By Nav Athwal, founder and CEO of RealtyShares.
Taking a startup from the "idea" phase to a fully fleshed-out company is a journey that's often fraught with obstacles. As the CEO and founder of an online marketplace for real estate investing, I know all too well the challenges startups face with regard to furthering growth.
Entrepreneurship seemingly made a comeback in 2015 in the U.S. The Kauffman Foundation estimates that 530,000 new businesses were created each month last year, representing a 10 percent year-over-year increase in startup activity. While that surge is encouraging, the outlook for the vast majority of startups often is not. Research from the National Venture Capital Association suggests that three out of four venture-backed startups fail. Those statistics are daunting to say the least.
There is, however, a tool that first-time founders can use to increase their odds of survival over the long-term: It's called the startup incubator.
The Incubator Difference
Having gone through the incubator process, I've experienced firsthand the benefits for startups focused on creating a sustainable company. Incubators allow newcomers to foster connections with individuals who are positioned to help them grow their business. When you go to business school, you're going not because of what you stand to learn, but for who you can meet.
Incubators also offer the ability to raise capital and get to the next stage of growth. That was a huge motivator behind the decision to take our company to 500 Startups, a leading global venture capital seed fund and startup accelerator. The time that we spent with 500 Startups enabled us to put our business model to the test and figure out what worked (and what didn't).
We were also on the receiving end of some extremely useful advice about how to build our company in a way that was as transparent as possible, while maintaining the highest compliance standards. Being part of the incubator allowed us to mold a healthy business that we could scale at a realistic rate.
Incubators like Y Combinator, Techstars and AngelPad have also proven to be invaluable for newcomers who have a great idea for a company but lack the connections and know-how to get it off the ground.
Making the Most of an Incubator Experience
Joining an incubator requires a serious commitment to the success of your venture. Aside from that, however, it also requires some careful thought prior to and during the process to ensure that you're maximizing its value.
Getting involved with an incubator requires more than simply filling out an application. You need to get clear about which type of incubator would be the best fit. One of the most damaging mistakes a brand-new company can make is choosing one that doesn't thoroughly meet its needs. Most incubators want to see some traction before they accept a startup into their ranks, see your company's story mapped out early.
A stellar idea is often complemented by a great backstory. Confidence is key as well: If you want to stand out during the interview, project a firm belief in your product and your business at all times. The right referral can have a significant influence on whether your startup is accepted to a particular incubator program.
In our case, we were able to gain entry to 500 Startups through a referral. If you know a founder who's already been through the incubator you're targeting or someone who's well-respected in your industry, you may be able to leverage that relationship to get your foot in the door.
Entering an incubator program is certainly something to take pride in, but you can't sit around resting on your laurels. Be prepared to fully immerse yourself in the experience and be receptive to advice, all while keeping your own goals and vision in sight.
It's somewhat of a balancing act, but if you're able to navigate it successfully, an incubator can make your startup that much stronger as you move towards the next phase of growth.
Nav Athwal is the founder and CEO of RealtyShares, a curated marketplace connecting real estate developers and operators with investors across the country.