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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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Oct 3, 2023

Startup Incubator

Go-To-Market

If you’re in the process of launching a startup, you’ve probably thought about applying for a startup incubator. In this guide, we cover all the basics: what they are, what they cost, what the requirements are and so much more. We also cover how they compare to other startup resources, such as accelerators, and we provide an overview of the top startup incubators. Finally, we provide tips on how to select the right incubator for you—let’s dive in!

What is a startup incubator?

A startup incubator, also known as a ‘business incubator’, is a program that provides resources and support to new small businesses and first-time founders. Incubators typically provide access to mentorship, discounted technology, physical workspaces, and networking opportunities. It is designed to help startups test their ideas, hone their business plans, and secure their first customers—which is helpful for getting a new initiative off the ground and securing funding from venture capitalists down the line.

How do startup incubators work?

Startup incubators typically have an application process that entrepreneurs must complete to be considered. Once accepted, entrepreneurs are typically required to participate in a program that lasts anywhere from a few months to a year. During said time, founders are provided with a ton of resources including mentorship, office space, and networking opportunities to help hone their business plan and grow their business. At the end of the program, entrepreneurs present their businesses to potential investors to secure funding.

What are the requirements to get into a startup incubator?

The requirements to get into a startup incubator vary from program to program. Most incubators require founders to have an idea for a startup, a business plan, and a team of at least two people. In addition, some incubators also require that entrepreneurs meet a minimum funding threshold before applying. Outside of the basic requirements, some incubators focus on specific niches, like med tech startups or health tech startups, some have specific requirements for the types of businesses they accept, and some only focus on startups in a particular area, like Silicon Valley.

Why do founders use startup incubators?

Startup incubators are a great way for first-time founders and early-stage startups to get their businesses off the ground quickly and find product market fit. As mentioned above, they provide a ton of key resources to ensure the highest possibility of success. In addition to the resources, incubators may also provide founders with introductions to mentors, investors, and industry experts to help scale their ideas. Finally, startup incubators typically provide entrepreneurs with exposure to investors during the final phase of the program: demo day.

What are the types of startup incubators?

Startup incubators come in a variety of shapes and sizes. They can either be for-profit or non-profit, and they can be focused on specific industries or they can be open to all kinds of businesses. Here are some of the common types of startup incubators:

• For-profit incubators : These incubators make money by taking equity in the businesses they help launch.
• Non-profit incubators : These incubators are typically funded by grants or donations, and they don’t take equity in the businesses they help launch.
• Industry-specific incubators : These incubators are focused on a specific industry such as healthcare, technology, or fashion.
• Geographic incubators : These incubators are focused on a specific geographic area, and they typically offer access to local resources and networking opportunities.

What are the benefits of going through a startup incubator?

There are many benefits to going through a startup incubator. Here are some of the top benefits:

• Access to resources : Incubators typically provide access to resources including physical workspace, discounted software, and potentially even raw materials.
• Guidance and support : Incubators typically provide founders with the guidance and support they need to launch their businesses through introductions to mentors and industry experts.
• Exposure : Incubators typically provide founders with the opportunity to gain exposure to investors to potentially secure funding.

What are the drawbacks of going through a startup incubator?

While there are many benefits to going through a startup incubator, there are a few drawbacks to consider, here are some of the most common:

• Equity : Some incubators charge a percentage of equity in exchange for the resources, guidance, and exposure they provide.
• Time commitment : Incubators typically require founders to participate in a program that lasts anywhere from a few months to a year, which may not work for everyone.
• Restrictions : Some incubators have restrictions such as specific industries or geographic areas they focus on.

What is the difference between startup incubators and startup accelerators?

Startup incubators and accelerator programs are similar in that they both provide resources and support to entrepreneurs. However, there are some key differences between the two.

Startup incubators typically have a longer program that lasts anywhere from a few months to a year. They provide access to resources such as mentorship, workspaces, and networking opportunities. They also provide guidance and support to entrepreneurs to help them develop their business ideas and launch their startups.

Startup accelerators, like YCombinator or 500 startups , on the other hand, are typically shorter programs that last anywhere from a few weeks to a few months. They provide access to similar resources such as mentorship, funding, workspace, and networking opportunities, but they are designed to help founders scale their startups, not launch them, and help prepare them to take on seed funding or venture capital.

What does participating in a startup incubator cost?

The cost of participating in a startup incubator varies depending on the program. Some incubators are free, while others may charge fees or require you to give them equity.

Do startup incubators provide capital to startups?

Some incubators provide access to funding and grants to help startups get off the ground, others do not. It depends on how large the incubator is and what type of incubator it is (for-profit vs not-for-profit).

What are the top startup incubators in the United States?

There are many great startup incubators out there, but some of the top ones include Idealab, The Batchery , Upward , SteelBridge Laboratories , and Invenshure .

• Idealab is a technological incubator out of Pasadena, CA that gives start-ups the resources they need to launch new products and services quickly. 
• The Batchery is a global incubator situated in Berkeley, CA that focuses on seed-stage firms that are primed for rapid growth.
• Upward is a global incubator based out of New York City that is dedicated to reviving second-tier towns through innovation.
• SteelBridge Laboratories is an incubator based out of Pittsburg, PA for FinTech startups.
• Invenshure is a medical device and imaging incubator based out of Minneapolis, MN that invests in medicines, developing platform technologies, and medical device and imaging startups.

What to look for and how to select a startup incubator?

When selecting a startup incubator, it’s important to do your research and talk to other founders who have graduated from the program. Here are some of the things to look for when deciding between multiple startup incubators:

• Resources : What resources does the incubator provide? Does it provide access to mentors, investors, and industry experts? What about workspace, funding, and other resources?
• Equity : Does the incubator take equity in the businesses they help launch? Am I okay with giving up equity in my business in exchange for the services it provides?
• Time commitment : What is the length of the program? Am I committed to putting in the time required to make the program successful?
• Reviews : What did other founders say about the program, did they think it was worth it? What are some of the critiques other founders had and are you okay with that?
• Track record : What is the historical performance of the companies that have graduated from the program? Are there only one or two stand-out successes or many successes?

Final thoughts on startup incubators

Startup incubators are a great way for founders to initially get their startups off the ground quickly. They provide access to a ton of resources which can be invaluable to founders that are strapped for cash. Before deciding to participate in an incubator, make sure to do your research so you understand exactly what is required of you to graduate. Also, make sure to talk to other founders to ensure the program fits your needs and what you are looking to get out of it.

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How to Apply and Get Accepted to a Startup Incubator

Learn to define your goals, create a compelling application, and secure your place in a supportive ecosystem that can accelerate your entrepreneurial journey.

In the fast-paced and competitive realm of startups, securing a coveted spot in a startup incubator can be a game-changer. It’s like finding the treasure map to entrepreneurial success. In this comprehensive guide, we’ll take you on a journey on  how to apply for startup incubator , unpacking the entire process, from understanding the profound benefits of joining a startup incubator to mastering the art of crafting an application that stands head and shoulders above the rest. Moreover, we’ll introduce you to  PitchBob , an invaluable resource that can help you navigate the intricacies of the application process with finesse.

A startup incubator, often simply referred to as an "incubator," is more than just a place where startups are nurtured. It’s a comprehensive program designed to offer invaluable support to early-stage startups, turning them into thriving businesses. The incubator provides a structured and supportive environment that empowers entrepreneurs with the tools they need to succeed.

It’s a program designed to offer these fledgling ventures the guidance, resources, and collaborative ecosystem they need to evolve and thrive. Here are the core benefits:

• Mentorship: You gain access to experienced entrepreneurs and industry experts who selflessly share their wisdom and insights.
• Resources: The incubator provides crucial resources, including office space, financial support, and invaluable networking opportunities.
• Collaborative Environment: It’s an environment where you rub shoulders with like-minded entrepreneurs, offering fertile ground for exchanging ideas, experiences, and even partnerships.

Why Join a Startup Incubator?

Timing is everything in the world of startups, and being part of a startup incubator can make or break your entrepreneurial journey. The earlier you secure a spot, the better your chances of success. The numbers don’t lie; startup failures are alarmingly high. In fact, according to According to  Exploding Topics , a reputable source for startup insights and trends, the startup landscape is indeed a challenging terrain. Let’s explore some key statistics:

90% of Startups Fail: It’s an alarming statistic, but one that we cannot ignore. Approximately 90% of startups ultimately do not survive the tumultuous journey to success. This demonstrates just how crucial it is for entrepreneurs to seek the support and guidance of incubators.

Top Reasons for Failure: The statistics also shed light on the primary causes behind these failures. Among the top reasons are a lack of market need for the product or service, running out of capital, and not having the right team in place. These are challenges that startup incubators are specifically designed to help you address.

The Role of Incubators: The statistics reveal that startups that are a part of incubators have a significantly higher survival rate. The structured support, mentorship, and resources provided by incubators contribute to this enhanced chance of success.

The Power of Timing: 22% of failed businesses didn’t implement the correct marketing strategies. Startups that join an incubator in their early stages tend to perform better and have a higher likelihood of success. This emphasizes the importance of applying for an incubator as early as possible.

Types of Startup Incubators

Now that we have a comprehensive understanding of what a startup incubator is and the compelling benefits it offers, let’s explore the rich and diverse tapestry of incubators available to budding entrepreneurs. Each type of incubator is meticulously designed to cater to specific entrepreneurial needs, and this diversity is an important aspect of the startup ecosystem.

