9 Reasons Why Startups Need Incubators

Building your network will gain you contacts, referrals, opportunities, and exposure in your own industry as well. Incubators give enough space and accommodate multiple companies and startups that are looking for business growth. In addition to production space, HBK Incubates also offers a suite of business development resources to position its member entrepreneurs for growth and sustainability. HBK Incubates offers ongoing workshops, panels, and exchanges that provide content on various small business topics like access to capital and marketing.

However, Cogo Labs brings the power of big data to entrepreneurs who might not otherwise have access to it.

Incubators, which are taking root across the world, offer startups guidance and resources. In essence, incubators are home to angel investors, venture capitalists, and others who are able to mentor entrepreneurs. Many also offer tangible resources Business Workshops such as accounting assistance, office space and legal guidance. Having this business infrastructure in place allows the startup to focus on what matters most–the core business (and not the mundane, day-to-day administrative responsibilities).

Members are also able to schedule one-on-one financial and business counseling sessions with HBK staff. The Hub, which can accommodate startups (and 50+ people), offers tenants professional mentorship and a host of collaborative and supportive services—embracing entrepreneurship in science and engineering as well as in non-science based companies. I’ve watched first-time entrepreneurs raise millions of dollars at substantial valuations because the mentors at the incubators were able to create a frenzy around a new fledging concept for a company.

Similarly, a restaurant entrepreneur could learn about the difficulties of overseas expansion from retired hospitality-industry executives. The companies that are part of an incubator can share the same facilities and share on overhead expenses, such as utilities, office equipment rentals, and receptionist services. Start-ups can also take advantage of lower lease rates if the incubator is located in low-rent industrial parks. Incubators may also help start-ups with their financing needs by referring them to angel investors and venture capitalists, and helping them with presentations. Start-ups may have better luck securing financing if they have the stamp of approval of incubator programs.

Early incubator programs first appeared in the Northeast in the late 1950s and early 1960s. But programs similar to today’s versions did not arrive on the scene until the 1970s and early 1980s. The 1990s saw a surge in incubator creation as statistical and anecdotal evidence of their effectiveness—both for entrepreneurs and the incubators themselves—emerged. The Los Angeles Business Journal , for example, reported in 2000 that companies that launched in incubators remained in business five years later a startling 87 percent of the time, while only 20 percent of all new business startups reached the five-year mark. In the late 1990s, meanwhile, a growing number of for-profit Internet incubators were created in the United States to capitalize on the explosion in e-commerce.

Everybody knows entrepreneurs need money to expand and grow their businesses, and although many early-stage startup companies raise their initial funds through the 3 F’s , there will come a time when a more substantial round of investment is necessary. Membership in a business incubator not only can connect entrepreneurs to venture capitalist and/or angel investment groups, but it can make the business a more attractive investment opportunity to such groups. If it is your first time in the business world, it will be difficult for you to find a strong network.

The ultimate goal of the process is to determine the viability of a startup’s idea and the ability of the company’s management team to realize the idea. Of those incubators in existence in the late 1990s, about 70 percent were maintained by economic development agencies or local government agencies. These organizations use incubators as a tool to boost regional economic growth or blunt the impact of big lay-offs and other bad economic news in the region. These programs exist in a wide variety of demographic regions, from rural areas to urban settings. Business incubation programs are often sponsored by private companies or municipal entities and public institutions, such as colleges and universities. Their goal is to help create and grow young businesses by providing them with necessary support and financial and technical services.

Graduation is determined cooperatively based on mastery of core business functions; for most companies, it will take place within four to six years. One of the most immediate impacts that business incubators can have on startup companies has to do with the physical space that they provide, and all of the services that are contained within. Most business incubators offer office supplies and other resources to companies— essentially everything they need to get their organization up and running in an efficient way. These resources are often shared—but they are also available in a far more cost-effective way than if the startup in question was operating entirely on their own. Because of this factor alone, it is estimated that a business incubator can help reduce the overall costs of both launching and operating a startup by between 40 and 50% in some situations. A business incubator is a company that supports startups and start-ups in their development by offering services such as management training or office space.

We partner with governments, corporations, foundations, investors, and other stakeholders to create, launch, and grow best-in-class and cutting-edge economic development solutions for more innovative, resilient, and sustainable local economies. The region’s only biotechnology incubator offers shared resources, turnkey wet lab space and sponsored professional services to promising, high-potential entrepreneurs and start-ups. In an era where roughly543,000 new businesses get started each month,many of these entrepreneurs would agree that they need all the help they can get.