To a fresh start-up with big ideas, little cash and an epic to-do list, the concept of a business incubator is an alluring one. Incubators and accelerator programs can offer a new business the type of resources that could potentially propel them into the big leagues. No-brainer, right? Well, maybe.
If you’re thinking of incubating that big idea, here’s a list of pro’s and con’s you may want to consider before deciding whether or not to go ahead.
Funding: Having money behind your business will get it further, faster. Many incubators will either offer seed funding themselves or will train their participants to polish up their pitch and go for Angel or Venture Capital funding. Others may help your business secure government grants.
Mentors: Sage advice from people who have been there and who can see your business perhaps slightly more objectively than you is invaluable for a start-up. At a time when it’s easy to get swept up in the momentum, having a good mentor or two in your corner can help you refocus, keep you on track, and open up new possibilities.
Networks: It’s not what you know…Incubator programs often come with some powerful introductions. Access to industry experts, potential investors, and strategic partnerships can push your business way beyond the next level.
Resources: Product development is fun. It’s exciting. It’s ‘The Idea’. Thinking about things like desks, phones, printers, and website hosting is much less so. Having a ready-made workspace to walk into is supremely helpful.
Costs: It’s important to remember that every incubator is a business too. Some programs will charge a fee for entrance. If you are going to let go of your all-too-precious start-up capital, make sure you know what you’ll be getting, and that you’re ready to take full advantage of the opportunities the program will provide.
Equity: The trade-off for access to incubators’ funds and resources is usually equity in your business. Without clear guidelines and boundaries you may end up feeling micro-managed or under pressure from your new vested interest. Make sure roles are understood ahead of time.
Incubator culture: Doing your research is advisable when choosing an incubator program. A good fit provides an amazing opportunity. But the last thing you want to be doing is negotiating about the direction of your company with an investor who may have other ideas.
Time: Incubator programs can go for months. Can you? For those savvy entrepreneurs that are trying to make a go of their side hustle, taking time away from full-time work may not always be feasible. The good news is some incubators have recognized this and there are a few programs that don’t require such a large time investment.
There is a lot to be said for incubator programs. Many millions have been raised, many people employed, and many plucky start-ups have become fully-fledged success stories.
If you’re thinking of incubating, do your research, find the right fit for your business, and make sure you’re ready to take full advantage of the opportunity.
Aja is Sydney-based writer and serial entrepreneur. She regularly writes about small business, entrepreneurship, and health and wellbeing. Her latest entrepreneurial adventure is Yomama.world!
There’s plenty of other stories to help you decide whether an incubator is right for you, even from Shark Tank investor and founder of River City Labs, Steve Baxter himself. Even if you need a ‘landing pad’ overseas, ShortPress has advice to hand.