Are Startup Incubators Right for You?

A unique form of mentorship available to entrepreneurs is incubators. Incubators combine traditional investing with a streamlined mentoring process to help take newbie entrepreneurs from idea to success.


What is an incubator?
Is incubator mentorship right for you?
Let’s take a look.


The Basics

An incubator is a business coaching experience often run by very successful entrepreneurs or investors. Often times, the incubator will provide $10,000 to $30,000 in funding or services and require between a 2% and a 10% equity stake in the company.


Once you’re in the incubator program, you’ll have access to their facilities and network. You’ll be able to work out of a shared office for free or low cost and take advantage of the incubator’s experts (e.g., lawyers, accountants, marketing experts, etc.).


In addition to access to the primary mentor, you’ll usually also have access to a whole range of other successful individuals. For example, incubator programs often expose their incubated companies to successful entrepreneurs as mentors or speakers. The incubator might also bring in alumni of the program to talk about their successes and give advice.


There is a Downside to Working with an Incubator

First of all, many incubators are industry focused, making them difficult to find for many businesses. A large number of them are focused on the technology sector in areas that include, but are not limited to, healthcare, technology in the financial sector (Fintech), technology in the educational section (Edutech), technology in the environmental sector (Greentech), technology in microbiology (Biotech) and others.


Secondly, incubators often work under a very specific business model. They fund a group of businesses, expecting a good portion of them not to succeed. The ones that do succeed need to bring in enough revenue to cover the lost investments, as well as the overhead costs of the incubator itself.


Is An Incubator Right For You?   

If your business meets the requirements for joining an incubator program, becoming a member is worth serious consideration. A significant upside of belonging to an incubator is the mentorship factor. You’ll often have access to a primary mentor and also experts in many facets of business development – from incorporation and getting started, to eventually selling your company.


The best way to decide if a business incubator is for you is first getting clear about your mission, goals and objectives.  Then, get clear about the motivation and goals of the incubator. Interview alumni if you can. Use what you learn to determine your best next step.