What is a business incubator?

As defined by the Entrepreneur Magazine, “Business incubators are organizations geared toward speeding up the growth and success of startup and early stage companies” (Source)

Who does an incubator serve?

Incubators cater to startups and early stage companies, who are in the beginning stages of building their business. It all starts with the founders’ idea. From there, the incubator helps the founder develop a business model and a roadmap to transform the idea into a reality.

To reduce the chances of startup failure, the incubator aims to create a solid foundation for the company to build upon. Success is not measured by scalability or rapid growth, rather success is measured by the startup’s longevity. With longevity in mind, incubators can not only cater to quickly growing scalable startups, but also slow growing local startups who are less scalable.

Incubators not only help entrepreneurs create a sustainable infrastructure, but also connect entrepreneurs with the necessary education, support, and resources.

How long does a company stay with an incubator?

Some startups stay with an incubator longer than others. There is no standard timeline. Rather, the startup graduates from the incubator once they have a scalable business model and the resources to support an independent operation.

In the beginning, many startups appreciate the lower overhead of a shared office building. Startups share the common areas (i.e. meeting rooms, training rooms, bathrooms, kitchen, etc.), but still have their own space (i.e. desk, cubicle, suite, etc.). Often, startups leave an incubator when their operations have outgrown the given space and they have the resources to fund their own office or manufacturing.

What services do incubators provide?

Incubators provide shared office space and meeting rooms. However, depending on their target market, some incubators will also offer laboratory or production space. Additionally, most incubators offer a collaborative environment, mentorship, events, and programming.

What’s the cost?

Incubators are often non-profits founded by economic development organizations or universities. Incubators usually do not take an equity stake in their client companies, nor do incubators provide capital to startups. Most often, startups pay monthly rent or a membership fee to access the space and resources.

What makes an incubator unique?

Every incubator is a little bit different. The location, available space, partners, supporting network, and target market will elude to what makes the incubator unique.

  • Location: The location of the incubator will influence the available resources and nearby events. An incubator in the city will likely have more events and programming, but it will also have space limitations. The location will also influence which industries are most active.

  • Available Space: Incubators are often designed to have open-collaborative space to spark creativity and idea generation, but also have private space for business meetings and work. The space will dictate the available meeting space, training space, and work space.

  • Partners: Incubators often partner with economic development organizations, an investment group, or a university to create a collaborative, resource-rich environment. The supporting network will determine the available resources, mentorship, and programming. Almost all incubators provide a collaborative environment and mentorship at a minimum. You will also want to consider if there are university faculty resources, student interns, educational programs and workshops, events and conferences, networking opportunities, etc.

  • Supporting Network: The incubator often connects the startup with a broader network of seminars and conferences, coaches, investors, service providers, consultants, interns, etc.

  • Target Market: Business incubators can differ in their target customer, business model, and philosophies. Some incubators target specifically technology or health related companies, while others serve as a mixed-use incubator and cater to a variety of startups.

If you are considering an incubator, you want to do your research and tour the various facilities. With incubators offering different resources, you want to find the one that best fits your startup.

Photo Credit: Craig Schreiner, UW-Whitewater