Industry-Specific Incubators

Industry-specific incubators are precisely what the name suggests — they are incubators that are laser-focused on startups within a particular sector or niche. These specialized incubators provide targeted support and expertise tailored to the unique challenges and opportunities within that specific industry. Whether you’re venturing into the world of biotechnology, artificial intelligence, e-commerce, or any other field, there’s likely an industry-specific incubator designed to meet your needs.

University Incubators

Nestled within the academic realm, university incubators offer a unique blend of resources and opportunities. These incubators are typically located within educational institutions, allowing startups to tap into the vast knowledge and research capabilities of universities. University incubators offer an array of benefits, including access to cutting-edge research, collaboration with academics and researchers, and, often, a pool of potential talent.

Corporate Incubators

Corporate incubators are an interesting facet of the startup landscape. These are incubators initiated and run by established companies, often industry giants. The primary motivation behind corporate incubators is to identify innovative ideas that align with their core business and to invest in or collaborate with these startups. By joining a corporate incubator, startups can access a treasure trove of resources and support, including funding, infrastructure, and industry expertise.

How Can You Apply for a Startup Incubator

With a clear understanding of what startup incubators are and the benefits they offer, let’s take a deep dive into the meticulous art of preparing and submitting your application.

Step 1: Defining Your Goals

Aimlessly wandering into the application process is like setting sail without a destination. To align your application with the incubator’s mission, you must first define your goals and objectives. Why do you want to be part of an incubator, and what do you hope to achieve? This clarity not only guides your application but also demonstrates your commitment and purpose.

Step 2: The Art of Researching Incubators

In your quest to find the ideal incubator, research is your most potent weapon. Explore the wide array of startup incubators available in the market. Take into account factors like location, industry focus, program duration, and the specific resources they offer. Ensure that the incubator aligns harmoniously with your startup’s objectives and values.

Step 3: Crafting a Killer Business Plan

Now, let’s get down to the nitty-gritty — your business plan. Your business plan is the cornerstone of your application. A well-structured and comprehensive business plan is essential. It should leave no room for doubt regarding your business concept, your target market, your revenue model, and the growth strategy you intend to employ. This plan should paint a vivid picture of your startup’s journey and potential. You can use PitchBob’s AI Business Plan Generator tool.

Step 4: The Art of Developing a Pitch Deck

A  pitch deck is your visual narrative — a compelling story that mirrors the essence of your startup. It is your chance to highlight your startup’s value proposition, and it must be nothing short of captivating. A well-crafted pitch deck is not just an accessory; it’s a pivotal piece of your application puzzle.

Step 5: The Application Process Unveiled

With your goals, research, business plan, and pitch deck in hand, it’s time to fill out the application form. This step demands meticulous attention to detail. Provide all requested information with precision, conciseness, and clarity. Ensure that your responses reflect your passion, vision, and commitment.

Step 6: Crafting a Convincing Personal Statement

Your personal statement is your opportunity to present the human side of your entrepreneurial journey. It should be a testament to your unwavering passion for your startup and your unwavering commitment to its success. Use this space to share your journey, your motivations, and your personal investment in your vision.

Step 7: Gathering References

References can serve as the golden ticket that seals the deal. Collect references that genuinely vouch for your skills, character, and the value of your startup idea. Strong references can significantly boost the credibility of your application.

Step 8: The Fine Art of Pitch Practice

A winning pitch is not born; it is made. Practice your pitch relentlessly until it gleams with confidence, clarity, and conviction. The ability to articulate your vision effectively is paramount during the presentation.

Step 9: Be Prepared for Interviews

If your application shines and you find yourself on the shortlist, be prepared for interviews. Anticipate questions about your startup, your aspirations, and your ability to collaborate. A well-prepared interview can be the cherry on top of your application.

Securing Your Place at the Table: Strategies for a Winning Application

All startup ideas are not created equal, and it’s imperative to understand the kind of concepts that incubators seek:

• Groundbreaking Concepts: These are the transformative ideas that have the potential to revolutionize entire industries upon market introduction. They are the diamonds in the rough.
• Progressive Concepts: Progressive concepts involve enhancements to existing products or services, ensuring they reach the next level of excellence. They represent the next step in evolutionary innovation.
• Conventional Concepts: While conventional concepts might have profit potential, they often don’t align with what incubators typically seek. Incubators primarily gravitate toward groundbreaking and progressive ideas, as they promise substantial market disruption and innovation.

How PitchBob Can Be Your Navigator on This Journey

At  PitchBob , we empathize with the challenges you face as a startup entrepreneur, and we’re here to provide you with the tools and support on  how to apply for startup incubator . Generate your pitch deck with ai  as our aim is to ensure that you shine brightly in the fiercely competitive world of startup incubators.

In conclusion, the world of startup incubators offers a rich tapestry of options, each finely tuned to address the specific needs and aspirations of entrepreneurs. Industry-specific incubators provide a deep dive into the intricacies of particular sectors, offering specialized guidance and connections. University incubators bridge the gap between academia and entrepreneurship, harnessing the intellectual power of educational institutions to fuel innovation. Meanwhile, corporate incubators, backed by industry leaders, bring substantial resources and investment opportunities to the table. Whether you’re driven by niche expertise, academic collaboration, or corporate support, the diverse incubator landscape promises a supportive ecosystem for your entrepreneurial dreams.

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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.

Featured image source: IconScout

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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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The Ultimate Startup Incubator Guide

The Ultimate Startup Incubator Guide: In this post—the first in our series on entrepreneurship—we explore the complex and often puzzling world of incubators. As we’ll see, not all incubators are created equal. This is vital to understand ahead of time. After reading this post, you’ll know:  

• Exactly what an incubator is  

• The benefits of graduating from an incubator  

• The 10 main pitfalls of incubators to watch out for

• What to look for in an incubator  

• How to vet an incubator  

With this guide in hand, you can navigate the intricate inner workings of the business incubator scene with ease. Ready? Let’s go.  

What is An Incubator?

Incubators provide mentorship, networking and funding to entrepreneurs. Don’t confuse an incubator with an accelerator.  

There are some important differences.  

• Incubator. An incubator provides support to entrepreneurs in the beginning stages of their venture. An incubator can help an entrepreneur turn an idea into a viable business.  

• Accelerator . An accelerator is all about helping an existing business grow. To get the attention of an accelerator, you need to have your business model in place. You need to show via a detailed business plan how you intend to turn a profit.

Incubators have become extremely popular since the early 2000s. But the history of startup incubation goes all the way back to the 1950s, in New York. In the Big Apple, established businesses created programs to provide startups with affordable office space and other shared resources.  

The concept evolved in the ‘80s with the addition of focused mentorship. In the mid-2000s, the concept saw another quantum leap with the advent of the Internet. Incubators like 500 Startups, Y Combinator and Techstars became all the rage. Gaining entry to any of these became the thing – especially for tech startups .

In this post, we’re focusing on the strengths and weakness of incubators. But much of what you’ll learn about incubators applies to accelerators and vice versa.  

Let’s take a deeper look at the differences before diving into potential pitfalls.

Application Process

As we’ll discover, incubators are quite choosy, for good reason. These programs invest significant resources into developing local startups. The most effective use of resources comes about as a result of a stringent application process. This helps filter entrepreneurs who aren’t serious. It also eliminates entrepreneurs who lack the work ethic required for startup success .  

However, because an incubator has less interest in rapid growth, they’re more likely to value concept over flash.  

Accelerators use a much more stringent and formal application process. An accelerator wants to see explosive growth. Consequently, they often provide funding in exchange for equity . They need to see that you have a winner on your hands before they’ll give you time of day.

Many incubators are open-ended, while some have finite ‘graduation’ periods. There is a strong focus on the longevity and survival of the startup. In other words, they’re less likely to be concerned about rapid growth. Accelerators , on the other hand, operate within a set time frame.  

Environment

Both incubators and accelerators offer an environment of collaboration, support and mentorship. The key difference is that an accelerator may provide funds. With these funds, you can retain your own consultants and other experts should you choose to do so.  

The goal of an incubator is to provide you with that mentorship so you don’t have to look for it elsewhere.  

Both incubators and accelerators may provide offices in which you can work and collaborate.  

Most incubators do not provide investment capital. But nor are they likely to demand equity. An accelerator, on the other hand, may provide investment capital in exchange for a chunk of equity.

Today, many business owners see the incubator as the fast path to success. Incubation allows you to retain full ownership—usually.

But more important is the fact that an incubator can make you more likely to succeed. The reality is, over 90% of startups fail right after their first round of funding .  

The goal of any incubator worth mentioning is to improve that figure.  

The Many Pitfalls of Incubators

There’s no doubt an incubator can catapult you along the path to success. But there are downsides you must be aware of before seeking entry. If you don’t consider these points, you may lose money, time or both.  

#1 Location  

For many established entrepreneurs, relocation is the number one reason they wouldn’t do another incubator program.  

You’re most likely to find an incubator in a large city.  

In Europe, for instance, roughly half of all incubator programs are based in an urban setting. In the U.S., 45 percent of such programs are located in big cities. In the United Kingdom, roughly two-thirds of all programs are in London.  

Granted, the Internet makes it possible to telecommute and collaborate. But consider the situation in the UK as an example. If two-thirds of programs are in London, only 6 percent of the population can take advantage of a local incubator.  

Many people who get into an incubator program have to relocate. Traveling adds complexity and cost to the equation. If you decide to go to the big city to enter a program, you may be geographically isolated from the rest of your team. Yet if your entire team goes with you, you’ll all be isolated from friends and family. This could mean that you’re isolated from your target market, too. Not ideal.  

