Businesses proliferate when ideas germinate. A novel idea or an out-of-the-box business concept results in an innovation, which could be a complete game-changer. We have seen many examples in the past; Microsoft, Apple, Amazon – well, the list is endless.
That said, ideas need to be put to action to turn them into reality. This requires resources – educational, mentorship, operational, and of course, financial. Someone out there might have a wonderful business idea but may lack one or more of the above to give life to it.
If you are one of those talented minds who are in search of necessary aid, this page is for you.
In this blog, we delve into what business incubators are, what benefits they offer, how they are different from accelerators, and finally the pointers to consider before choosing a business incubator.
Let’s get started.
WHAT IS A BUSINESS INCUBATOR?
In simple parlance, business incubators are specialized programs or workspaces that help sole entrepreneurs or startups to innovate, develop and grow. These programs offer all the resources that the startups require during the early stages of their incubation, until the time they stabilize. These include access to office equipment, administrative support, key investors, education, training, and mentorship. The business incubators require an application process for the budding entrepreneurs to join and some dedicated commitment period.
Business incubator programs support the participants in hopes that they will complete the course, graduate, and move ahead. That said, some individuals conclude that their business idea will not work and close down instead.
How does the business incubator application process work?
Most business incubator programs need applicants to undergo a thorough application procedure. Different business incubators have different application criteria. Essentially, they include:
Apply – This involves filling up and submitting your personal details and information about your business. Some incubator programs ask for your business plan and details of any earlier business activities you were into.
Interview – This involves a round of interviews, usually over a brief video call, to understand your experience and knowledge.
Decision – Usually, the business incubators intimate their decision of acceptance within a couple of weeks. In case you require financial assistance, you may apply after getting accepted.
Examples of business incubators
There are a plethora of business incubators, however, the common objective is to promote the growth and nurture the upcoming entrepreneurs. Some examples include
Academic/Educational Institutions – Several business incubators are run by educational organizations and academic institutions. While some incubator programs involve university students, others take young professionals from companies.
Venture Capital firms – Some venture capitalist firms also serve as business incubators and invest in startups in return for equity or fund them through the program.
Non-Profit Organizations – Various not-for-profit groups and the government sectors also sponsor business incubator programs, usually accepting companies targeted at public development.
Benefits of Business Incubators
Undoubtedly, business incubators offer a range of benefits to those finding their foot in the startup business. These programs provide guidelines, resources, and financial aid to those budding entrepreneurs. These benefits include:
Learning and Growth – Most incubator programs help their students by helping them form a network with key mentors which may include lawyers, scientists, business leaders, human resource professionals, researchers, and more. This fosters the overall growth of the entrepreneurs and nurtures their business idea.
Cost-effective – Business incubators offer support including office space, equipment, etc. at lower costs. This in turn helps you reduce your operating expenses while focusing on the core business area.
Funding Options – Most business incubators bring you in touch with funding organizations such as venture capital firms, government agencies, or others who may be willing to fund your business idea. This in a way relieves you of a major chunk of financial burden, while enjoying the privilege of being supported by an organization of repute.
Networking – Business incubators help you network with other fellow innovators and thus you gain enhanced experience of working with like-minded professionals, who can offer you new perspectives.
Improves Focus – Incubators provide a structured approach during the program that keeps you focused on your business goals. Regardless of whether you are in daily workshops or weekly sessions, you can plan on how to kick-start your business.
INCUBATORS VS ACCELERATORS
Incubators are mostly focused on ascertaining the viability of a business idea and setting up the initial success for the founder or the entrepreneur. Some incubators put a limit on the time frame for which the company can operate in that space, though usually 1-2 years. While some incubators take equity, others charge a fee for the company to be in that space for the specified duration and tap the available opportunities.
Accelerators are short-term, structured programs for 3-4 months that have a rigorous application process. Most accelerators limit the number of participants and either offer cash or the accomplishment of an objective. In the case of accelerators, usually, the accepted companies have a proven track record and a minimum viable product (MVP). Accelerators primarily focus on providing mentorship, resources, and networking opportunities to increase the success of these proven business concepts. The time frame of accelerators usually ends with sharing the presentation of their growth and development achieved during the period of the program.
Things to Consider When Joining an Incubator
There are a couple of pointers to look into before joining an incubator:
Well, if you are new to the business and need guidance in formulating a business plan, creating a model, or bringing a specific business idea to life, then make sure you go for incubators who have expertise in your niche.
Are you looking for funding options?
If you are a business with proven results and need funds to further its success, then you must opt for the accelerator. However, if you are a budding entrepreneur requiring mentors, ideas, resources, workspace, etc., then an incubator must be your choice.
Business incubators offer a variety of benefits that nurture the dreams and goals of upcoming entrepreneurs. They are a great option for people who envision an ambitious goal and are determined to achieve them. Incubators serve as launching pads for thousands of such individuals and businesses, preparing them for a bright future ahead.