Key Takeaway:

 

  • Startup incubators offer mentorship and resources to help entrepreneurs kickoff their business during the early stages.

  • Unlike accelerators, startups focus on long-term, ongoing support and development.

  • There are many different types of incubators such as corporate, academic, private, etc.

 

Anyone who has had an interest in entrepreneurship would have eventually heard the words ‘startup incubator’ at some point in their lives. The right startup incubator can be an excellent way for you to attract investors, secure financing, and get the resources you need to turn your business idea into a successful new venture. But before you can do any of that, you need to know how startup incubators work, and how to choose the right one for you.
 

In this guide, we’ll explain the different types of startup incubators out there, the benefits you can get from them, and how to find the right one for your business idea.

What Is A Startup Incubator?

A startup incubator or a business incubator is essentially a specialized program or ‘hub’ that provides entrepreneurs with mentorship and essential resources to help their business grow. It is focused primarily on the early-stage aspects of a business–unlike accelerators or venture capitalists.
 

Another key difference between a startup incubator and a business accelerator program is that accelerators follow a time-bound structure–typically around 3 to 6 months. A startup incubator, on the other hand, focuses on the initial phases of business development, and therefore provides ongoing support until the startup is ready to scale.
 

While accelerators focus heavily on seed funding, startup incubators focus on developing the business model so it is viable enough to attract investments and secure financing.

How Do Startup Incubators Work?

Since the goal of startup incubators is to help entrepreneurs during the very early-stage of their business venture, they tend to offer a wide range of services–from mentorship, workshops and training, to networking opportunities and facilities. 
 

  • Mentorship and Guidance: One of the core components of any incubator program is the guidance and mentorship they offer to startups. This mentorship and guidance comes from industry experts, professionals and entrepreneurs who can share their knowledge on business development, strategy, marketing, and more.
     

  • Networking Opportunities: Since startup incubators tend to be a collaborative program, they usually have valuable, insightful networking opportunities for entrepreneurs. These connections can later help entrepreneurs to secure financing or form partnerships in the industry.
     

  • Resources and Facilities: Growing a business comes with many challenges. Many startup incubators offer facilities such as office space, administrative support, legal services, and technical resources so that entrepreneurs can focus their energy and time on innovation and business development.
     

  • Workshops and Training: Along with mentorship and guidance, startup Incubators often host workshops and training sessions to entrepreneurs to teach them how to refine their business model, create pitches for investors, and other essential skill development.

 

As you can see, most of the services offered by incubators focus on the challenges of building a business, which is a crucial stage for anyone interested in entrepreneurship. Without a viable business model, it is impossible to secure financing or investments. Therefore, a startup incubator can help you make sure your business is ready for the market before you present your pitch and ideas to potential investors.

What Are The Different Types Of Startup Incubators?

Now that you know how startup incubators work, it is important to understand the different types of startup incubators out there so you can choose the right one for you.

  1. Corporate Incubators

As the name suggests, corporate incubators are those startup incubators that are supported by large corporations who want to help foster innovation in the industry. Some popular examples of corporate incubators are P&G Ventures by P&G, InGenius by Nestlé, and Volvo Innovation Lab by Volvo Group.

  1. Academic Incubators

While corporate incubators are backed by large corporations, academic incubators are supported by universities and other academic institutions with the goal of helping students and faculty get their startup ideas off the ground. Harvard University’s Venture Incubation Program (VIP) and Stanford’s StartX are some of the most renowned academic incubators in the U.S.

  1. Private Incubators

Private incubators are independent programs that are typically not directly associated with universities or large corporations, but have an extensive network of mentors, investors and alumni who can support entrepreneurs with their business ideas. Some of the most popular private incubators are Y Combinator and Techstars.

  1. Public Incubators

Another type of business incubators are public incubators, which are government funded organizations that focus on small businesses and local startups for the goal of economic development and employment.

 

5 Benefits Of Joining A Startup Incubator

If you believe you have the grit and creativity to kickstart your own startup, joining an incubator can be a great way for you to pave the way for a successful business. Below are 5 good reasons why you should join a startup incubator if you want to be a successful entrepreneur:

  1. Learn From Industry Experts And Professionals

There’s no better way to perfect your business idea than to learn from the guidance of those who have walked the path before you. By joining a startup incubator, you can get the mentorship and guidance from industry experts and professionals–a rare opportunity you may not have otherwise.