The entrepreneurial life is already taxing enough on relationships.  

Of course, there can be upsides, too. Some areas, such as silicon valley, foster a strong culture of innovation and collaboration. That can pay dividends.  

In the end, it’s up to you to decide whether relocating is viable or even desirable.  

In order to accept entrance into the 500 Startups accelerator program, Agu De Marco, founder of Wideo, had to move to Silicon Valley from Argentina. Today, Wideo is a popular video creation platform.  

The CEO of YouGift, Efrem Weiss, relocated his entire startup team from New York City to upstate New York. Things didn’t work out, and Weiss moved back within two weeks. Imagine if the move had been cross country instead.  

Zoli Honig was invited to 500 Startups by its founder, Dave McClure. There was just one condition: he would have to relocate. Honig had a wife and young child to consider. They chose to make the move, and in this case, it worked out. But it doesn’t always work out that way. Carefully consider all the factors so you can avoid potential head and heart ache.

# 2 Fees & Costs

While incubators typically don’t demand equity, they may charge fees. Always read the fine print and ask about fees up front. In the U.S., for instance, an incubator may cost hundreds to thousands of dollars per month. If you’re looking for a free incubator, you’re likely out of luck. Your best bet is to find a local mentor who is willing to take you on.  

Here’s a term you should become familiar with: omnibus charge.  

An omnibus charge is a fee that covers things like rent, utilities and maintenance. If you expect to gain access to facilities owned by an incubator program, expect to pay an omnibus charge, or fee.  

While incubators are a bit more laid back than accelerators, you should still have a fleshed out business plan. You may need to show a prototype, too. This can result in unanticipated costs or fees.  

Worse, some programs cut you loose with no understanding of how to keep the funding train going for yourself. A good incubator program will help you differentiate yourself by demonstrating that:  

• Your valuation is accurate and is not too high  

• That you have and can keep traction  

• That there isn’t too much noise in your segment and that you stand out

#3 Acceptance Rate

As mentioned, incubator programs are exclusive – even in the Fintech world or Blockchain landscape . Most programs have very low acceptance rates—between one and five percent. There are only 9,000 incubators in the world, give or take a few. But there are around 280 early-stage entrepreneurs. Assume that each incubator takes on 20 startups at a time. Demand exceeds supply.

Not all incubators are created equal. Some are little more than a means for established businesses to collect fees. Here’s how to spot a low quality program:  

• The focus is on swag instead of product. An incubator should not be overly concerned about explosive growth. The program should not encourage you to spend a lot of money on startup branding , advertising, startup brand identity or anything else. The focus should be on getting the fundamentals down.  

• The incubator pressures you to spend more on omnibus services. An incubator shouldn’t encourage you to spend a lot of money on office space or equipment you don’t need. Your office doesn’t need to look like Google headquarters.  

• The incubator is obsessed with vanity metrics. Your incubator shouldn’t focus on app downloads per day, website visits, etc. These metrics can be important, but focusing on them too much is a red flag. It may indicate that the incubator has a cookie-cutter approach. Such an approach may not benefit your startup.  

• The incubator is unable to help you make touch decisions. Sometimes, as an entrepreneur, you have to be the bad guy. An incubator should guide you through these tough decisions, offering sage advice based in experience. Some incubators are lacking here. They can’t offer you advice because they don’t have the experience they claim to have.

#5 Management

The value of an incubator depends to a large degree on its management team. If management is lacking, everything else will suffer. This is a trickle-down effect. Bottom line: poor management means that an incubator won’t live up to its side of the bargain.  

The worst case scenario is that sub par management runs the incubator into the ground. If this happens, you’ll have to vacate the premises.  

Remember that everything exists on a bell curve. There are some exceptional incubators, and there are some horrid incubators. Most are average. But the point is to be on guard for signs of incompetence.  

Just because a program is exclusive doesn’t mean it’s worth your time.  

The best incubator managers tend to share certain traits. For instance, a good manager will ask you certain questions at your first interview, or will do so somewhere in the application process. These questions are:  

• Are you innovative?  

• Are you scalable?  

• Are you coachable?  

The first two pertain more to your product or service. But the second comes down to you. A mentor, coach or manager knows that if you aren’t willing to be coached, you’ll gain little from the incubation process. If you have all the answers and just need funding, seek acceptance into an accelerator.  

Of course, your answer to all three of these questions should be a resounding ‘yes.’ But take some time now to really think about them. Is your product actually innovative? What sets you apart? Are you really scalable? Providing numerous concrete examples will make a good first impression.  

As to the third question, expect them to want examples from you that demonstrate your willingness to learn. It’s a good idea, therefore, to seek mentorship of some kind before you try to get into an incubator. This way, you can point to this past experience and spell out how you benefited from it.  

A good incubator manager has the mentality of, You can lead a horse to water, but you can’t make him drink. Demonstrate that you’re willing to do what needs to be done.  

In a similar vein, a bad manager will try to be your friend. They’ll try to help you too much—to the point that they’re doing your work for you. This may seem like an advantage on the surface, but it isn’t. If your manager handles every issue that arises, they rob you of the opportunity to learn through first-hand experience.  

Sometimes, the best way to learn is to make mistakes.  

A good manager understands that there’s a fine line between helping an entrepreneur find their way and doing the work for them.  

In other words, your managers should teach you to fish.  

A bad manager talks—or rather, they love to hear themselves talk. A good manager listens.  

Imagine that your manager starts every meeting by rattling off the programs and services available until your eyes glaze over. That’s a red flag. Instead, what you want is someone who takes time to figure out who you are and what makes you tick.  

Finally, some managers get into mentorship from a place of ego. They long ago had their ideas validated, but now that they’re getting older and may be less relevant, they need their egos validated. These managers are best avoided, but sadly, avoidance is not always possible.

#6 Interference

Potential interference   is an issue related to management. Many incubators take a hands on approach. This is understandable since they’re offering mentorship. However, it can go a bit too far, threatening to squash the entrepreneurial spirit.  

It’s the rare incubator that offers funds in exchange for equity or a seat on the board, but it does happen. If this is in the cards, beware. These incubators assert more control over your day-to-day operation.  

This means you’ll lose some agility. But if the incubator suffers from quality issues, you may also be exposed to poor advice.  

In his book Startup Communities, Brad Feld makes the point that the startup community is made up of leaders and feeders.  

Entrepreneurs are leaders.  

Everyone else, from schools, to incubator management to government, are feeders. The role of an incubator is to provide tools, connections and encouragement. These assets allow entrepreneurs to do what they’re naturally inclined to do: lead and innovate.  

But a poorly run incubator tries to go from feeder to leader. it tries assert too much dominance over the day-to-day operations of the companies under its tutelage.  

Another gotcha to look out for is the incubator that has too little influence. These are often said to be like frat houses. There are no rules. While a laid back environment can be conducive to idea generation, it can also produce waste, and it can contribute to inefficiency. A good incubator understands that there’s a balance they must strike between structure and free flow.  

#7 Lack of Focus

Eager to prove their value, many incubators keep a full schedule. But a crowded itinerary can mean quantity over quality. Your incubator may organize training sessions, seminars, and mentoring workshops. This is a good thing, but you want to make sure that these events add value. You should come away from each event having learned something concrete.  

If possible, talk to someone in the program to find out if the events were worth their time. Remember, your focus should be your startup.

#8 May Focus on Profits & Not on Value

Not all incubators have fixed durations. But no startup can remain in a program forever. You may find that you’re ready to graduate from the program early.. But you are still valuable to the incubator. You’re paying fees, providing testimonials, etc. The incubator may want to maintain the status quo even if you’re ready to move on.

Indeed, many incubators are businesses. There may be potential conflicts of interest. If they’re a for-profit organization, they have their own profit projections to meet. Even if they’re a non-profit, they still have concrete metrics they need to hit. Assume that the incubator is answerable to someone.  

Often, these things align with your own interests. If you succeed, the incubator looks good. But an incubator may put a lot of focus on rapid growth. Recall that this is more the purview of the accelerator. But some incubators have been known to get carried away. You may find yourself in a position where you’re pressured to hit arbitrary growth goals. What if high-speed growth isn’t what’s best for your startup?

#9 You May Become Dependent

Some entrepreneurs become dependent on the structured environment of the incubator. They’re afraid to move on, so they try to stay in the program forever. It’s possible to become dependent on:  

• Your mentor  

• The incubator management team  

• Other members  

To be sure, the incubator environment promotes growth. But if you overstay your welcome, your growth will stagnate.  

Yet it’s important to know what to do once the incubation process is over. If you don’t have a clear idea of what to do from the outset, you run the risk of becoming dependent on the support that incubators provide. Here’s what to do.  

Keep In Touch

Make sure to keep in touch with everyone you met during the networking phase of the incubation process. You’ve met with investors, founders and CEOs. Don’t let all that elbow rubbing go to waste. Have a plan in place to reach out to these people as appropriate, and keep track of who you have contacted.  

If your incubator provides shared resources such as a Slack team, Facebook group or spreadsheet, use them.  

Once your incubator is over, take a bit of time off—but not too much. Use this time to reconnect with friends and family. This may not seem like the time to cool your heels, but recharging your batteries at this stage is important. At the same time, reach out to fellow entrepreneurs in your community. Share what you’ve learned. Compare notes. You may get ideas or figure out ways to optimize your existing processes.  

But stay focused on your project. Remember the old adage: you’re the average of the five people you spend the most time with.  

