack the deck in their favor.
Focused on startups with revenue or pilots ready to scale in the areas of healthtech, securetech, and urbantech.
“Europe’s seed fund” invests in founders who attack large, global markets and solve real problems using technology.
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.
For founders whose revenue comes from enterprises, Alchemist offers funding, access to marquee customers, and highly rated mentors.
Aims to help technology entrepreneurs grow their startups into successful companies. They like to invest early.
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.
A three-month program helping companies gain traction through mentorship, rapid iteration, and fundraising preparation.
They’ll help you find customers, unite founders, and build your product. You might also receive funding from them.
Mentor immersion, business acceleration, and finance and demo day preparation -- all based in Chicago.
A Texas-based incubator that introduces startups to investors, employees, mentors, and customers.
A University of Illinois incubator focusing on biotechnology, chemical sciences, software development, and materials sciences.
With programs based in NYC and San Francisco, AngelPad spends three months working intensely with a small number of companies.
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.