Business Incubator

A business incubator is an organization that helps startup companies and individual entrepreneurs develop their businesses by providing a wide range of services, starting with management training and office space, and ending with venture capital financing.[1] The National Business Incubation Association (NBIA) defines business incubators as a tool for either regional or national economic development. It categorizes its members' incubators by the following five incubator types: academic institutions; non-profit development corporations; for-profit property development ventures; venture capital firms, and a combination of the above.[2]

Business incubators differ from research and technology parks in their dedication to startup and early-stage companies. Research and technology parks, on the other hand, tend to be large-scale projects that house everything from corporate, government, or university labs to very small companies. Most research and technology parks do not offer business assistance services, which are the hallmark of a business incubation program. However, many research and technology parks house incubation programs.[3]

History

The first business incubator was the Batavia Industrial Center, which opened in 1959 in Batavia, New York.[4] Two years earlier, Massey-Harris had announced the closure of its Batavia farm machinery factory, resulting in a giant vacant building and a local unemployment rate of 18 percent.[4] The Mancuso family, the dominant business family in that area of Western New York, was desperate to resuscitate the regional economy, whose imminent collapse threatened to bring down their various business enterprises.[4]

In Mancuso's frantic search for tenants, he offered creative incentives to anyone willing to sign a lease, such as "short-term leases, shared office supplies and equipment, business advice, and secretarial services", as well as assistance with linking up with local banks to secure financing.[4] One tenant was a nearby chicken hatchery in need of space to house additional chicken coops, which explains the origin of the term "business incubator".[4]

Business incubation expanded across the U.S. in the 1980s and spread to the UK and Europe through various related forms (e.g. innovation centres, pépinières d'entreprises, technopoles/science parks).

Types of Services

According to the Small Business Administration's website, their mission provides small businesses with four main services. These services are:

• Plan your Business: Turn your great idea into a great business plan
• Launch your Business: Turn your business plan into a reality (register, file, and start doing business)
• Manage your Business: Master day-to-day operations and prepare for success
• Grow your Business: Find new funding, locations, and customers when business is good and it's time to expand[14]

Among the most common incubator services are:[6]

• Help with business basics
• Networking activities
• Marketing assistance
• Market Research
• High-speed Internet access
• Help with accounting/financial management
• Access to bank loans, loan funds and guarantee programs
• Help with presentation skills
• Links to higher education resources
• Links to strategic partners
• Access to angel investors or venture capital
• Comprehensive business training programs
• Advisory boards and mentors

Types

Incubators differ from the U.S. Small Business Administration's Small Business Development Centers in that they serve only selected clients. Congress created the Small Business Administration in the Small Business Act of July 30, 1953. Its purpose is to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns." In addition, the charter ensures that small businesses receive a "fair proportion" of any government contracts and sales of surplus property.[15]

Incubator Networks

Incubators often aggregate themselves into networks which are used to share good practices and new methodologies. Europe's European Business and Innovation Centre Network ("EBN")[23] association federates more than 250 European Business and Innovation Centres (EU|BICs) throughout Europe.

Silicon Valley Founder Houses

San Francisco and Silicon Valley are home to 'founder houses'.[25] These involve a collective of founders sharing an apartment or house while working to get their companies off the ground. Similar to tech/hacker houses in the same area, the founders collaborate to promote one another's success while enjoying the financial benefits of co-living in one of the most expensive regions of the country.[26]

List of Business Incubators

Main page: Category:Business incubators