Keep up the Pressure

After the reconnect phase, jump back into things. This will ensure that you build momentum. Consider everything you just learned from your incubator program and see how you can apply it to your operation. What optimizations can you make? Really sit down and think about this.

#10 A Cookie-Cutter Approach

Many incubator programs have a pre-defined structure. This may not be ideal. After all, your startup is unique. Many mentors tend to lump startups into broad categories. They often have a set strategy for each. This isn’t the best approach. A mobile dog groomer’s strategy will differ from that of a brick & mortar operation. They have different costs and may have different short-term goals.

Your incubator should value your startup for its unique attributes. It should help you come up with a tailored strategy that plays to your strengths. When evaluating an incubator, get as much info as you can on the program and structure. Make sure you won’t be spending time or money doing things that won’t benefit you.

What to Look for in an Incubator

So you still think an incubator may be a good fit for your startup. That’s great! Though any incubator program can have a few rough edges, the concept is proven. All things being equal, an entrepreneur in such a program stands a better chance of success than someone on their own.  

Any incubator worth your consideration should offer all of the following:

• Mentoring. You can gain access to experts in your space, industry or market even if you are a novice startup . Mentors can offer idea validation and market analysis.  

• Tailored office space. An incubator can offer tailored workspace for you and your team. The rent tends to be lower than you’ll find elsewhere. What’s more, your landlord will understand the unique needs of a startup team.  

• Fund Raising. Most programs won’t fund you directly. But they can help with your fund raising efforts. Any quality program will have access to venture capitalists, angel investors and other sources of early funding. Once in the incubator ecosystem, you’ll find it much easier to raise funds.  

• Tech. Many incubators provide high speed Internet, servers and other tech solutions so you can focus on your startup.  

• Networking . The program should offer ample networking opportunities. This way, you can form strategic partnerships early on.  

• Training. A good program provides training by in-house personnel and outside experts. Training in taxes, legal issues and intellectual property are especially valuable.

Three Problems

In the same vein, a stellar incubator solves three problems for you .  

#1 Validates Your Ideas

One of the main benefits of these programs is that they help you quickly validate your idea without asking for a chunk of equity in exchange. A good incubator program has a long duration and is not focused on explosive growth.  

#2 Provides One-On-One Advice

You’ve probably heard that you’re the average of the five people you spend the most time with. This can prove problematic for business owners. Most people are content to work a nine to five. How, then, can an entrepreneur get advice about starting their own business from friends and family?  

An incubator should solve this problem by putting you in touch with folks who are proven successful.  

If you’re in the enviable position of being pursued by more than one incubator—hey, it happens—you may want to give preference to the organization that keeps a small client list. They may charge higher fees, but you’ll get more one-on-one time in exchange.  

#3 Bring You Out From the Cold

As mentioned, incubators should put you on the radar of angle investors and venture capitalists. But more than this, an incubator should teach you the value of networking. You should always strive to expand your network. At the end of the day, building a robust network makes you more agile.  

Considerations

There are three things you must take into account before you apply.  

#1 Curriculum

You’ll be expected to go through a specific curriculum, so make sure you can commit. Training is usually in the form of seminars or webinars. You’ll be provided with a schedule ahead of time, and you may be expected to hit a certain attendance minimum.  

#2 Your Pitch

The application process will be highly structured. But you should still be prepared to give your elevator pitch on the fly. This is good practice anyway since you’ll never know when you’ll be given the opportunity to pitch to an angel investor.   Your pitch should, in some way, demonstrate that you’re a doer. You should demonstrate an ability to execute.  

#3 What Will You Pay?

Before seeking an incubator or accelerator, decide what you’re willing to give up. If you’re given an unexpected offer, it’s easy to become flustered. At a minimum, you should decide how much of your company you are willing to give up in exchange for mentorship or funding.

How to Vet an Incubator

In this section, you’ll learn how to evaluate a given incubator program. As mentioned, not all are created equal. You should take your time when evaluating these programs as they may take several months or even years to complete.  

# 1 Location  

Each industry has its geographical center, and these centers can change over time. Know yours. Your job is to find out which incubator is best. But you must also find out which is best for you, as mentioned earlier. Don’t move to silicon valley if doing so will cost you relationships. This is the surest path to burnout or worse.  

#2 Growth of Graduates

Find a list of companies that have graduated from the program and look at their growth. The bigger your sample size, the better. But remember, it’s normal for some of these graduates to fizzle or even go out of business. That’s a reality of the market.  

When speaking to former graduates, keep in mind that their bad experience may be your ideal challenge.  

Look at the IRR—Internal Rate of Return—of the incubator. Does it produce winners? In addition, look at the quality of talent that graduates attract. Often, this can be an indicator of a maturing company’s health.  

How much capital have graduates raised? Looked at as a whole, this can provide you with a good idea of whether a program is worth your time.  

But don’t just focus on dollars and cents. If an incubator can expand your network, that can be extremely valuable.

We hope this guide has provided you a better idea of the pitfalls of the incubator. You should now be well equipped to appraise any incubation opportunity that comes your way.

If this post has helped you, would you consider giving it a share? Thanks!  

Mash Bonigala

Mash B. is the Founder & CEO of SpellBrand. Since 1998, Mash has helped conscious brands differentiate themselves and AWAKEN through Brand Strategy and Brand Identity Design. Schedule a Brand Strategy Video Call with Mash.

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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.

More on Business Model

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The 10 Key Steps to Making Your Corporate Incubator a Success

Wondering how to start an incubator, already mid-way through the process, or simply looking to enhance your set up? This article is sure to help you.

What do companies like Lufthansa, Danone, and Nike have in common?

Well, aside from being leaders in their respective fields, these companies have all invested in starting their very own business incubators and are currently reaping the benefits. Corporate incubators can help companies grow, operate more efficiently, and find disruptive solutions to traditional problems.

Sound intriguing? Keep reading! We’re about to walk you through the 10 key steps that will make your corporate incubator a success!

Let’s start things off with a little bit of background… Explore our global list of corporate ventures with over 200 examples you can sort by business model, industry, parent company and more!

Discover the 10 key decisions that shape your corporate incubator.

What is a corporate incubator.

Simply put, business incubators transform ideas into working companies.

It’s a give-and-take relationship in which:

• The corporation provides its early-stage business unit with the support and guidance it needs to develop into an independent business
• The incubator acts as a catalyst tool for the corporation to stimulate innovation and develop a pipeline of successful new ventures

This type of support can be crucial to the success of a new business.

What are the benefits of a corporate incubator?

We’ve already touched on some of the key benefits of starting your own corporate incubator, but here are a few, more specific examples:

• They’re a great way to actively involve your employees in the innovation process and build a culture of innovation.
• They help companies tap into new markets and stimulate the development of new value propositions.
• They encourage the exploration of new research directions and help companies commercialize their expertise and know-how.
• The newly acquired insights can help companies solve problems faster, more cost-effectively and at a lower risk.
• They foster a supportive environment that facilitates innovation by creating, experimenting and learning by failing.
• They provide access to new ideas, skill sets, and technologies
• They can expand a company’s strategic vision

Corporate incubators vs accelerators: What’s the difference?

Although some people use these terms interchangeably, the concepts are quite distinct from each other:

• Incubators “nurture” disruptive ideas with the aim of helping them transform into an independent company with a solid business model.
• Accelerators are the next step in the process, helping young companies expedite their growth and scale their existing business models.

Here are a few other key differences:

• Programming: Corporate incubator programs tend to be flexible and on-demand due to the rapidly changing needs of a young company that is still establishing itself. Accelerator programs are fixed and highly structured because scaling a business model is a comparatively more straightforward task.
• Duration: The “incubation” process lasts 1 to 3 years and concludes when the new company is ready to be pitched to investors or consumers. On the other hand, the “acceleration” process lasts only 3 to 6 months and ends when the company has reached its predetermined development and scaling goals.
• Return: Corporate incubators usually have full ownership of the venture, while accelerators tend to establish partnerships or arrange some sort of equity in the venture.

Now that we’ve covered the basics, let’s explore the 10 key steps that’ll help you take your corporate incubator to the next level!

10 Key Steps to Making your Corporate Incubator a Success.

Step 1: establish a clear purpose.

Start by envisioning what your end goal is, and why your company needs an incubator, e.g.:

• Are you trying to remain competitive in a changing market?
• Are you looking to change your company culture?
• Are you looking to create new revenue streams?

Once that’s done, work on figuring out what the scope of your incubator will be e.g.:

• What expertise will your incubator have?
• What knowledge and assets will you leverage to gain a competitive advantage?
• Does your plan include exploring new technologies?

Based on that, you’ll have a pretty good idea of what your incubator’s direction will be and the resources you’ll need to get started.  

Let’s look at two examples:

RBC Ventures , a thriving subsidiary of the Royal Bank of Canada, focuses mostly on exploring new markets that go beyond traditional banking. In terms of establishing a clear purpose, they went pretty specific.

Their purpose was to get 5 million people to use the products and services of RBC Ventures within a 5-year span and then convert 10% of that client base into Royal Bank of Canada clients.  

Lufthansa’s Innovation Hub is another great example. Having been set up to explore new digital business models, their main focus is to improve everyday travel through digital solutions.

Step 2: Define the range of your corporate incubator

It’s important to have a clear idea of how far you want to branch out from your core business. A good way to start is by figuring out what type of innovation you’re looking to achieve e.g.:

• Radical innovation: Disrupt the market by developing new products or services that don’t exist yet.
• Adjacent innovation: Entering a new market by leveraging your company’s existing expertise.
• Core Innovation: Optimising existing products for existing customers.

