8 Things You Should Know About Business Incubators
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Today’s Question: What, exactly, do incubators do? How do you know if your startup needs an incubator? How do you pick one that is right for you? What are the benefits? What are the downsides?
1. Know What Incubators Do
Incubators work with early-stage companies or baby businesses, helping them access resources and support to get them to the point of self-sustainability. When people decide they want to become entrepreneurs, but are not sure where to turn for help, the incubator can provide mentoring, coaching, collaboration (with like-minded people), access to networks, and even physical office space.
— Krista Covey, Pasco Economic Development Council’s SMARTstart Pasco Incubator
2. Guard Your Intellectual Property
I am an intellectual property attorney. I counsel clients on the dangers of incubators in the sense that, if you have a patentable idea or trade secret, you need to keep those confidential at the incubator. Sometimes, that can be difficult both physically and logistically if you are in a space where there is a lot of sharing – a space like an incubator.
— Kathleen Lynch, Law Office of Kathleen Lynch
3. Look at an Incubator’s Track Record Before Signing Up
Just as investors look at traction for a startup before they invest, you should look at the success of previous startups at a particular incubator. The success of an incubator should be measured by how well startups have done after graduation. Does the incubator have a track record of successful startups? Has the incubator assisted startups in raising their seed rounds after graduation?
— Todd Crosland, Seed Equity Ventures
4. Look for an Incubator That Can Nudge You Toward Success
Ultimately your assessment should be based on what you need. If you are lacking in encouragement or mentorship, if your business plan is close to working, an incubator can be a great avenue to get that little nudge and the social support to help your business reach a new level.
— Matthew Egan, Image Freedom
5. Don’t Overcommit
Before joining an incubator, consider what’s going on in your life, your commitment level to your company, the location of the incubator, and what the requirements are. Don’t overcommit.
Ask yourself if you are ready to be a client. This means showing up and participating in the program; being teachable
and accepting input from the incubator’s leadership; and all the while continuing to grow as the leader of your own company.
— Leslie Naugle, SetHero
6. Know the Difference Between Early-Stage and Late-Stage Incubators
Early-stage incubators are valuable for helping an entrepreneur turn an idea into a step-by-step roadmap for building a business. The key ingredient in such incubators is mentorship from experts in the areas of building a business plan, financial strategy, management, operations, branding, pitching to investors, marketing strategy, etc.
Late-stage incubators and accelerators for businesses that can show initial market traction can provide important access to angel investors and opportunities to pitch to venture capitalists. Incubators and accelerators also help build important networks of contacts that can prove instrumental for financing and partnership prospects.
— Lynn Nichols, X Intellectual Property
7. An Incubator Can Bring You a Sense of Community
Incubators are about building partnerships with other organizations so that both businesses can benefit and grow. We knew we needed an incubator because we hit a bit of a hump and wanted to be part of a community of successful companies and mentors that could get us over that hump. We chose the one we are in because we saw the value it could offer us – but we also saw how we could add value to the incubator and be leaders in the community as well as students.
— Daniel Bernardo, Glass House Shirt Makers
8. Pay Attention to the Fees
Incubators typically provide inexpensive office space and basic business needs, such as Internet connectivity, in exchange for a fee. Entrepreneurs should understand exactly what the program offers and at what cost.
The upside of incubators is easy and inexpensive access to essentials, such as office space, telecommunications tech, conference rooms, and mentors. The downside is that incubators can often be more focused on generating lease fees instead of building value for the entrepreneur’s business – that is, there seems to always be another tenant waiting in line.
— Terence Channon, SaltMines Group, LLC.