Business incubators were all the rage back in the days of the dot-com bubble (700 for profit, many more non-profit). Then they turned into cash incinerators about the time the bubble burst, and more than 80% of them disappeared. Now they are coming back, but I find that most startup founders don’t even know what they are.
By way of a definition, a business or startup incubator is a company, university, or other organization which provides resources to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. The goal of all business incubators is to produce healthy firms that create jobs and wealth, strengthen the economy, commercialize new technologies and revitalize communities.
They normally provide one or more of the following:
- flexible space and leases, many times at very low rates
- fee-based business support services, such as telephone answering, bookkeeping, secretarial, fax and copy machine access, libraries and meeting rooms
- group rates for health, life and other insurance plans
- business and technical assistance either on site or through a community referral system
- assistance in obtaining funding
- networking with other entrepreneurs
Incubators differ from research and technology parks, in that most research and technology parks do not offer business assistance services, the hallmark of a business incubation program. However, many research and technology parks also house incubation programs. Another variation is technology business incubators, which nurture high-tech startups and present a technology oriented variant of business incubators.
To find what’s available in your area, take a look at the National Business Incubation Association (NBIA) web site, and use the lookup tool provided. This organization claims to be the world’s leading organization for advancing business incubation and entrepreneurship. Another sure-fire approach to finding what’s available is to check local university resources – almost every one offers some services along these lines, or certainly can refer you to local alternatives.
The only down-side I have heard is that many business incubators used to be notoriously high-pressure environments where a lucrative exit strategy was more important than the half-baked products. If that’s the toughest problem you face as a startup, then you probably didn’t need an incubator in the first place.
The up-side is that startup incubator programs allow new startups to benefit from the wisdom of other startups and veteran companies by co-existing -- in the same office or through the same venture funding -- with other startups. They do more than throw money at you.
If you have had first-hand experience with one, good or bad, please share your comments here for all of us to learn.
Marty Zwilling, Founder & CEO, Startup Professionals, Inc.
