10 Start-up Incubators to Watch
TechStarsY-CombinatorSummer@HighlandDreamIt VenturesLaunchBox DigitalFlashpointCapital FactoryBen Franklin TechVenturesEnvironmental Business ClusterEnterpriseWorks at the University of Illinois
Founded in 2006, TechStars is one of the country's most prestigious incubators. Its four locations in Boston, Boulder, New York City, and Seattle, host 10 teams for three months of the year on rotation, funding each team member between $6,000 and $18,000. More than 600 teams applied last year, making TechStars one of the country's most competitive incubators. TechStars focuses on technology companies with transnational appeal, and requires a 6 percent equity stake in any new companies that are funded. Each program ends with a pitch event with venture capitalists and other investors.
Since 2005, Y-Combinator has set the standard for technology incubators. Founded by tech entrepreneur Paul Graham, the Silicon Valley-based paradise for coders with an entrepreneurial streak hosts teams in two rotations from January to March and from June to August of each year. Y-Combinator invests about $18,000 per company for the session, and asks an equity stake that averages about 6 percent. Roughly 300 companies have received funding to date, among them Scribd, WePay, and Reddit.
Michael Gaiss, a senior vice president at Highland Capital Partners, decided in 2007 that an in-house incubator might be an ideal way for investors to acquaint themselves with next-generation entrepreneurs. The program took a hiatus last year, but has returned this summer to host 11 teams spread across locations in Boston and the San Francisco Bay Area. The incubator has accepted applications from companies with a variety of different ideas in past years, but decided to narrow its scope to technology companies this round. Teams of two-to-four members receive $15,000, along with office accommodations from early June through the end of August.
DreamIt Ventures began hosting start-ups in Philadelphia in 2007. Recently, the incubator expanded to New York City, where 12 of its alumni companies are based. Offering $5,000 for each additional team member (up to $25,000 for a team of five), DreamIt makes available a bit more seed funding than the average incubator. Like other top-tier incubators, DreamIt provides successful applicants with mentorship from entrepreneurs, as well as legal, accounting, and administrative help, and a demonstration day during which teams present their fledgling companies to investors.
Founded in Washington, D.C., LaunchBox Digital expanded last year into North Carolina's Research Triangle Park. Teams receive $15,000 to $30,000 in seed funding in exchange for a 4 to 8 percent equity stake in the company. This incubator, which favors proposals with a technological orientation, provides the companies it selects with administrative and legal advice over 12 weeks leading up to their demo day.
Flashpoint doesn't look for the latest location-based app or daily deals scheme. This incubator based in Washington, D.C., was founded in 2003 to provide space and supplemental financial support to nonprofit arts organizations in the Beltway. The average Flashpoint business has just one, two, or three paid staff members, and receives technical support, professional development, and office equipment during residency. Notable alumni include Irish contemporary arts group Solas Nua, professional dance company Step Afrika!, and Washington Improv Theater.
Capital Factory sets up shop in Austin, Texas, from the end of May to the beginning of August each summer. The program is capped by a demo day with 250 investors in September. For the 10 weeks of the program, each team receives $20,000, office space, and brand and logo development as well as accounting, banking, help with PR, and legal aid. In exchange, Capital Factory asks a 5 percent equity stake. Capital Factory prides itself on the mentors it makes available to participants, including SKYLIST founder Joshua Bear, ApartmentRatings.com founder Jeremy Bencken, and Smart Bear founder Jason Cohen.
Situated in what was once Bethlehem Steel's main research facility, Ben Franklin TechVentures was founded in 1983 and moved to its current location on the campus of Lehigh University in Bethlehem, Pennsylvania, in 2007. Residents at TechVentures have received seed funding from Ben Franklin Technology Partners in the past. This regional incubator assists early-stage companies with operating costs, connections to investors, and business advice. One of a group of ten regional Pennsylvania technology incubators, TechVentures provides the facilities, lab space, and management advice that start-ups need.
More than a decade older than most of the other incubators on this list, the Environmental Business Cluster is the nation's largest clean-tech incubator. Founded in 1994, the EBC has assisted more than 150 companies by providing facilities like conference centers and office space as well as education, counseling, and access to investors, all in the hope of promoting businesses that are working to develop renewable energy sources, better waste management treatments, and other forms of emerging green and environmental technology.
Part of the University of Illinois's Research Park, EnterpriseWorks hosts early-stage tech firms, and has had particular success with information and biotechnology companies. About 70 companies have had their start at EnterpriseWorks since the incubator opened its doors in 2003. If you're looking to hobnob with the venture capital flash that only Silicon Valley can offer, this may not be the incubator for you. But for tech firms that need some time to get their business in order, a residency at EnterpriseWorks provides office and lab space, meetings with the incubator's three entrepreneurs in residence, and the option to hire student employees from the University of Illinois's student body. —Matt DeLuca