The meaning of a startup incubator is a program usually located in a central workspace. Their purpose is to help a new business find its footing and survive in a neo-capitalistic market. Ideas are only good when paired with excellent execution. The collaborative programs that are called startup incubators help new ideas with a practical setting to ease up the initial process of establishing a business. They will provide small businesses with seed funding, workspace, mentorship, networking, and funding.
Startups are all the rage nowadays when everybody wants to be their own boss but a good start to a startup is essential to beat the competition. This article discusses in detail, the benefits, procedures, and meaning of a startup incubator.
Benefits of Startup Incubator
Some of the major benefits of a startup incubator and their significance in your business are listed below-
Networking Opportunities: It is essential for a business to have good products and unique ideas. But in the long term, just efficiency might not be enough. Every startup needs to have corporate liaisons. The meaning of choosing a startup incubator is that the networking process is half done for you.
You might be new to the business and have no network that includes professionals and companies in your field. But an incubator program is not new and certainly has the contacts you need to build a strong network to benefit your business.
Exposure to clients, leadership, and mentor: This point is congruous to the previous one because having more contacts mean your business will have exposure to individuals that can mentor your business. Not only mentors but this way you get to meet individuals and companies who can be potential clients.
Access to low-cost spaces and flexibility: The meaning of having a startup incubator is having access to a range of spaces at a considerably cheaper rate than it would cost if you leased the space, which resembles the cost-benefits of having a coworking space.
Funding and Partnerships: Startup incubators usually work with a number of partners that assist startups with investor relations and partnerships. If your business needs funding, make sure to look for incubators that provide investment programs in association with networking partners which are commonly known as angel networks.
When it comes to partnerships, they are essential for exposure in the industry you choose to work in. Startup incubators will help you decide when a partnership is necessary and which companies to partner with.
Best examples of Startup Incubators
The meaning of opting for a startup incubator is to choose from the best programs available. Here are some of the best startup incubators from around the world-
Techstars, USA: Techstars, USA is primarily a tech-based startup incubator that is functioning since 2006. They invest in around 500 startups every year and invest up to $120,000 in them. They have funding of up to 21 .3 billion dollars, which makes them a safe bet for early-stage companies.
Venture Catalysts: This is an India-based startup incubator program. They invest from $200,000 up to 2 million dollars in businesses and claim to “not interfere” or “not teach entrepreneurship” but act as allies to small businesses. Businesses like Fynd, Beardo, and ImpactGuru have used Venture Catalysts as their startup incubator.
Ignite: This incubator program is based in England and functioning since 2011. They offer both pre-accelerator programs for early-traction companies and accelerator programs for startups at the seed age. Ignite is in partnership with Google, AWS, SendGrid, and other lucrative investors to help with startup funding.
Chinaccelerator: Chinaccelerator is one of the biggest Asian incubators functioning since 1994 which also makes it one of the oldest. They invest in 150 startups per year. Their network consists of over 200 corporate partners and over 300 mentors across the globe. One of the best things about Chinaccelerator is that they give a lot of importance to gender inclusivity
Types of Startup Incubators
There are multiple types and meanings of startup business incubator programs. Here are some that can be significant to new entrepreneurs based on the focus area of their businesses.
Academic and Scientific Incubator
These kinds of incubators target various reputed universities and the business ideas that the students may have. You have to be a student at a targeted university and have a business idea related to academia or science. The meaning of opting for this kind of startup incubator is to have technical and statistical support for your business.
Social and Virtual Business Incubator
If your startup idea depends on making social changes social incubators will be perfect for you. These incubators focus on providing practical executive solutions to the aspect of social changes your business attempts to achieve. This way you don’t need to enroll with any specific social enterprise or charity. These incubators will support your social entrepreneurship if you have a unique idea and passion for making a positive social impact.
Virtual business incubators have no physical workspace. They are the most common startup incubators. They need the startup to set up a presence on their website and they will provide you with assistance, networking opportunities, connections to available workspaces, and technology But you will need to maintain the offices and warehouses away from the incubator’s site.
Corporate Incubator and its meaning
Corporate incubators are the best kind to provide small startups with financial support. They also do something called prototype testing and beta testing of products and provide the businesses with the targeted commercial market. With the resources, these incubators can also help the startup mobilize funds and partnerships.
Kitchen and Local Economic Development Incubator
Kitchen incubators focus on a very specific area of business. The kitchen industry has evolved and spread widely across virtual and physical spaces. They provide food-based startups with the kind of seed resources they need be it a cloud/ghost kitchen or a startup restaurant with a physical presence. Kitchen incubators provide businesses with marketing, analysis, accounting, financing, and insurance along with food and kitchen-space-related assistance.
Local development incubators are meant to help large-scale businesses make policies focused on area-based marketing, and administrative tasks so that the growth of the business is not limited to specifics but happens all around. They don’t provide the businesses with financial support directly but they do help the businesses access external funding and financial connections.
Startup Incubator Vs. Accelerator
A startup incubator and accelerator can often be confused but the meaning and working processes of these two are very different. Below is a comprehensive comparison of startup incubators and accelerators based on different categories–
Purpose and meaning of a startup incubator and accelerator
The purposes of incubating and accelerating are totally different. Incubators are for absolutely new startups so that ideas can be converted into practical, substantial businesses. Incubators provide businesses with infrastructure, manufacturing, contacts for networking and partnerships, mentorship, and training while accelerators provide more nuanced help for sustaining an already existing business with potential.
Accelerators provide startups with structured guidance. They form these structures according to practices followed by previous successful ventures while also providing the businesses with legal guidance, resources for growth within a short span, and funding in exchange for equity in the company.
Working time frame of incubators and accelerators
Since incubators help businesses build from scratch and provide the kind of assistance which takes a lot of time the working period of them is naturally longer. Incubators also keep in touch with businesses they help set up and provide help accordingly in the future.
Accelerators are meant to provide businesses with results within a short span and once the targeted growth has been achieved they move on to the next business which makes their working time frame significantly shorter.
The process of joining an incubator vs. an accelerator
Joining an incubator program is easier because all you really need is a good business idea but joining an accelerator generally means a business has to have potential. So, to join an accelerator you need to have a credible and functioning business which makes the work harder.
The process of raising funds
An idea doesn’t need too much funding to convert itself into a business. At least not as much as an already established business needs. So, although incubators act as a platform for new businesses to meet potential investors and clients it doesn’t actively do much fund-raising. An accelerator, on the other hand, has to achieve a goal within a short period of time which needs a lot more funding and thus has a larger network of investors and fund providers.
Startup incubators provide new businesses with practical help like networking opportunities, a potential client base, low-budget working spaces, etc. The meaning of a startup incubator is basically a collaborative program.
An incubator is a collaborative program generally limited to a central, physical workspace, that helps to launch a startup business.
An incubator adds meaning and practical execution to a startup idea so that it can flourish into a company of its own standing.
The main purpose of a startup incubator is to help a new business succeed.
Many highly successful and multi-national companies have used incubators in the initial stages of their business as it lowers the cost of workspace and equipment, and provides potential clients, mentors, and funding. Especially if your business is at the pre-traction stage, joining startup incubators is a great idea. However, choosing the best incubator programs suited to your needs is very important.