Walmart’s Nº8 , for example, focuses on radical innovation to explore new markets and change the way people shop.  

Capital One Labs from Capital One, on the other hand, focuses more on a mix of adjacent and core innovation, by developing products that improve the lives of their customers.

Step 3: Decide how to build your corporate incubator team

Once you have a good idea of what your new incubator’s product or service will be, the next step is to figure out the type of expertise you’ll need to make it a reality.

For example, do you have the knowledge-base you need within your corporation? If so, will your new business unit consist of only internal intrapreneurs?

Depending on what your new offering is, you might need to bring in experts from outside your company. If that’s the case, you’ll have to choose between building a new team with only external experts or a mix that includes people from within your corporation as well.

Google’s Area 120 , for example, is an employees-only program aimed at encouraging small teams to build innovative products.

Coca Cola’s Founders takes a different approach by collaborating solely with external entrepreneurs to come up with new business ideas and create new ventures.

Step 4: Define the potential additional activities of your corporate incubator

Find new ways to expand your portfolio by investing in and partnering up with startups that fit within the focus of your incubator e.g.:

• Startup investment: Investing in startups within the focus of the incubator.
• Mergers & acquisitions: Take over existing startups within the focus of the incubator.
• Startup acceleration: Inviting startups to join an added acceleration program.

Lufthansa Innovation Hub is renowned for actively engaging in these types of activities to help further its digital capabilities and build a more innovative culture.

Step 5: Focus on the right criteria to select your corporate venture ideas

Focusing on the right criteria will help you make well-founded decisions when refining your venture ideas later on.

Here are just a few examples of the type of criteria you should consider:

• Problem statement
• Solution fit
• Company strategy fit
• Market Validation
• Venturing Team
• Business Case  

Covering your bases early on will significantly increase your chances of success as you move through your incubator program.  

Step 6: Set up a timeline and milestones for your corporate incubator program

Make sure you have detailed outlines illustrating the duration, process flows, milestones and deliverables of your incubator program.

Taking this step will help keep you focused on your goals and avoid unnecessary delays.

LEO Pharma’s Innovation Lab is a great example of how useful step 6 can be. Each of their products and services is subject to a strict 100-day build phase. Setting up such a precise timeline helps them go from idea to market quicker and more efficiently.  

Phillips Healthworks operates under a similar program designed to help them move quickly between ideas and new venture concepts. They use a 3 phase system of sprints to ideate, experiment and pitch each product or service.  

Step 7: Allocate your resources wisely

New ventures need resources to get up and running, and it takes a lot more than just money to make it all happen.

Make careful decisions about which resources will be allocated to strengthen your new ventures e.g.:

• Which departments will be involved (e.g. legal, engineering, I.T., marketing, etc.)?
• What type of monetary resources do you have available?
• Will you be working with any external sources of funding (e.g. crowdfunding, grants, loans, resource funding, etc.)?
• What type of office space and equipment will you be using?
• Does your incubator program need any additional services (e.g. entrepreneur or startup networks, advisory boards)?
• Do you need to set up any strategic partnerships?

Having a clear idea of what resources your incubator program needs will help you reach your scale phase quicker and more efficiently.

Step 8: Motivate your team with the right incentives

Setting up an effective incentives program is a crucial factor in the success of any new venture; so put careful thought into the type of incentive programs you’ll use.  

Taking this measure early on will ensure that your team is adequately motivated to build your next breakthrough product or service.

‍ BASF knows all about keeping a team motivated. They set up the Chemovator to offer their intrapreneurs a protected space to work on different ventures with full access to all BASF resources. This encourages passion projects, while at the same time creating new opportunities for innovation.  

Step 9: Position your incubator strategically within the corporate structure

Positioning your incubator close to the executive level of your company will help you bypass long chains of command and expedite your approvals.

This can go a long way in helping you:

• Keep the support and backing of your corporation’s leadership
• Accelerate the development of your new business unit

Remember, no matter how brilliant your business ideas are, your venture runs the risk of being delayed or even phased out if you don’t have the right positioning, connections and internal support.  

Step 10: Plan past the incubation phase

Decide on what happens when your venture is incubated, and ready to scale. Here are just a few factors you should consider:

Are you working towards selling your venture to an external buyer?

• What type of investment will you be making or needing in the next phase of your venture?
• Are you planning on establishing any partnerships?
• Will you become a spin-off company?
• Will your business unit be internal or external to your corporation?

Having a long term plan will keep you focused and working towards your pre-established goals, increasing the chance that your business unit will become a prosperous company when the time comes to scale.  

Final thoughts

When executed skilfully, incubators are a great way to innovate and develop disruptive new ideas that might otherwise be scrapped in favour of everyday corporate demands.

They’re especially useful for companies that are having trouble competing due to rapidly changing technologies, an outdated business model or the arrival of newer players in the market.  Find out more about how to identify the 5 key signs showing it’s time to step up your innovation game now.

If you recognise any of these traits in your company, it might be a good idea to take a closer look at investing in your own corporate incubator.

Building a customised incubation strategy enables you to leverage existing assets and take advantage of growth opportunities fast, all while expanding internal capabilities and fostering a culture of entrepreneurship. Get started today.

10 key decisions to shape your corporate incubator.

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How to Start a Business Incubator for Profits – Sample Business Plan Template

By: Author Tony Martins Ajaero

Home » Business ideas » B2B Industry

Do you want to start a business incubator company from scratch? Or you need a sample business incubator business plan template? If YES, then i advice you read on. Starting a business is a very critical period in the life of an entrepreneur—one that brings a lot of fears and uncertainties.

Am I doing the right thing? What if I don’t succeed? Would I be able to recoup my investments ? These and similar questions run through the mind of an entrepreneur at the startup stage. This stage requires a lot of hand-holding, reassurance and support from experts. This is where business incubators become relevant.

Business incubators help to breed a business and support it during its start-up stage by providing a variety of services such as accommodation, expert advice, facilities and support. Usually, business incubators are run as not-for-profit organizations either as a government-sponsored program to encourage entrepreneurship or by some other NGO’s or developmental organizations.

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However, business incubation services have now become different from what it used to be years ago as it is now run by some people as a business on its own.

How Business Incubators Make Money

There are entrepreneurs who come up with several highly workable business ideas on a regular basis. If you know you have such attribute as an entrepreneur, then you should consider starting your own business incubator. Becoming a business incubator means that are able to turn ideas into money spinning machine, you will be able to nurture ideas from infancy stage to highly profitable stage.

Basically, what business incubator does is that, they provide support and all form of infrastructure to small business that are just starting out. They also provide a conducive environment for business ideas to be conceived.

For example, as a business incubator, you could create a hub where programmers who are just starting out without any office and the basic infrastructure needed to be productive to come under a roof to build their businesses. Normally most business incubator centers are supported by the government and they also receive grants from other organizations.

Starting a Business Incubator – Sample Business Plan Template

It is important to state that starting a business incubator requires vast business experiences. It requires huge capital to start and run and you are likely not going to start making profits from the onset. As a matter of fact, it pays to start it as an NGO or as a Community Social Responsibility – with that, you will be able to access funding and grants from appropriate bodies.

Now if you know you have what it takes to start a business incubator and you are ready to get started, then the following tips will help you to start on the right footings:

1. Research, Research and Research

Starting a business incubator is not as easy as it sounds. You would have to do a thorough research on various business models. You would have to research on factors affecting businesses in the area you intend starting your business incubator; you would have to research on various ways of accessing funds for small business and all the support system they would need to grow.

The truth is that you would do well with your business incubator centre if you are good with research and also if you truly have passion for helping entrepreneurs grow their business. Without these qualities, there is no point starting a business incubator.

2. Pool Your Cash Together

In case you have not been told, you would need to pool all the cash you can gather to be able to start and run a business incubator. You might want to ask what you would need the cash for? The truth is that you would money to rent and equip the facility to be used, you would need money for daily running of the centre, you would need money to pay some of your utility personnel / mentors and you would even need money to foot your bills as well.

This is so because the money you generate from the students would likely not meet up with your expenditure. Of course the easiest way to make money from running a business incubator is from grants from the government and NGOs and it won’t start coming from the very beginning. Here is a sample business incubator business plan template to help you raise the funds you need.

3. Incorporate Your Business or NGO

If your idea of starting a business incubator is so that you are able to offer a support system and structure for budding entrepreneurs to leverage on to start and grow their own business for free or at a very minimal fee so that you will be able to access grants and funding from government and the private sector, then you should consider registering and NGO.

It is easier to access funding when you work as a non-profit organization. Here’s how to start a non-profit organization . If you choose to run your business incubator as a full fledge business, then you should go ahead to register it as a business.

4. Lease or Rent a Conducive Facility

If you have pooled your cash together and you have incorporated your NGO / Business, then the next thing that is expected of you to do is to hire the services of a realtor to help you get a decent facility. Part of what you need to look out for when shopping for a facility is its location and space. You would need a facility that can easily be accessed by the public and a facility that has enough open space.

5. Build Your Faculty

Starting a business incubator means that you would have enough experienced successful business men and women in your faculty that will serve as mentors to young entrepreneurs. The success of your business incubator largely depends on the pedigree of your faculty members. So, it is important that you look out for people who are not only successful as entrepreneurs, but people who are willing to impart business knowledge to budding entrepreneurs.