  1. Connect With Investors, Partners And Other Startups

Most startup incubators offer many networking opportunities, which can be a great way for you to get to know others in your industry, and start forming your own community. Businesses do not survive in the market on their own–and as an entrepreneur, a startup incubator can help you get in touch with strategic partners, potential investors and other startups.

  1. Get Access To Valuable Resources And Facilities

Startup incubators have invaluable resources and facilities to offer entrepreneurs. From getting access to office space, technical support, administrative and legal support, the resources you get from joining a startup incubator can keep your mind off of the other challenging aspects of running a business. That way, you can focus more on perfecting your business model and innovating your idea.

  1. Gain Trust And Credibility When You Pitch Your Idea

When your business is being backed by a reputed startup incubator, you have more credibility when you decide to go ahead and pitch your idea to investors and other stakeholders. Trust is hard to earn for anyone trying to break into a new industry, and joining a startup incubator can help you gain the trust of stakeholders much more easily.

  1. Secure Financing By Having A Solid Business Plan

With all the resources and mentorship at your disposal from joining a startup incubator, you can develop your business idea into a solid, viable business plan that can actually attract investors and secure financing.

 

How To Choose The Right Startup Incubator For Your Business?

With so many different types of startup incubators out there, you might be wondering which one would be the right choice for your business. Here are some things you should consider before joining a startup incubator:

Step 1: Assess Your Startup’s Needs

First, think carefully about your business idea and what it needs to transform into a viable, market ready venture. Do you need technical support for research and innovation? Do you need mentorship and guidance about operating in a specific industry?
 

Knowing what your business idea needs is the first step to figuring out which startup incubator is the right fit for you.

Step 2: Research Potential Incubators

Once you are aware of what kind of assistance and resources you are looking for, it’s time to research potential incubators that can provide the startup support systems you need.

Step 3: Consider Location And Industry Focus

In addition to choosing a startup that aligns with your business needs, you also need to take the location and specific industry into consideration. You want to choose a startup incubator that is specialized in the industry and region where you want to kickstart your business.

Step 4: Evaluate The Program’s Network

The goal of joining a startup incubator is to access and utilize their resources to the maximum. Pick a program that is supported by a network of industry experts and professionals who can guide you, or could become potential strategic partners for you.

Step 5: Prepare For The Application Process

Every startup incubator has their own application process. Once you know which incubators are a good fit for you, prepare carefully for the application process and highlight your skills, experiences and the potential of your business idea.

 

Examples Of Successful Startup Incubators

If the idea of joining a startup incubator seems the right approach for your business, consider some of the most well-known and successful startup incubators when you start your journey.
 

  • Y Combinator: This startup incubator has backed some of the most well-known and popular businesses that have disrupted the industries where they operate. Some of the businesses that were supported by Y Combinator are AirBnB, Dropbox and Reddit. They focus intensively on mentoring and workshops, all of which leads up to Demo Day, where participants get to pitch their idea to investors.
     

  • Techstars: A mentor-driven program with a huge network of alumni, Techstars have supported companies like Sphero, ClassPass and SendGrid.
     

  • 500 Startups: With a focus on growth strategy, fundraising and product-market fit, 500 Startups is known to support businesses from many diverse industries.

Final Thoughts: Making The Most Of Startup Incubators

For entrepreneurs and small business owners, startup incubators can be a valuable opportunity to get mentorship, resources, and connections for growth. By choosing the right incubator, you can transform your business idea into an exciting, successful new venture. 
 

So take the next step for your business, and get started on the journey to finding the right startup incubator for you. 

FAQ

  • What is the difference between startup incubators and accelerators?

Startup incubators provide long-run mentorship and support for early-stage business ideas, while accelerators are more intensive and focus on seed-funding for well-developed business models.

  • What is the biggest startup incubator?

Y Combinator is widely considered the largest and most influential startup incubator.

  • How do startup incubators make money?

Incubators usually charge money for their services or take equity in the startups they support.