A premature, newborn baby is extremely vulnerable to illness or even death due to an underdeveloped immune system and other internal organs. They are placed in incubators for several weeks until they grow and are able to survive on their own. This concept is exactly how business incubators nurture startup companies.
There are more than 1,250 business incubators in the U.S. alone, and 7,000 worldwide, according to the National Business Incubator Association (NBIA). Incubators should not be confused with business accelerator programs. Incubators deal with all kinds of business, including nonprofits. The average program lasts nearly three years. Accelerators primarily deal with tech startups, with the average program spanning only a month or two.
A 1997 study entitled “Business Incubation Works” found that 87 percent of firms that completed an incubator program at the time of publishing were still in business. The failure rate of all businesses varies depending on the source, but nearly three-quarters of failed enterprises are attributed to incompetence and/or inexperience by management. Incubators can help most new entrepreneurs if they find the right one for their particular business.
The Incubator Culture
Y Combinator, considered by many to be the top incubator program in America, is described as a “boot camp” for startups by Newsweek, but the company disagrees. The Mountain View, Calif.-based firm does in fact fund several startups at once and says that is the extent of the analogy’s accuracy.
Y Combinator, like most incubators, requires all of its startups to relocate to its offices for three months for an intensive training regimen. It immediately provides seed funding and schools pupils on all aspects of business, including communicating with investors, preparing legal paperwork and hiring employees. They also act as conflict resolution mediators for feuding founders. Reddit, Dropbox, WePay and Coinbase are just a few of the 630-plus companies that are Y Combinator alumni.
Non-tech incubators generally follow a similar curriculum. Kick, with offices in the U.S., Canada and Kenya, particularly covets lifestyle and social companies. Telluride Venture Accelerator specializes in, inter alia, outdoor gear, green living and tourism firms.
Choosing An Incubator
When deciding which incubator is right for you, consider how exactly the program can help once you’re enrolled. Your weakness as an entrepreneur may be management and hiring of employees. Most incubator programs will provide mentoring for this, but you could just as easily (at less expense) use your own network and find a mentor or seminars to attend.
Research other startups that have graduated from a program. The companies should have similar characteristics to yours and be doing fairly well after completing the program. The choice of incubator may also come down to cost. Top incubator program are pricey, while others claim large portions of equity for you to enroll.
University Incubators
The obvious advantage of incubator programs based at research universities is the plethora of resources instantly made available to you. One-third of all U.S. incubators are located on university campuses, according to the NBIA.
The University of Arizona’s Tech Launch Arizona incubator graduated four technology companies from its Mentored Launch Program in September 2013. The program’s mission is to combine the resources available in the university’s business, technology and research departments to create the most comprehensive incubator program in the world. Campuses that aren’t known for their technology departments, like Syracuse and Duke, have also launched incubators for non-tech startups.
The University of Arizona’s Tech Launch Arizona incubator graduated four technology companies from its Mentored Launch Program in September 2013. The program’s mission is to combine the resources available in the university’s business, technology and research departments to create the most comprehensive incubator program in the world. Campuses that aren’t known for their technology departments, like Syracuse and Duke, have also launched incubators for non-tech startups.
To find and research incubator programs by state and country, visit the NBIA website.