6. Create Admission Procedures

This is on area that you need to be deliberate about; from the outset. You should be able to create a picture of what you want, and the kind of people you want to pass through your business incubator and that should inform your admission criteria. It would pay you to only admit people who are determined to succeed with their businesses so that you wouldn’t end up wasting your time and resources on people that don’t have the drive to grow a business.

Hence, it wouldn’t be a bad idea if you request that every entrepreneur seeking admission into your business incubator undergo a business pitching session where they can be screened by experts.

7. Open Your Door

If you are done with all that is expected of you to do, then the next thing to do is to open your door to only those who scaled through the business pitching session. It will pay you a great deal if you only admit those that have the passion, zeal and diligence to work hard to grow their businesses.

If you have successfully implemented the above, and you have started running your business incubator, then you should go all out to seek and apply for grants and funding.

There you have it, the seven steps needed to successfully start and run your business incubator. But the business incubation business problem could present a lot of challenges. The most prominent challenge is that you would be working with businesses that are just starting up and can hardly afford paying for such ‘ luxurious services ’. Therefore, if you plan to start making money providing business incubation services, here are some things you should know.

10 Critical Tips for Running a Profitable Business Incubator

A. run your business as a ‘for-profit’ incubator.

It is better to be upfront about things and run your business as a profitable enterprise. This means that you would register your business, draw up a business plan, and structure it as you would structure a regular for-profit enterprise.

b. Source for the right clientele

You need to source for the right people who recognize the importance of the services you render and wouldn’t mind paying you for it. Not everybody would be willing to pay for this type of service; only people who truly recognize and understand its potentials and what they stand to benefit would be willing to pay. These are the kinds of clients you should be searching for.

c. Accept equity as payment

Another strategy through which business incubators make money is to accept equity in the business instead of once-off payments. This way, you would continue to earn something from the business for a very long time. This also proves to be a win-win situation for both the business owner and the business incubator as both parties would strive hard to ensure that the business succeeds.

d. Accept deferred payments

One thing about start-ups is that funding is almost always a challenge. There would always be one or more expenses to undertake. Even entrepreneurs that recognize the potentials of business incubators may want to shy away from hiring their services due to unavailability of funds. You can help to ease such challenges by accepting deferred payments so that payments can be made only when the business becomes successful.

e. Employ strict selection process

Due to the fact that you may have to accept deferred payments and equity participation, it is only normal that you would want to select the businesses you incubate with care. You should carefully look at the plans and potentials of such businesses and discard businesses that look like they do not have good chances of survival without sentiments.

f. Offer your service as a consultancy

When you are drafting your service agreement or terms and conditions, you must ensure that your service is structured as a consultancy service. Of course, everyone knows that a consultancy service has to be paid for one way or the other.

g. Offer additional services

You could also think of offering several other similar services, which you could make money from—such as business planning , marketing consultancy , negotiators, etc. There are several other services that business incubators can render and make money from.

h. Create awareness

Involve the press or the media, so they can give your business widespread coverage. Basically, ensure that you do all it takes to create the necessary awareness and publicity that your business needs. This is why we provided a sample non-profit marketing plan template to help you out.

i. Encourage cross-pollination

This means that you should allow entrepreneurs or participants to communicate, patronize, and help each other to grow. There are likely to be ways through which each business can help the next to grow or patronize the next. This way, such businesses would be involved in one another and contribute significantly to the growth of each other.

j. Employ experts

You should build your team with people who are experts , understand various aspects of business, and can help other entrepreneurs to grow their businesses. With such people in your team, you will be able to achieve results that businesses will be eager to pay you to replicate for them.

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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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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Business Incubator

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You will learn how the unique traits of business incubators can help your business evolve. Then, you will learn step-by-step how to build your own business incubator.

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In this training, you will

• 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.

Related Training

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How to Apply and Get Accepted to a Startup Incubator

Ready to put your startup into overdrive? An incubator or accelerator might be the perfect resource. Read on to see how to apply and get in.

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Starting a company is both exhilarating and challenging. And it can be overwhelming without help and guidance from people who have already done it successfully.  It is also very easy for unsuspecting first-time founders to be misled by the hype often surrounding innovation and entrepreneurship.

Sadly, startup failure rate is above 90%. That's a scary statistic. But data shows that founders who receive help when building their startup have a higher chance of success and growth as well as attracting additional investment.

Enter the startup incubator. Startup incubators and accelerators provide founders with assistance and help to guide startups. Top benefits include:

• Focus on strategies that have the highest impact on growth
• Create customer acquisition channels that scale cost effectively
• Develop sustainable business models and revenue sources
• Get venture funding
• Make connections with key partners and acquirers

There is a lot more you can get from joining an incubator. However, the main aim is often to make the business valuable and attractive to investors. But getting accepted to an incubator or accelerator isn't simple. In this article we break down the steps to apply and get accepted to any of the 1000+ programs around the world.

PRO TIP: Want to do research on the best places to fund your startup? Check out the comprehensive list of incubators and accelerators in the United States from Angel List.

What You Need to Know Before Joining An Incubator

If you think you're ready to apply to an incubator or startup accelerator, then you're ready to take certain steps. Read on to see what it takes to get accepted.

Application Procedure

To be accepted into some of the best incubators, your startup has to meet certain measures mainly because such incubators tend to be selective and mostly approve startups that are in their early stages. A startup is required to provide its business plan when applying to join. The business plan can either be in the form of a document or potentially innovative ideas that promise development in certain sectors.

On some occasions, incubators will only accept startups that have been referred to them by a member of a network of incubator advisors.

PRO TIP: See professional bio examples , company profiles and pitch decks before you start talking to investors.

Incubators support innovation, new ideas and push startup businesses to come up with market solutions. This way, they encourage new entrepreneurial ideas and innovative outcomes; this is how ideas are incubated to design business models. They help nurture and guide entrepreneurs for a certain period to assist them in devising a startup.

Joining an incubator provides you with access to a long-term support system that promotes development for your startup. The tenure can be between 6 months and over a year; this depends on the time it takes for the entrepreneurs to gain investors or get their ideas or products working.

New upcoming startups usefully don't need immediate investment. Therefore incubators often offer support without necessarily investing or having a claim to equity in the businesses; this is mainly because most incubators are usually sponsored. They are therefore capable of providing support without relying on financial earnings from the startups.

The majority of incubators are open to all types of entrepreneurial ideas, as long as it involves promising industrial development concepts—however, some focus on a specific industry. An example of this is incubators that deal with pharmaceuticals; they can only take in startups that offer development in medical issues.

Additional Benefits

Joining a good incubator means you will have the most extensive support you could wish for when starting a business or creating a new market. You can expect a boost in credibility, mentorship, and even the provision of working space. However, not all incubators offer the same services; you may need to choose between the various ones available to pick the one that suits you the most.

Incubators offer shared office space to maximize the amount of support provided. This helps them monitor progress and provide constructive input. Aside from that, they focus on providing the startups with connections to communities and recent developments and help you stay informed about potential threats.  

Once you join an incubator, you will have all means to help boost your company's presence in the market. You will have access to investors and receive the guidance you need.

Why Join an Incubator?

Startups that have been involved with an incubator have an advantage in terms of built networks and mentorship. There's also a high chance for such startups to succeed in their ventures. You just need to know the right time to join; it's recommendable to join as early as you can as long as your business plan is well defined.

PRO TIP: The most important thing you can do before starting a business is to be sure you're solving a meaningful problem for a large enough customer group. Need some help with that? Try this startup customer development course to learn more.

How Can You Apply and Get Accepted?

It's highly required for upcoming businesses to associate with incubators; this is steered more by their desire for growth in their respective industries. So what do you need to be selected? Let's look at how you can ensure your application earns you a seat at the table.

First, you need to understand your project or product fully. You have to be able to lay out what problems your products and services are solving, how they will solve them, and whether or not you have the right team for the job. Once you have the answers to these questions, you have a chance at being accepted by an incubator that will help boost your ideas to a higher level.

Generally, there are three categories of ideas that can help prepare you for your presentation and which can determine your selection; such categories include:

• Revolutionary Ideas: Can forever change the industry once introduced to the market
• Evolutionary Ideas: These are improvements made upon an already existing service or product that guarantee improvements that will take them to the next level
• Other Ideas: An ordinary idea but with the potential to make money and profit. However, incubators tend to look for ideas and businesses that fall under the first two categories.

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To be selected, you need to be prepared. Here are the top things to focus on before you pitch.

Make Sure Everything Is In Order

Before joining an incubator, you need to ensure you have established your business to some degree. This means leaving no stones unturned, which requires you to take care of all the legal needs and consult trusted advisors. Ensure to take care of the basics in terms of agreements with potential customers and investors.

If there are other partners, it's good to have an operating agreement. Ensure all your legal needs are catered to, such that when you join an incubator, you only focus on growth and mentorship, not legality issues.

Calculate Your Value

While starting your venture, you may not be fully converting to many financial aspects of your business. However, it's important to practice and familiarize yourself with the financial perspectives of your project; doing this prepares you on how to employ the incubator resources that will enable the growth of your venture.

Although incubators can help you learn about this aspect of business, it's always best to be prepared.

Assemble a Capable Team

When you apply for a position in the incubator, they will need to know whether you have the proper team to execute your ideas, provided you are given access to the resources required. You don't necessarily need to have a whole team of staff; however, you may need a number of dedicated team players that have the potential to yield results and offer project solutions when needed.

Incubators can help you gain funding as well as new investors; however, you need to establish a presence in order to be the viable candidate for such resources. Building your presence within platforms such as Linkedin can be beneficial. This will help you start an early connection with advisors and mentors, providing you with your own network before joining an incubator.

