Business Incubator

Q: What is the connection between business incubators and startups?

Incubators tend to get involved with startups as the new company starts to formulate their business plan. When they are ready to move from the ideas to the growth stage.

Q: What is an example of a business incubator?

Techstars USA is one of the most well known.

Q: What is the difference between a business incubator and an accelerator?

Incubators tend to get involved with startups earlier in the ideas stage. Whereas accelerators are usually bought in once the new company has a product thought to be viable for the market. As their name suggest they work to accelerate growth.

What is a business incubator?

A business incubator is a company dedicated to helping new startups, SMBs and other entrepreneurial ventures grow and evolve into successful entities of their own. They do this through through providing numerous forms of support, from office space to capital, and from mentorship to financial consulting. Each business incubator offers a slightly different selection of these services to anyone starting this type of a business.

Business incubator offerings

Professional development ‘nutrients’ are provided by the business incubator to those starting a business, in the form of resources and advice new ventures often need.

These can include the following:

Guidance from experts and mentors in their industry
Training programs (covering everything from drafting business and marketing plans to the how-to of operations)
Help with starting a business website
Investor funding opportunities and help with raising money for a business
General office necessities like administrative services and equipment

Amount of time ventures stay at business incubators

Companies usually stay in an incubator for a maximum of two years. This time is considered the trial period for their business, in order to test out if their idea is sustainable and profitable within the market. This timing distinguishes business incubators from business accelerators, which are geared towards fast-track launches.

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Capital Commitment

The cost of using a business incubator

The purpose of business incubators is to offer their services at a very fair, discounted price in comparison to the market value. Sometimes that comes in the form of a fee, while others take an equity stake (or percentage of ownership) in the new venture.

Business incubators are able to offer these low prices because they are mostly sponsored by more developed business organizations such as education-based colleges and universities, financial or investment ventures, and government entities.

Types of business incubators

Some business incubators serve the general public and cater to a wide range of developmental needs.

Others choose to specialize in certain industries in order to help new companies grow and foster together based on common goals and values. Doing so enables these particular business incubators to provide a more focused set of resources.

Examples include:

Cryptocurrency
Food technology
Retail and fashion
Environment-focused ventures

How to find a business incubator in your area

To find a business incubator in your area, check out the International Business Innovation Association (InBIA), which provides the largest network of worldwide entrepreneurial support. On their website, you’ll find a search engine and member directory for you to browse. In addition to this, you can also locate business incubators by reaching out to local economic development foundations or government agencies to guide you in the right direction.

You can also check out other types of funding for your business, from crowdfunding to loans.

FAQ (Frequently asked questions)

What is the main role of business incubators?

Essentially it is to help new, or startup companies get started as a business. They aim to nurture them into a potentially successful business venture. Support can come in many forms - with help for funding, helping to raise capital, office space, the provision of equipment and resources, as well as advice.