As an entrepreneur, you must have heard of incubators. In the U.S alone, there are around 1,400 incubators. This might get you wondering about business incubators' roles, what they bring to the table, and whether this strategic move will benefit a young startup. This article will tell you all about business incubators, their model, their importance, how they help to boost the startup ecosystem, and how to choose the right one.
Business Incubators
A business incubator is a program specially designed for a startup that helps grow and innovate.
What are business incubators?
Business incubators provide you with services that are specifically designed for your startup to help it to grow. These services range from management training, mentorships, education, office space to investors and venture capital financing. A business incubator will allow your startup to operate and grow at a lower cost during the initial stages. There is an application process to join an incubator followed by a commitment for a specific period.
Importance of business incubators in startup
Business incubators are essential to have in a startup as they provide you with administrative and advisory support. Additionally, they also give startups financial help along with guidance on competing with market players. The relationship built between a startup and an incubator establishes a natural synergy of the business incubation process. This benefits the business for a long time, even after the relationship ends.
Examples of business incubators
Business incubators have evolved into many forms since their start in the 1950s. The sheer number of incubators might get you confused, but every one of them aims to promote growth. Here are some of the kinds you may come across while looking for incubator programs:
- Venture capital firms: In order to provide an investment opportunity to startups, venture capital firms have established incubators. They may offer to fund alone or along with an investment in the startup in exchange for equity.
- For-Profit property development ventures: In this, large companies form incubators for many purposes. Programs offered in these can be a way to fund subsidiaries, an investment opportunity, to find partnerships, or develop the technology.
- Non-profit development corporations: Government agencies and non-profit organizations use incubators to help stimulate economic growth in the country. Such programs tend to only invest in companies that are focused on the welfare of the public.
- Academic institutions: There are many universities or academies that run business incubators. Some of the programs accept young people from startups, and others work with university students.
Pros and cons business incubators
There are many pros and cons of a business incubator; some of them are:
Pros
- Incubators generally offer startups a co-working space with low rent. This helps new startups to save money on rent and other operating expenses.
- Incubators help startups to find fundings. They will get you in contact with venture capitalists that may be willing to invest in your startup. If you get accepted by a good incubator program, it can serve as proof of your company's skills and determination to the investors.
- Startups can not only learn but also grow as the best incubators will grant you access to a network with the best of the best. You will find coaches and mentors that will assist you in your journey. Some mentors and coaches will include accountants, angel investors, researchers, lawyers, HR professionals, entrepreneurs, and much more.
- Incubators often provide you with a co-working space. Often this co-working space is with other fellow innovators and young entrepreneurs. This will be the centre for you to join minds with people of similar thought processes and also create partnerships with other businesses.
Cons
- There will be a time commitment that you will have to make with them.
- They are usually slow-paced, which is only beneficial to companies that need time to grow.
- It is not easy to get into programs with a high reputation. This limited access is due to the selection process. High programs get many applicants and are harder to enter.
- Incubators have a rigid schedule.
Types of business incubators
There are many types of business incubators; here are some of them:
#1 Virtual Business Incubators
Also known as online business incubators, virtual business incubators appeared with the advent of the internet and everyone had access. Few incubator companies that started in the 1950s did not survive the internet bubble, but most of those who did adapt and switch. Many high-tech business incubators use the rise on the internet in the 1990s to adapt and grow.
A virtual incubator allows the business to be remote. The startup need not be in the exact location of the incubator. This is best for those who work remotely from their house or warehouses.
#2 Medical Incubators
A medical incubator is focused on biomaterials and medical devices. These types of incubators encourage innovation in medical technology by supporting businesses and startups that innovate such tech.
#3 Kitchen Incubators
A kitchen incubator's primary focus is the food industry. Speciality foods are of high value and low production. To start a commercial kitchen costs a lot. Kitchen incubators provide shared kitchens that can be rented for low costs at hourly or monthly rates. They also offer services such as packaging, marketing, and the sale of products.
#4 Public/Social Incubators
They focus on public welfare and invest in companies that look after the public. These incubators provide social entrepreneurs with the necessary tools to expand their business.
#5 Seed Accelerator
A seed accelerator is an incubator that is only focused on early startups. They attend a selective group providing educational components and mentorship. Unlike other business incubators, it is easy to apply for, and the only drawback is that it is competitive. There are types of seed accelerators that are programs or subsidiaries of large businesses.
#6 Corporate Accelerator
The corporate accelerator is a program of substantial for-profit corporations that focus on startups. They are similar to seed accelerators but have other objectives. Some of which are establishing a tunnel for investments from venture capitals or keeping close to the trends. They usually have a fixed-term and a continuous intake.
#7 Startup Studio
A startup studio, also known as a startup factory, is a business incubator that focuses on building other companies to their success. This is referred to as parallel entrepreneurship. Bill Gates first did it, and in 2008 the trend gained momentum.
#8 Venture Build
Venture build is similar to the startup studio, but instead of helping other startups grow, it builds companies internally by using their resources and ideas. They do not take any applicants or run a competitive program. They pull ideas from within the company and assign teams to develop and make them grow. They build many models, projects, and systems first and then create a company around the best and most promising one.
How do business incubators help startups?
Validate the idea
Every founder thinks that his idea is the best and will work. The harsh reality is that most of the time, this is not true. This is why the idea needs to be validated, making sure that it will work. There may be times when the idea may be innovative, but there is no potential or demand for it as it may not solve a problem. The incubator validates the idea, researches and determines the best mix through market feedback, and makes a ready prototype.
