In cities and regions with significant startup presence, incubators are becoming more commonplace. These collaborative programs are spaces designed to help startups succeed at different stages. While each incubator varies in their offerings and membership requirements, many will offer office space, logistical or technological support, training, and a community of like-minded entrepreneurs who are also pursuing their passions.
What is a startup incubator
Business incubators are not a new phenomena. The first formal incubator began in Batavia, New York in 1959 as a solution to the region’s high unemployment. Batavia Industrial Center offered short-term leases to occupants, office supplies, business mentorships, and management services. Forming a model for future incubators to come, the center housed small businesses, entrepreneurs, and what we now consider to be startups in their early stages.
Now, incubators are often not-for-profit organizations, or they may be privately-held and work in connection with venture capitalists. You may find them attached to research universities, and they may be tailored towards certain sectors. The most commonplace industries for incubators are in health and technology, which comes as no surprise when they are connected to research institutions that often share similar priorities in these fields.
Incubators act as a catalyst, helping their members succeed and grow into new stages of their business plan through executional support, financial investment, management services, and office space. They help startups clear the initial hurdles that act as barriers to growth as businesses get off the ground.
How to find one in your area
Utilize your mentorship and business connections to learn about incubators in your area. More prestigious incubators, such as Y Combinator, attract applicants globally, and competition for entry is highly competitive. With high-ranking incubators, entrepreneurs are often required to relocate for the duration of their residency in the program, or for training and programmatic education.
In most major cities, there will be more than one incubator or accelerator. Startup networks are often a great place to start if you are looking for an incubator to join. As always, the Internet is a great resource for listings of some of the more popular incubators in your area. If your startup is at a place where you may be a competitive applicant for a top-ranked incubator or accelerator, consider speaking with your investors and mentors for recommendations about pursuing a partnership.
What are the benefits?
Mirroring the rise of co-working spaces, more and more startups are working in a collective space. This not only saves on brick and mortar fees associated with leasing or buying an office space, but also offers entrepreneurs the opportunity to work in a communal environment with other startups. The life of an entrepreneur is often marked by long working hours, increased isolation from social opportunities, and a skewed work-life balance. While an incubator cannot solve any of these issues in isolation, it offers opportunities to remedy these situations that entrepreneurs are less likely to seek out if they are working out of their home alone.
There are also often financial incentives to working within an incubator. Many incubators offer financial support for their startup partners, often in exchange for equity or partial ownership in your company. As always, before you accept financial investments, weigh the offer against your business valuation to ensure that you are not signing away a larger stake in your ownership than you are comfortable with.
Joining an incubator
There are many different types of incubators, and each has their own requirements for entry. Some are entirely virtual and act as an online community, while others are brick and mortar spaces that you can work out of daily. Seed accelerators tend to focus on startups that are in their very early stages, while other incubators offer membership to startups at more experienced stages.
When you are looking for an incubator to join, consider what each has to offer. Incubators may offer a wide variety of services, and some are tailored towards specific industries. Applications for admission often require detailed and workable business plans, financial information, and rounds of interviews with the startup’s founder. Incubators often offer admission for a period of time, rather than an indefinite affiliation.
Do I need to join an incubator to be successful?
The short answer to that question is no, you do not need to be at an incubator for your startup to be successful. Could your membership be beneficial in the long run? Absolutely. Does it guarantee your success—no, you do. An incubator is not the right choice for every entrepreneur, nor is it necessary to be a part of one in order to succeed.
Think of an incubator as another way to educate yourself, to drive your business plan forward, and to build out your network. There are strategies to accomplishing each of those goals without an incubator, but it is worth considering membership or fellowship at an incubator as another strategy in your arsenal in accomplishing them.