As the number of incubators has continued to rise in recent years, some experts are questioning whether they do enough to support startups. While there are studies that show the positive impact of incubators on businesses, there is plenty of data to suggest it might not be the best option for all new ventures.
An incubator provides office space and education to new businesses, often with a fee. Businesses usually must apply to be accepted into the program and, once they're accepted, they'll have access to the incubator's amenities. This includes networking opportunities with industry professionals who can help them as well as access to mentors. The support and camaraderie an early-stage business can access through an incubator is enticing, especially since new entrepreneurs often feel the need for support for the many questions they have.
The Best Candidates
Obviously the top reason to consider an incubator is your need to find assistance. Whether you need funding, advice, a workspace with internet access, or a combination of all of the above, note those needs and keep them in mind as you read up on or even personally check out available incubators in your area. Keep in mind that incubators can vary drastically from one location to another. In some instances, the program may be nothing more than a co-working space with occasional member meetings. If you're looking for even more impressive amenities such as seminars or occasional community events to help you learn and network, then a smaller space may not be right for you.
In order to qualify for an incubator program, you'll first and foremost need to be seen as a startup. Once you've determined that you fit that criteria, search for an incubator in your area and read up on the requirements. If your local incubator has openings, its leaders will likely review your application, paying close attention to the type of company you run, and determine whether you're the right fit for that particular program. Being denied by one incubator should not stop you. You may be declined because the nature of your business simply isn't a good fit or the program is currently full.
Is It Right for You?
At its heart, an incubator is merely a fundraising organization, gathering money and dispersing them among a select group of startups. The application process for one of the few open spots in many incubators tends to be highly competitive, with a large number of startups applying. However, before you battle through the grueling process of explaining why your idea is better than everyone else's, ask yourself if there might not be a better way to accomplish your goals.
One of the little-discussed facts about incubators is that these services are not meant to serve as a grant. They more than likely will take a piece of you along the way. In many cases, you'll be expected to follow the advice you receive, which takes away a portion of your control of the company you're working so hard to build. You'll also usually be expected to give the incubator equity in your company. It's important that you fully understand before you sign on the dotted line exactly what you will receive in exchange for that equity. A good incubator should give you a strong head start in building your business, providing guidance and connections to potential partners who will help you grow and succeed. If you're signing away equity in exchange for nothing more than office space and a few seminars, you likely can get that kind of assistance without giving anything away.
Instead of standing in line to be accepted at an incubator, consider seeking out one of the many Small Business Development Centers located around the country. Often held at universities, these centers provide counseling and training services to small businesses at every stage, including information on how to get financial assistance when it's needed. A startup can take its business plan and marketing materials to one of these centers and receive advice on things that might need to be changed in order to make the business more effective.
Many co-working spaces are appearing on the scene too, offering camaraderie and networking without requiring control or equity in your company. With a co-working space, you'll be granted an office space for a monthly fee, where you'll work alongside other local startups and small businesses. Companies employing this method have found these spaces to be valuable resources for meeting others and learning.
If you're considering an incubator for your startup, learn as much as possible about each one and apply only to those that you think can help your business most. If you aren't accepted, at least you'll know that there are numerous alternatives that can provide support and assistance without requiring a rigorous application process.