Mentor services
Young entrepreneurs may be full of confidence and drive, but they do need guidance. Incubators provide them with mentoring services. They make them understand everything they will face and know all aspects of the business like sales, marketing, operations, development, and finance. A good mentor will help the company succeed.
Co-working space
Startups do not have large sums of cash available to spend. They have to be careful of how they spend so that they do not go bankrupt. Incubators provide startups with co-working spaces that cost less to rent. These spaces are shared with similar-minded people and can help increase the drive of entrepreneurs.
Assistance in fundraising
Incubators have a well-established network. They provide startups access to that network and investors that are willing to invest in the idea. They also help you practice by doing demo meetings before actually meeting the investor to secure the investment.
Shared Resource Pool
They provide you with a shared resource pool of experts in various areas that help your startup to develop faster.
How do you choose the right business incubators?
Selecting the right incubator is essential for your startup. Here are some things to look at before choosing one:
- It would be best if you looked at the perks of joining them. Research their services and offers to see if it matches your needs.
- Look at their curriculum and make sure that it is what you need, and they are not giving something you already have since some of them follow a strict schedule.
- Make sure that the costs are reasonable and that you are willing to pay for the equipment and workspace they are providing.
- Check their track record if you can meet up with people who have been there and get their take on the whole experience.
- You must check the incubator's location as you will have to go there regularly. Please make sure you are comfortable with it, and it is not a hassle.
Additional Reference: Here is the top 100 startup incubator list prepared by Eqvista.
Ready to join an Incubator Program?
Incubators help startups in many ways. It is vital for you to choose the right incubator and program for your startup, as if done correctly, it can lead to the success of your startup. All the services that business incubators provide have helped boost the startup economy. Many young entrepreneurs do not have to endure huge costs and go through some of the hardships with the assistance of business incubators to excel.
Is There a Drastic Difference Between Startup Incubator Switzerland and Startup Accelerator Switzerland?To begin with, startup incubators and startup accelerators have the same purpose: to help newly established businesses gain a stronger foothold in the industry and assist them with resources until they are fully independent.Startup incubators are more suitable to businesses that need extra support and have just been established whereas startup accelerator Switzerland is more suitable to businesses that have a strong establishment and just need a little push until it can stand alone.Therefore, considering the conditions and requirements, startup incubators support businesses for a very long time, for years, or for as long as they need.
A startup accelerator, on the other hand, will only support small businesses for a few months through a pre-organized acceleration program.So, no, there isn’t much of a difference if you think about the resources provided by these organizations and startup invest Switzerland but there surely is a difference in the timespan that they support a business for.How Can Your Business Benefit from Startup Incubators in Switzerland?statrSome of the main benefits that your business can gain from startup incubator Switzerland are a cost-effective, professional work environment, brilliant consultancy from experienced pros, useful referrals, open support, and administrative support of high standards.
You will also achieve excellent networking opportunities, will meet new clients, and make several contacts that will help you out a lot in enhancing your business’s success levels.Other than that, you will get access to excellent funding resources that will help you out in establishing a stronger establishment, you can find the ability to continue your education in the business department and learn several new things that can help your business, and you will also find various helpful resources like the ability to enter new markets and make new contacts that will help you learn more about the industry.Moreover, you will save a lot of time and money while working with a startup invest Switzerland as it will grant you access to a pool of unlimited resources such as professional accounting and financial dealings and brilliant advisory services.With a startup incubator Switzerland, you can also get your hands on some marvelous equipment that you need to improve your company’s work.What Are Some of The Best Startup Accelerators and Startup Incubators in Switzerland?MassChallenge - Switzerland AcceleratorEIT Food AcceleratorKickstart InnovationF10 Fintech – ScaleupF10 Fintech - Prototype to Product ZurichFONGIT
Those prescribed procedures include:Place your unit appropriatelyCheck temperatureCheck moisture and CO2Clean the incubator routinelyAlign all the timeRight now, take a look at each of these in detail.Place Your Unit Properly Appropriate situating of your unit can guarantee it runs effectively and has the least presentation to potential contaminants.
Here are the variables you have to consider when settling on the ideal spot for your lab incubator:Doors and vents can blow in contaminants and increment the possibility of fungal development.
Furthermore, they can make drafts that can influence the temperature dependability of your unit.Direct daylight can cause temperature vacillations and issues with against buildup highlights.You need enough space (in any event three inches) around the unit with the goal that warmth can vent and lines and attachments are effectively open.Place floor incubators on remain to confine the danger of contaminants clearing in when the entryway is open.Place units from sources of vibration, for example, shakers, stirrers, or coolers, as vibrations can influence cell development.Guarantee the region around the unit is as perfect as could reasonably be expected.Perfect conditions for a lab incubator would be in cleanroom conditions and temperature-controlled conditions.
As that is frequently not functional nor feasible, considering the variables above will get the job done for most applications.Screen Temperature Incubators are frequently kept up at 37°C for the ideal development of cell cultures.
Temperature sensors are incorporated units in refrigerated incubators, however, how would you realize that you can generally depend on your sensor?
One approach to guarantee the right temperature is to utilize a subsequent thermometer.If your incubator has a glass door, you can join an adjusted thermometer to within the glass and read it without opening the door.
