A startup incubator is a collaborative platform or organisation for budding entrepreneurs designed to help their startups in their early stages. Usually located in one physical space, incubators provide workspace, guidance, mentoring, training, and seed funding.
Some of the most successful startups today – Airbnb, Uber, and Udemy - began with the assistance of recognised incubators like TechStars, Y Combinator, and 500 Startups.
Startup Incubator: Expertise at Hand
A startup incubator is often the first port of call for startups because they are created to help founders get the business off the ground and reach the next stage. Broadly, they offer two kinds of support to entrepreneurs: tangible and intangible.
Tangible support acts as a buffer for the startup, protecting it from the immense competition and helping it survive various external threats. An example would be offsetting the costs associated with a workspace so the startup can channel its limited finances to more pivotal areas. On the other hand, intangible support acts like a bridge, covering up gaps like discovery and networking.
5 Ways Incubators Help Startup's Growth
1. Idea Validation
A startup incubator is extremely helpful for entrepreneurs with disruptive ideas but lacks commercial potential. In such cases, the incubator conducts market research to convert the idea into a feasible concept. It also offers an understanding of commercialising it and helps the entrepreneur build a prototype.
Another instance where incubators extend their help is when the idea already has brilliant real-world utility but has yet to achieve a minimum viable product (MVP). The incubator guides them through the struggles of developing the MVP and executing the business plan.
2. Hand-Holding
For young founders without a business background, startup incubators fulfill the critical role of mentoring on the many nuances of starting a business.
From sales to operations, marketing to hiring, CAs to legal, the incubator hands-holds the entrepreneur providing critical business advisory. This includes technical guidance and expert feedback through 1:1 sessions to overcome roadblocks on the product map.
3. Fund Raising
Fundraising is a common and valuable service a startup incubator provides founders. They arrange pitch meetings with angel investors and hold demo days where each startup they incubate gets the chance to present their ideas to a group of investors.
Besides direct access to investors, incubators also increase the probability of securing capital, as being part of the program gives entrepreneurs a stamp of approval. It signals to investors that the startup has been thoroughly evaluated and the business concept has been validated, giving it a high probability of success.
4. Working Resources
Another tangible advantage of incubators is easy access to the resources necessary to start a business. Most incubators are co-working spaces, offering entrepreneurs an office area, utilities like Wi-Fi, and equipment like desks and chairs at discounted rates.
They also deliver low-cost administrative support and professional services like accounting. An incubator reduces the overall cost of a startup to a considerable degree. Many incubators even provide tailored training and content and host regular boot camps or workshops on varied topics such as the legal framework and future forecasting. It alleviates much of the work inherent in starting a business.
5. Social Capital
Besides providing the nuts and bolts of running a business, incubators also deliver the pivotal value propositions of networking and community building. Since incubators are entrenched in the startup ecosystem, their network of connections is unparalleled. This network becomes useful in building peer contacts and finding mentors; it is nearly impossible to get this exposure when founders work solo.
- Mentorship: With incubators comes the opportunity to interact with and learn from experts and business leaders. Their experience and acumen become the founder’s sounding board, helping iron out issues.
Furthermore, the exclusive insight and industry information they bring to the table make setting up a startup much simpler and more rewarding. Lastly, learning from leaders ensures founders can prevent or sidestep the most common pitfalls startups face. - Peer guidance: Incubators are frequently a melting pot of veteran founders from all industries. Founders can learn from their experiences, which can prove invaluable when growing a company and hoping to reach the next stage. Such peer interactions also build lasting relationships that help founders weather tough and lean times.
Deciding to Join a Startup Incubator?
For bootstrapped startups or early-stage startups, incubators provide indispensable support. The structured environment and guidance keep founders focused, guaranteeing that the business grows in the right direction.
However, the choice of incubator determines how much value an entrepreneur can derive from it.
A startup incubator perfectly suited for one business may not work for another because all incubators are different. For instance, a specific differentiating factor is the industry verticals they are investing in. One incubator may focus on technology, while another may focus on life sciences or agriculture.
Use the respective application process of each incubator to determine if an incubator will support your startup according to your needs. Do your due diligence by talking to entrepreneurs who have been through the particular incubator’s program.
Final Thoughts
A startup incubator can provide the anchor founders and entrepreneurs resources and guidance to navigate the rocky waters.
However, for perosnalized guidance, direct mentorship from industry experts and valuable business-building resources, Scalix could help you with what you need. Our mission is to help young founders and startups understand the ecosystem, connect with potential investors and business partners,build network, and share resources to help your business grow.
You may also sign up with the Early Founder Program or join the Fundraising Cohort to find the right investors for your startup.
Talk to us to learn more!
