Business incubators can be very enticing for new entrepreneurs. They promise things like an instant mentorship network, camaraderie with other startup owners, shared resources like office space, and even the potential for funding.
However, before you dive into the application process for any business incubator, there are several things to consider.
First of all, although options for business incubators and accelerators continue to grow, getting a spot in an incubator can be very competitive. Applying to one can take time and energy, all with low odds of success.
More importantly, spots in a business incubator tend to come with a cost, whether that’s equity in your company or simply the freedom to devote 100% of your energy to working in your business.
Because of that, you’ll need to be sure that the incubator’s benefits are compelling enough to make joining worth it. If it turns out they aren’t, you may be able to consider alternatives that provide similar benefits.
Establishing Your Priorities
Take a moment to think about what you really hope to gain from an incubator spot. You’re probably excited about all of the perks, but there are usually a few benefits that stand out from the rest.
The ones that interest you the most will be unique to you and your business. These should should be the ones you vet the most before you apply.
Here are some of the main reasons companies choose to join incubators, along with a few ways to tell if each one will be worth it for you.
[content_upgrade cu_id=”819″]Compare the various forms of incubators and accelerators in our bonus resource: A Quick Guide to Types of Incubators and Accelerators.[content_upgrade_button]Click Here[/content_upgrade_button][/content_upgrade]
The chance to learn from experienced experts is a big draw for entrepreneurs. After all, good mentors can be hard to find, and getting access to a bunch of valuable ones can seem like a big win.
However, not all mentors are created equal, and too many might even hurt your business.
Consider what kind of expertise you think would help your company, specifically. Look for mentors whose skills complement your weaknesses. Do they have experience in your industry? Do they have experience with businesses of your size and style?
Also, beware of “mentor backlash.” Steven Lachance used this term to describe the effect of getting feedback and instruction from too many experts, which can pull founders in conflicting directions, causing you to “zig-zag and run circles without getting anywhere.”
Figure out how much contact you expect to have with each mentor or investor. It may help to ask alumni of the incubator how mentorships specifically helped their businesses.
Most business incubators have requirements that include classes and other activities.
Review them carefully before making any commitment so you can understand which activities are essential, which are optional, and how much time each will take. Although these activities can be really helpful for your business, they may also distract you from running it.
[Tweet “The requirements of a business incubator may distract you from running your business.”]
Do the incubator’s courses speak to you? Or do they feel like an obligation that you need to get through in order to get the other benefits?
Startups have very different challenges and needs, and those needs and challenges tend to change quickly. Incubators don’t always adapt to them.
This article on The Next Web asked a poignant question: “It is quite common that many founders drop out of school to focus on building their startups full time – so why are we sending them back in the form of accelerators and incubators?”
Remember that although lecture-style classes can add value, they often pale in comparison to experience.
Networking & Camaraderie
A lively startup environment can energize your team and provide a sense of camaraderie with fellow entrepreneurs.
However, these benefits will only be helpful if you’re in an incubator that’s a good cultural fit and is filled with other ambitious, talented, and driven people.
As more and more incubators join the scene, they can’t all be the best or attract the best companies. Working alongside businesses you don’t gel with culturally could possibly corrupt your own culture.
As Cliff Oxford mentioned in Forbes, time spent alongside others with little experience or success is a natural and not always helpful consequence of working in a incubator.
If you’re concerned about the culture of any given incubator, you may want to reach out to incubator alumni. Check out and compare the incubator’s success rates and gather some testimonials.
If the office environment provided by a potential incubator is a big plus for you, it’s essential to understand what you’ll get in exchange for the fees you’re typically expected to pay.
Check the amenities: Does the office space include features like a receptionist, a conference room, a mailing address, an answering service, shared resources like printers and telecommunications equipment? Who takes care of the maintenance and the common areas?
Consider that if you really need flexible, affordable office space, you can pursue a turnkey office solution or look into a coworking space.
The popularity of coworking spaces continues to grow. They’re often filled with up-and-coming businesses and creative types and can provide the same kind of atmosphere and benefits that you might be seeking with an incubator.
For more info on renting or leasing office space, check out our list of red flags when searching for office space, list of things to look for when viewing a space, and list of common leasing mistakes.
For plenty of companies, the main appeal of joining an incubator is the possibility of funding. Many new business owners feel that a quick cash injection from selling some equity is what will lead to success.
We wrote an entire post on the pros and cons of bootstrapping vs venture capital. Of course funding can be key to a startup, but in many other cases, it should be avoided. Every piece of your business that you give away means you lose a ton of money and possibly control over your company, so every point needs to be considered carefully.
Incubators are often businesses themselves, and could be more interested in diversifying their portfolios or collecting lease fees than building value for participating companies. That’s why it’s important to do your research to make sure you’ll get a ton of value in return for what you’ll pay.
Note that although some incubators do provide funding for equity, “accelerators” do more frequently. Accelerators work with businesses that have already grown past their infancy stage and are focused more on rapid growth.
[content_upgrade cu_id=”819″]For more on the differences between accelerators and various types of incubators, check out this bonus resource: A Quick Guide to Types of Incubators and Accelerators.[content_upgrade_button]Click Here[/content_upgrade_button][/content_upgrade]
Landing a spot in a competitive business incubator or accelerator means you’ve proven that your idea has merit, that you have a promising team in place, and that your product has legs — even if you don’t have any customers yet.
Being in an incubator can lend some credibility to your business and facilitate connections you wouldn’t have been able to make otherwise with limited experience. Those connections can be valuable.
However, others point out that this feeling of validation may lead to a false sense of accomplishment and even complacency. If working in an incubator is considered something to celebrate, it doesn’t leave founders with the same sense of urgency to get to the next level.
As Mark Cuban is quoted in The Triangle Business Journal, “Too many entrepreneurs think if they get into an incubator they have accomplished something. They haven’t. It’s a false sense of confidence. Call it incubator inflation.”
It’s true that the best incubators can offer some amazing advantages. Clarifying the top reasons they appeal to you can help you make sure you’re not joining for the wrong reasons, such as the quick sense of validation it can provide.
Establishing your priorities also gives you a better opportunity to compare your alternatives, whether that’s seeking mentors the old-fashioned way, enlisting the help of a SCORE counselor, checking out a coworking space, continuing to bootstrap, or even waiting until you’re further along in your business and trying an accelerator.
If you have experience with incubators, we’d love to hear about it. Tweet us at @TKOfficeSpace.