What Is A Business Incubator?

Incubator, as the name suggests, is a place where conditions are met to make life sustainable by providing a nurturing environment. Now when you apply the same concept to startups or businesses that are just starting out, you get the basic concept of a startup incubator.

startup incubator or business incubator helps your startup to develop until it is able to sustain itself in the market.

How Does A Business Incubator Help?

Incubators are home to various venture capitalists, angel investors as well as other mentors for entrepreneurs. By helping the startups set up office spaces or legal expertise, they allow the startup to focus more on the running of the core business.

A business incubator provides you much needed support to develop your new startup. This support can be in the form of:

  • Infrastructure: Startup incubators provide office workspaces, workshops for startups to get the initial prototype phase up and running.
  • Networking: Incubators help multiple startups simultaneously. When these startups work under one roof, they get connected with entrepreneurs working in the same industry which helps them gain insights to improve their product. Many incubators even arrange startup networking meetings to help entrepreneurs increase their network.
  • Financial advisory/ Intellectual property teams/ Legal advisory: Business incubators lend their financial advisors, IP teams and legal advisors to the entrepreneurs so that they can make well-informed decisions.
  • Contacts for potential investors: Business incubators have been in the field of launching startups to become a legitimate business. Because of this, they have multiple contacts with previous and potential investors. They even help the entrepreneurs in developing a perfect pitch deck.
  • Manufacturing: Many startup incubators have tools and equipment to manufacture prototypes, 3D models and even final products.
  • Initial financial support: Some business incubators provide a minimal fund to set things into motion and begin with the initial phase of pitching the idea and developing the concept.
  • Training and guidance: Business incubators provide training from market experts on how to begin, develop and implement ideas. They follow your progress closely and guide you how to improve your reach and get to the target market.

How Do Business Incubators Work?

There are multiple incubators in the market ready to support you but the requirements and support they provide are different.

There are academic incubators (universities and institutions incubator services), private incubators (privately funded incubators which charge for their services) and free starting incubators (which provide initial services for free). Every business incubator serves its purpose with their predefined terms and conditions.

Some incubators are situated in actual physical space giving providing you support and guidance for the project and some incubators are set up virtually where they provide guidance, links to potential investors and fellow entrepreneur in the same domain.

Why Should You Take Support From A Startup Incubator?

Although capital can buy most of the services business incubators provide, it is unable to provide the benefits of a network, expertise of business owners, and constant guidance of the experts who have guided hundreds of startups in their nascent phase.

The ability to tap into the strong network of business partners is one advantage of business incubators. Being part of a group of companies that are already in the spotlight helps the other startups to grow big and successful. It also strengthens their ability to gain more opportunities to showcase their ideas and products.

Since the mentors such as venture capitalists or angel investors are entrepreneurs themselves, the startup founders are always given more challenges which lead to more clearer vision, roadmap, and strategy. Taking a help of an incubator actually jump starts the startup and gives them the ability to fly solo.

If you are running low on capital, a lot of startup incubators provide workspaces, manufacturing labs, technical guidance, and startup networking meetings at a slashed down prices; helping the entrepreneurs on their way to creating their own brand.

What Do Startup Incubators Get In Return?

Academic institutions help their student entrepreneurs to nurture their ideas and successfully convert them into business models. This is done to entice potential students as increased support to startups is an elusive deal.

Some existing companies incubate ideas to develop an eco-system around their existing product line thus making the market tilt towards their favour.

Other private incubators help entrepreneurs by providing them support in exchange for equity.