India is a developing country; the country’s youth is leading towards development, which makes India a country of startups. On average daily new startups are innovated in the country. But do you know around 90% percent of the startups fail? They cannot survive in the market, the reason being finance, strategy, team, networking, or maybe something else.
Incubators help in reducing the chance of failure in the early stages of the startup. But again, what are the incubators? How do they work? What metrics make a successful incubator? Why do Incubators fail? And here is the answer to your every question!
What are Incubators?
The Incubators support the startup to access the necessary resources, be it capital, coaching, connecting, and anything that requires a startup to grow. But the incubators are also the startups and their success can not be decided by any single parameter. It is determined by many metrics like engagement with the mentors, the number of startups it has incubated, financial sustainability, and many more.
Types of Incubators
There are mainly four types of Incubators
Private Investor Incubators
These are founded by companies, corporations, and venture capitals. They assist the business and then take their benefits by selling the shares. These incubators usually target technology-related startups.
The Corporate incubators target the internal and external related projects related to the company. They help to enhance the quality of the startup to stand up with other industries. But are corporate incubators reliable?
The Academic Incubators offers the sources of finance and support the zest of the entrepreneurs. They look after the internal and external projects of the institution before even the company is established.
Economic Development Incubators
They aim to uplift society by helping them economically and supporting SMEs ( Small and Medium enterprises). The Economic Development Incubators mainly target small and locally sourced small businesses.
The Metrics of a Successful Incubator
Success and Failure are just two sides of the coin; be it an incubator or a startup, its progress will depend on several metrics. Jumping to the conclusion without seeing the growth can lead to the loss.
Here are some of the Metrics that make an incubator successful
Number of the companies Incubated
The Employment generation of the Incubator
Networking and Engagement with the audience.
The Sustainability of the Incubator
The raising Funds
The transparency and the visibility in the market
The Process for Incubation
Incubators do not serve their assistance to all the startups or the companies. The interested entrepreneurs have to apply for the incubation program. Also, the criteria may vary from program to program.
The time that an Incubator invests in the company can depend on several factors, including the level and the type of the business. The process for the incubation includes several steps like Eligibility, Infrastructure, Seed Loan, Agreements, Intellectual property, and many more.
Why do maximum Incubators not Survive?
Capital is not enough
It is just next to impossible for an incubator to get off the ground just by providing the capital. If you are planning to start an incubator, is it mandatory for you to learn and research about the does and don’t of the incubation game. It is not just an idea or money it is more about executing the idea with minimum capital in a proper way with strategies.
The Business Module
It is not important to invest in every business, and the incubators often make the mistake of investing the time, money, and other resources to a wrong or maybe a not so good business module that leads to failure.
Lack of Resources
Another reason for the failure of the incubators could be the lack of Business development resources. The early date incubators appoint the business development partners. It plays a very vital role in getting your first shot. Business Development helps you to get good investment bankers for the Initial Public Offering (IPO). Moreover, the incubators with the best IPOs and exits get the perks.
How to choose an Incubator?
Choosing an Incubator for your startup can be a big and crucial decision. It will confuse you and can create arguments between the partners. So here are a few pointers you should keep in mind while choosing a business incubator.
Make sure to research everything about the incubator you are thinking of choosing. Study about them, learn about their resources and service.
Usually, the incubators have a very strict schedule of training. Assess the curriculum to ensure that it teaches you the same and you want to learn.
Contact the alumni or some senior person for their take on the experience with that particular incubator.
Be sure about the cost, workspace, and the environment of the center.
Also, learn about the terms and conditions of the loans and the percentage of equity.
Who are the Incubators?
You have almost read everything about business incubators in the article, but do you know what they are? They can be partnerships or collaborations between two businesses. These can be
The Government entities
Economic development organizations
Or some profit ventures
It will be advantageous for startups as they will get all the services through one source. Incubators would help a startup for better management and services.
Apart from these advantages, the biggest advantage would be better time management and flexibility. Adopting Incubators can also allow the entrepreneurs to focus more on the startup rather than worrying about other things.
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