Although incubators have been in existence since the 1950s, it was not until the dot com bubble of 1999 that incubators came into prominence, with more than 1,500 in North America alone, and about 7,000 globally. Can incubators help business startups? Most definitely, and more than just financial help is offered.
Business incubators, sometimes called startup accelerators, typically enlist the help of business professionals, such as accountants, business consultants, or marketing and management experts, to help business startups shorten their learning curves and take them to market more quickly than the owners can do it themselves on their own.
Generally, financial assistance of some sort can be acquired, albeit on the low side, but one the biggest advantages of an incubator is also to provide office space, as well as possibly research and even manufacturing facilities.
Two Main Types Of Incubators
- The first primarily focuses on infrastructure, including space, various aspects of technical support, such as access to servers and software, and can also spread marketing and management support among different entities.
- The second takes a more process oriented approach, with mentors a key part, but can also assist with networking with potential investors, and this is the main allure of this type, which is financing.
Even as incubators help startups in numerous ways, it is advisable to keep in mind that this can be an arduous process, as you learn from mentors as well as other business founders. Constructive criticism is part of the curriculum, and sometimes can lead to abandoning of the business itself, which may not be such a bad thing in some instances.
It is furthermore noteworthy that incubators tend to be associated with high tech startups, and 39% of North American incubators are actually tech focused, but any business can be considered, from services, manufacturing, food production to green initiatives.
Initially the province of business people, incubators are now spreading to corporations, universities, states, and municipalities. As a matter of fact, a floating incubator has been proposed that is due to launch around the third quarter of 2013. The Blueseed vessel has plans to house 1,000 entrepreneurs for a rent of $1,000 to $3,000 a month, and some equity will have to be surrendered. It is further planned that the Blueseed will anchor in international waters, making an entry visa into the U.S. unnecessary, and daily ferry service will be available to transport the entrepreneurs to nearby Silicon Valley. 140 business startups from 40 nations have already expressed interest.
What’s The Reality?
According to the National Business Incubation Association (NBIA), a whopping 87% of companies that graduated from incubators are still in business.