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Incubator Update

A general discussion of business incubators and their sponsors.
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There are approximately 500 business incubators across the country today, up from 385 in 1990, reports Dinah Adkins, executive director of the National Business Incubation Association, in Athens, Ohio. Since 1986, she says, new incubators nationwide have been opening at the rate of more than one per week. The incubator graduation rate (the number of graduates as a function of the number of tenants) is also on the rise -- 27% today versus 22% in 1990. "Considering that 65% of all incubators in the country are still less than four years old, one would expect the rate to accelerate," says Adkins. A recent survey found that 37% of incubator tenants spend one year or less in the facilities; 32% are in and out within two years. The mean gestation period is 2.2 years.

Aspiring entrepreneurs looking for places to hatch their ideas may want to head for the hills: new incubators in rural areas are opening at faster rates than their suburban and urban counterparts. Nearly 26% of the country's incubators are to be found in rural areas, and 42% of the rural ones opened in the past two years. By contrast, suburbs lay claim to just 12% of incubators, with over half (56%) of that group at least three to four years old. Urban facilities still make up the largest proportion of incubators, nearly 62%.

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Who Foots the Bill?
An incubator's objectives, activities, and tenant population are influenced by the kind of organization that sponsors or supports it, notes Adkins. The NBIA identifies five sponsorship categories: for-profits, four-year colleges, two-year/technical colleges, government/public agencies, and hybrids of any of those. Slightly more than half of all incubators are sponsored by a public agency or the government. More than a third of incubators responding to a recent NBIA survey have an economic-development corporation as a sponsor.

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Major Sponsors of Incubators
Public Agencies/ 51% Government

Hybrids 25

4-Year Colleges/ 10 Universities

For-Profits 8

2-Year Colleges 6

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Source: NBIA State of the Business Incubation Industry Survey, 1991.

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Incubating Industries
Look to the following industries to see who's incubating new ideas:

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# of incubator % of
Industry tenants nationwide national total
Service 368 36.0

Light manufacturing 204 20.0

Technology products 162 15.9

Research & development 109 10.7

Wholesaler/distributor 80 7.8

Other 37 3.6

Not-for-profit 27 2.6

Construction-related 20 2.0

Retail 10 1.0

Heavy manufacturing 5 0.5

TOTAL 1,022 100.0

Source: NBIA State of the Business Incubation Industry Survey, November 1992. -- Alessandra Bianchi

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