Incubators and Accelerators

Incubators Heat Up Chances of Small Business Survival


24th Dec'22
Incubators Heat Up Chances of Small Business Survival | OpenGrowth

An incubator is often thought of as a tool for warming a newborn infant or helping a chick to hatch. They function similarly in business to maintain a startup as it finds its target market.

Startup businesses can find office space in incubators as well as a wide range of expert services and guidance. They want to provide startups and emerging companies an advantage over the competition. So, do incubators benefit businesses in the same way that they benefit infants? The outcomes are self-evident.

Businesses that were developed in a business incubator had an 87% survival rate after five years. In contrast, 44% of businesses that operate independently without the backing of an incubator survive.

Although they are not the only option, incubators are a fantastic choice for growing a new firm, particularly for entrepreneurs who haven't quite nailed down their business model but are beginning to generate some strong ideas.

two people shaking hands.

What is a Business Incubator?


An incubator is a firm that supports the growth and success of start-up companies by offering workspace that is either free or inexpensive, mentorship, industry knowledge, access to investors, and, in some cases, working cash in the form of a loan. You'll interact with other entrepreneurs running businesses that frequently share your emphasis.

Joining an incubator is similar to enrolling in a college program in that you must apply, be approved, and then adhere to a timetable in order to accomplish the incubator's goals. A time commitment of one to two years is usually required to participate in the incubator.


Types of Business Incubators


1. Corporate Incubators


Their goals are to improve entrepreneurial abilities and aid startups in keeping up with other sectors of the economy and rival businesses. Corporate incubators focus on both internal and external projects associated with business operations. Conflicts over goals and management-related choices between top executives and committees are the most frequent problem that corporate incubators run into.


2. Local Economic Development Incubators


In order to improve society as a whole, they encourage SMEs and particular groups to promote economic development. These categories include locally sourced firms, small businesses, and businesses involved in handicrafts. Conflicts, long hours of negotiation, governance risk, and unstable management quality are frequently connected to these incubators.


3. Private Investors' Incubators


They offer assistance to high-potential companies (such as startups that rely heavily on technology) and later profit by selling shares. These incubators don't last as long and are of poor quality.


4. Academic Incubators


They provide fresh sources of funding while encouraging the entrepreneurial spirit and emphasizing civic duty. Academic incubators focus on both internal and external ventures at academic institutions.

people in a meeting.


Advantages of Incubator 


You can already see some of the benefits an incubator can offer firms to help them launch successfully based on the criteria. Make sure you thoroughly investigate possible incubators to confirm that they offer the following advantages:


  • Your incubator should offer a free or inexpensive workspace that enables you to save costs while you expand.

  • Look for an incubator that will provide your company with advantages that can hasten the growth of your company, such as office space and services, mentorship, knowledge, influence, and occasionally funding.

  • Additionally, incubators could include business development programming including seminars and roundtable talks.
  • Make sure investors have faith in the incubator to fund the right companies and develop them into profitable enterprises. When looking for finance, joining this kind of incubator will provide you with an advantage.
  • Some incubators may provide businesses with access to essential office resources like the internet, administrative assistance, and production machinery. Office services differ amongst programs.
  • A fledgling firm can maintain focus and expand in the proper direction with the support of the structured atmosphere and curriculum of an incubator.


Numerous incubators focus on particular industries and provide specialized resources and experience. Examples of these areas include digital education, green technology, homeland security, fashion, and food. Before applying, make sure you are fully aware of the services that an incubator offers.


Disadvantages of an Incubator 


Not all incubators are created equal; some offer more or superior advantages. Here are a few possible drawbacks:


  • The application procedure can be challenging and cutthroat. An applicant must provide a thorough business plan and reveal all of their business activities in order to be considered for most incubators.

  • A time commitment of one to two years is typical for incubators, along with adherence to the incubator's schedule, which may involve numerous pieces of training and workshops. Yes, you will gain a lot of knowledge, but doing so will take up some of your time.
  • An incubator is a professional setting, for better or worse. You won't be able to come and go as you want, and you'll have to report your progress to someone other than yourself. An incubator might be compared to a supervisor who cares about your success.


As you can see, the advantages could be very good for the appropriate candidate. To gain the benefits, be sure you are prepared to commit yourself and your company to the program.


pie charts on a board.


How to Choose a Business Incubator?


It's a major decision to select an incubator for your new company, especially if you'll be sacrificing a significant amount of time and equity in exchange for its resources and knowledge. Before selecting a program, you should consider the following qualities of a business incubator:




Find out if the incubator's offerings fit your needs by doing some research. Discover the company's resources and services. Look into the mentors and advisers at the incubator to see if your company's needs align with their knowledge, abilities, and networks.




Numerous incubators have rigid timetables and training requirements. In order for your business to prosper, make sure the curriculum teaches what you need to know. Verify that you can handle it all while continuing to operate daily operations.




How have comparable businesses fared with the incubator's help? If at all possible, get in touch with past participants to get their opinions. On their websites, most incubators include a list of graduating companies.




How much does it cost to utilize the facilities, including the workspace? If applicable, what financing terms are available, and what equity share will the incubator accept? Make sure the price is reasonable for the effort you're willing to put in.




As was already mentioned, enrolling in an incubator is similar to enrolling in a college program. You'll need to live on campus, which is close to the incubator, as you'll be attending class many times a week, if not every day. If you are unable to find the ideal situation close enough to your home, this may entail moving closer to an incubator.


Also read: Is a startup accelerator right for you?




Incompetence in business management, money handling, and human resource management, and a lack of interpersonal and people skills frequently have an impact on how well business incubators perform.


In various studies, it was shown that interpersonal, technical, financial, marketing, management of human resources, and administrative abilities were crucial for business incubators to function well.


The availability of cutting-edge technologically based facilities, self-sustainability strategies, support systems, and funding were identified to be the main difficulties faced by business incubators. Additionally, enrolling in business courses at nearby schools or universities is advised for incubation managers who lack the requisite entrepreneurial abilities.


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