Positions in an incubator are often coveted; therefore, you have to boost your eligibility by doing a bit more work than the average applicant. Demonstrating you are capable of employing the resources you will receive into stimulating the growth of your startup gives you a better chance of being accepted.

Keep in mind the more prepared you are for a program, the higher your chances are of succeeding. The above guidelines are meant to help you efficiently prepare for an incubator and to better your chances of getting into one.

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This free sheet contains 100 accelerators and incubators you can apply to today, along with information about the industries they generally invest in.

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Startup Incubators: What Are They & The 15 Best Ones in 2024

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Information about the countries, cities, stages, and industries they invest in, as well as their contact details.

List of 250 startup investors in the AI and Machine Learning industries, along with their Twitter, LinkedIn, and email addresses.

List of startup investors in the BioTech, Health, and Medicine industries, along with their Twitter, LinkedIn, and email addresses.

List of startup investors in the FinTech industry, along with their Twitter, LinkedIn, and email addresses.

If you’re looking for ways to advance your early-stage startup through mentorship and networking, one option available to you is to join a startup incubator.

Whether you’re still in the initial idea stage of your business and want help developing a minimum viable product (MVP), or you already have an MVP and need guidance to build your sales and marketing strategies, an incubator might be just what you need to start moving your company in the right direction.

Keep in mind that incubators and startup accelerators are different in terms of funding. Incubators are not typically intended to be a source of capital in and of themselves. 

In fact, you usually have to pay a small monthly fee to participate in startup incubator programs. However, they offer great networking opportunities, which can result in meeting potential investors and securing funding from venture capital firms.

You may also want to read our Startup Accelerators guide .

What Is a Startup Incubator?

Startup incubator programs are made for businesses in the early stages of development. A startup incubator aims to provide support and resources to turn ideas into successful business ventures. Incubators offer a range of resources, including access to office space and coaching from mentors, typically serial entrepreneurs, founders, and venture capitalists.

Startup incubator programs have a selective application process to ensure that both parties are a good fit. Incubators can be industry-specific or open to startups from all industries, focusing on innovative business ideas with high growth potential.

Best 15 Startup Incubators

With thousands of startup incubators located in different countries worldwide, searching for the right incubator for your business can be overwhelming. 

Below, you’ll find five of the top global startup incubators to take a look at and consider applying for:

1) Capital Factory

Capital Factory connects entrepreneurs in Texas with potential investors, employees, mentors, and customers. The Austin-located incubator program offers a large co-working space, admission to tech-focused events, and access to its network of mentors.

The company serves startups in all stages, providing entrepreneurs and their companies with the services they need to reach the next level in their development.

Location : Austin, Texas, USA

Industries : Transportation, digital health, education technology, government and military, marketplaces, virtual reality, artificial intelligence, big data, and more.

How to apply : Fill out the community membership application here .

What they give : Office space on a month-to-month basis, onsite amenities, access to a VR lab, advice from 150+ mentors, introductions to investors, special events, and pitch competitions.

2) The DMZ at Ryerson University

The DMZ is the #1 university-based tech incubator in the world, according to UBI Global. The organization is committed to helping tech startups with high growth potential scale, fostering a vibrant startup community, and fuelling innovation in Canada. The DMZ provides entrepreneurs with the tools and services they need to build, launch, and scale their startups.

Location : Toronto, Canada

Industries : Tech startups in a variety of industries.

How to apply : Read the application requirements and apply here .

What they give : Access to office space, investors, target customers, industry-leading experts, and community events, as well as marketing, operations, talent sourcing, and financial management support services.

3) Seedcamp

Seedcamp is Europe’s biggest collective of investors, angels, and founders. The incubator VC firm provides founders with a global network of advisors to help them overcome common startup business challenges through training, consultancy, and other business services.

Seedcamp also helps pre-seed startups raise funding through introductions to investors and co-investments in funding rounds led by other VC firms.

Location : London, UK

Industries : No specific industries. Focuses on European seed-stage companies.

How to apply : Fill out the pre-seed admission form here .

What they give : Support in finding product-market-fit, building out sales and marketing capabilities, understanding how to grow your team, and introductions to a global network of operators and investors.

4) TechNexus

TechNexus is a Chicago-based startup incubator that offers a huge collaborative office space and access to a global network of partners, accelerators, and venture capitalists. They work closely with companies to identify areas for growth, build new and better products, enter new markets, implement new business models, and more. TechNexus also provides small investments to selected early-stage companies and connects companies they work with to other sources of venture capital.

Location : Chicago, Illinois, USA

Industries : No specific industries. Mainly focuses on seed-stage and series A-stage B2C and B2B companies.

How to apply : Email TechNexus at [email protected].

What they give : Consultancy and mentoring, recruitment and network support, leadership coaching, corporate customer partnerships, sales channels, co-marketing campaigns, co-developed products, collaboration capital and venture capital, and access to TeamWorking in-person office space.

Wayra was originally launched in Colombia and is backed by Telefónica, one of Latin America’s and Europe’s largest telecommunications companies. Wayra connects disruptive tech startups with Telefónica’s ecosystem and customers to help them scale up and accelerate their businesses. Wayra has hubs in 9 countries, including 6 in Latin America and 3 in Europe.

Location : Colombia, Argentina, Chile, Peru, Mexico, Brazil, Spain, Germany, and the UK

Industries : IoT, Video, Big Data, AI, Cybersecurity, Fintech, Blockchain, Edge, and more.

How to apply : Apply to their next activation program here .

What they give : Preferred access to Telefónica’s platforms, technology, and experts, testing of new products and services, opportunities for investments, and connections to 350 million+ potential customers.

Le Camp is a startup incubator located in Québec, Canada. They focus on fostering the growth and success of technology-based businesses. They offer a comprehensive range of services to businesses at all stages of development, from pre-startup to international expansion.

Location : Canada.

Industries : Artificial intelligence, Fintech, Cybersecurity.

How to apply : You can apply to their pre-start-up program here .

What they give : They provide interactive learning and hands-on workshops. You will be taught to use the tools to create a solid foundation to develop your business. 

7) Launch Academy 

Launch Academy is an incubator that provides entrepreneurs with the resources they need to launch and grow their businesses. This incubator has assisted over 6000 entrepreneurs since 2012, with 300 of those startups reaching the Seed and Series A stages.

Location : Canada. 

Industries : Information Technology,  Big Data, AI and more. 

How to apply : You can apply to their launchpad program here . 

What they give : Mentorship, weekly networking events, ability to connect with investors and access to their international network. 

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8) FinTech Innovation Lab

FinTech Innovation Lab is a 12-week initiative to help early-stage technology companies grow.

During this intensive program, participants will have the opportunity to refine and validate their value proposition with the support of top financial service organizations from around the world.

The program aims to help entrepreneurs transform their technologies from a luxury to a necessity in the industry by providing guidance and support.

Location : New Yor, Hong Kong.

Industries : Fintech.

How to apply : You can apply to their different programs here .

What they give : Workshops and panel discussions, product market feedback, and demo days where you get to showcase your product or service.

Idealab is a technology incubator founded in 1996. This incubator has significantly impacted the startup industry with a track record of over 150 successful companies, including 45 IPOs and acquisitions.

Its founder, Bill Gross, is a well-known entrepreneur who has spoken at prestigious organizations such as TED and the World Economic Forum.

Location : California, USA.

Industries : Tech, Eco-Tech, AI, Commerce and Clean Energy.

How to apply : You can get in touch idea Idealab here .

What they give : Tools for product development and their extensive network of entrepreneurs, founders and much more.

10) Highline Beta

Highline Beta is an incubator specializing in launching new startups through collaboration with leading corporations and founders. Highline focuses on finding industry opportunities and launching new ventures with co-investment from their corporate partners. 

Location : Toronto, Canada.

Industries : Insurance, Health, Fintech, Retail, and others.

How to apply : You can email them at [email protected].

What they give : Access to expert advice on brand marketing to take your business idea to the next level.

11) CodeBase

CodeBase was established with a straightforward objective: to provide affordable coworking spaces equipped with high-speed internet for all your business needs.

Since its launch in 2014, Code bases’ support system has seen tremendous growth. They are available in more than 20 cities across the UK and also provide mentorship online.

Location : In all major cities within the United Kingdom.

Industries : Tech, Robotics AI, Cloud Computing, and other tech-related industries.

How to apply : You can get in touch with CodeBase here .

What they give : Codebase provides a supportive environment that includes a workspace, a sense of community, and educational programs for entrepreneurs.

12) Venture Catalysts

Venture Catalysts is one of Asia’s biggest incubators. It provides great support and offers incubation assistance for one year. 

The incubator has also attracted co-investment from globally renowned investors, including YCombinator, Greenoaks, Axis Capital, and Alpha Capital.

Location : India, Hong Kong, and Qatar

Industries : IoT, Software, and Digital Health sector.

How to apply : You can get in touch with Venture Catalysts here .

What they give : Corporate connections, mentoring, global market access, networking opportunities, and industry-specific advice.

13) Tech Ranch

Tech Ranch is a startup incubator that assists startups in preparing for the market and equipping them with the necessary tools to tackle any challenge.

Tech Ranch offers a supportive community ideal for startups seeking to expand their network and establish robust connections with like-minded entrepreneurs and mentors to achieve success.

Location : Texas, USA.

Industries : Software, IT, Automotive Technology, and Business Services.

How to apply : You can connect with Tech Ranch here .

What they give : Virtual and online events and webinars, mentoring and coaching opportunities. Tech ranch also provides the ability to match startups with funding opportunities.

Ignite is a Europe-based incubator for early-stage startups. The program includes everything a startup needs to get their business off the ground. 

Location : United Kingdom. 

Industries : AI, cloud computing, edge computing, cybersecurity, and more.

How to apply : You can apply to their programs here .

What they give : Workshops, mentoring from experienced individuals, and networking opportunities.

15) InnoSpring Seed Fund

InnoSpring Seed Fund is a startup incubator based in Silicon Valley. They can tap into a worldwide network of resources for startups.

This incubator allows startups to secure significant and strategic investments as they progress in their development.

Industries : Technology, Media, B2B, and B2C businesses. 

How to apply : You can connect with InnoSpring Seed Fund here .

What they give : Future strategic investment opportunities, global expansion opportunities, resources, and information on how to scale your company.

How Long Do Startup Incubators Last?

Startup incubators usually offer long-term incubation programs of about 12 months or, in some cases, several years. This relatively long program length is because incubators are not designed to boost your startup’s growth rapidly but rather to nurture your business and provide you with the skills and knowledge you need to succeed as a founder and entrepreneur in the long term.

Application Processes of Startup Incubators

Since there is such a wide variety of startup incubators, the application process can vary significantly from program to program. However, incubator applications are generally not as complicated or competitive as startup accelerator applications.

To apply for a local or global startup incubator program, you will need to look at the specific organization’s website for an application form, or contact them directly and inquire about their current incubator programs. 

Most incubators require you to fill out a pre-screening form and provide some basic details about your startup to allow the incubator to evaluate whether or not you might be a good fit for their services. Note that not all incubators constantly accept new applicants, so you may not be able to apply for the incubator you’re interested in right away.

Do Startup Incubators Invest?

Startup incubators do not usually provide a sum of capital to startups that they accept to their programs. Their emphasis is on providing other valuable resources, including office space, training, and networking opportunities.

However, incubators are often closely connected to venture capital firms and angel investors, so you may have a chance to meet people who are interested in investing in your company during your time at an incubator.

When To Join a Startup Incubator?

Startup incubators are designed to help entrepreneurs in any development stage of their business. Unlike more competitive accelerator programs, incubators are not necessarily looking for entrepreneurs that already have an MVP or a fully fleshed-out business plan.

Since incubators often run for a year or more, they usually look for promising companies with long-term growth potential. So, if you have a business idea you’re working on, but you haven’t fully developed your product or service and acquired customers yet, it might be the perfect time to join an incubator.

Remember that most startup incubators are not intended to be a direct source of venture capital. So, if you’re strictly looking for funding for your business, an incubator may not be the right fit for you. You should join an incubator if what you’re mainly after is a collaborative space and a learning environment, where you will get to meet other people with experience building and growing startups who can help you solve early-stage business problems and develop your business plan and entrepreneurship skills.

5 Benefits of Startup Incubators

1) access to office space.

One of the primary benefits of joining a startup accelerator is that they usually give you low-cost office space to use. If you started your company from your home or a college dorm room, access to a professional office space for a year or longer can really help support you and your company’s growth in its early stages.

Incubator offices not only provide dedicated desk space, conference rooms, and other workspaces, but they also come fully equipped with high-speed internet and other critical business infrastructure and equipment that you may not be able to afford just yet.

2) Mentorship and Advisory Services

While incubators don’t usually offer the same intense, personalized mentorship that shorter accelerator programs do, they still typically have a team of startup mentors and business professionals who are there to advise program participants. Having access to individuals with a deeper, more experienced knowledge base than your own is invaluable when you’re developing your business idea and trying to get your startup off the ground and running.

3) Help With Business Basics

Startup incubators often provide help with basic business needs, including accounting and financial management services, human resources services, local regulatory compliance, etc.

These business basics are something that every company needs to deal with, but they can be daunting to tackle for new startup founders. Not only does having these types of resources available through an incubator program assist you in areas you don’t have any experience in, but it can be a huge time and money saver, as you don’t have to hire outside professionals to help you.

4) Networking Opportunities

Another of the biggest benefits of joining a startup incubator is the different networking opportunities they provide. From advisory board members and mentors to venture capitalists and other startup founders, you’ll have the opportunity to meet all kinds of people in the business world during your year or longer at an incubator.

These networking opportunities can result in business partnerships, investment capital, and other lasting connections that can help you and your business succeed.

5) Help Refining Your Ideas and Plans

Think of a startup incubator as a university program for your business that teaches you everything you need to know to set you up for success. During the time you spend at a startup incubator, you’ll use all the available resources to turn your early-stage business idea into a viable product or service, with a business plan that you can actually profit from.

Besides that, you’ll develop personal business skills that will help you be a more successful entrepreneur in the long run, on both current and future projects.

Should You Join an Incubator?

While many startup incubators are geared towards new founders, they can provide exciting opportunities to startups at any stage in their growth. 

Whether you have a budding idea that you want to turn into a prototype or an MVP, or you already have a product or service that you need help scaling and selling, you can certainly get value from joining an incubator.

There is a huge variety of incubators, so make sure to do your research about different startup incubators to find one that can provide you with the specific value you're looking for. 

Most incubators offer some things in common, including access to office space, consultancy, and networking opportunities, but some incubators specialize in certain areas that might be more or less suited to you and your company. 

If you’re trying to choose between a startup incubator vs. a startup accelerator , keep in mind that startup incubators are less focused on providing actual funding. 

They can introduce you to potential investors and can save you money in certain areas of your business, but don’t expect to receive a big chunk of venture capital when you join an incubator. Because many incubators charge a small fee to their members, they can even be a good fit for seed-stage or series A-stage startups that have already received some type of funding.

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Start » startup, interested in participating in a business incubator here's what to expect.

A business incubator can give your startup a competitive advantage. Here’s what to expect when joining and how you can make the most of your experience.

Business incubators are organizations (usually nonprofits) that offer startups physical space to get their operations off the ground. These collaborative work environments offer not only a location at which to start your new venture, but also mentorship and networking opportunities, funding support and the use of shared resources.

Incubators provide a competitive advantage to new businesses, and as a result, it can be difficult to gain admission into an incubator. A study by the National Business Incubation Association (NBIA) in 2010 reported that companies that participated in a business incubator had an 87% success rate —almost twice the success rate of companies that didn’t participate. Here’s what you need to know about applying to and participating in a business incubator.

[ Read more: Could a Startup Incubator Benefit Your Business? ]

Find the right fit

Like startups, incubators come in all shapes and sizes. The first step toward joining an incubator is finding one that is best positioned to support your business idea. Incubators tend to specialize in a certain area, like a market (for instance, green energy) or type of company (like direct-to-consumer e-commerce). This allows them to more effectively share resources and expertise.

An incubator is most likely going to fit into one of five general models :

• An academic institution.
• A nonprofit development corporation.
• A for-profit property development venture.
• A venture capital firm.
• Some combination of the above.

Look for an incubator in your area first, and then narrow down your choices to find one that best fits your startup business.

Ask for reviews

As part of your research, reach out to companies that have participated in the incubators you are considering to learn about their experience. Most incubators will post a list of companies that have gone through their program. Contact their founders to find out what mentor opportunities were available and what the business accomplished (or failed to do) during their time. Some incubators require that founders go through extensive leadership and management training ; ask about the curriculum and whether or not it was useful.

Incubators will look for a strong idea, but may give more weight to the team you've assembled to bring your idea to fruition.

Prepare an application

Incubators all have different selection criteria to gain acceptance into their program. “Some require certain milestones or criteria, like headcount, capital, entrepreneurial experience, background, revenue, or product fit,” wrote Hubspot .

Generally, incubators require that you submit a business plan as part of your application. Incubators will look for a strong idea, but may give more weight to the team you’ve assembled to bring your idea to fruition. The reason for this? It’s because the incubator knows it can work with talented, motivated experts to refine and build a business that works, evolving the initial idea into a sustainable company. Incubators specialize in developing people to turn ideas into feasible business models. So, while your business plan is important, it’s more crucial to have the right management team to back up your proposal.

[ Read more: Startup Checklist: 20 Things to Do Before You Start Your Business ]

Go through the screening process

If your application makes it through the first round, you’ll then be invited to present a pitch. Expect to discuss your company’s goals, plans, strengths and weaknesses with a screening committee.

This is your opportunity to demonstrate how your business will succeed.Your pitch should spark excitement in the incubator’s screening committee. “Remember, people are investing in you more than your idea. Businesses are fluid in the startup stage,” Michael Margolis of Get Storied told VentureBeat . “While pedigree or experience matter, your curiosity, obsession and commitment matter more. Character trumps credentials.”

You may also be asked about exchanging equity in your business for acceptance into the program. This is a common practice, especially for incubators that operate as venture capital firms. Be prepared by understanding how much your idea is worth and anticipate how much you’d be willing to trade in exchange for the connections and expertise of the incubator’s team.

Make the most of the program

While gaining entry to an incubator can boost your business idea, it isn’t a guarantee that you’ll be successful. Remember, there are still nearly 20% of businesses that graduate an incubator program and fail. The reason for this? Many entrepreneurs view a business incubator as a shortcut to raising capital—and fail to take advantage of mentorship and training opportunities.

An incubator is a big commitment: Most programs require one to two years of workshops, training, meetings and networking events. These are intensive professional environments, but if you commit to the process, the end result will likely be in your favor.

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