The world has seen the success of many small startups, many of which become large multinational businesses. To keep promoting such success, incubators were created.
As the number of startups increased, the number of incubators also increased in turn. The US alone has around 1,400 incubators. But what is a startup incubator, and how does it work?
Startup Incubator
A startup incubator is a program set to support startups to grow and succeed. They provide startups with resources and services such as mentorship, office space, networking, equipment, and potential funding through angel investors.
What do Startup Incubators Mean in a Tech Startup?
Technology business incubators focus on tech startups. They are usually ventures of private players, local government, public research institutes, or universities that promote new and innovative technology.
They assist you if your startup is knowledge-intensive or tech-oriented in the service sector. For a tech startup, this is beneficial as they look to provide you with the resources you need and guide you along the way.
Being a part of such a program can also benefit you in the long run as you meet up with fellow innovators and build a network in the tech industry. As a tech company sharing a working space with other tech startups, you will be able to learn from your mistakes and others as well.
It is also a place where innovation and creativity are at an all-time high since you will be with similar-minded people.
Why is Startup Incubators Important in Tech Startups?
Startups usually do not have it all sorted out, especially those in the tech sector. A business incubator will provide you with administrative and advisory support services. Being part of an incubator program means that the chances of your tech startup being financially viable and successful are high. Incubators will work with tech companies and support them in many ways. Some areas in which you will benefit from working with them are:
- Financial Management: Incubators will help tech startups save on operating costs. If your company is a part of an incubator, one of the facilities they might provide is the sharing of utilities and equipment. It will save the company huge amounts as they will not have to rent or buy the same equipment.
- Creating synergies: Since you will be working closely with these incubators, synergies and relationships will last long after you leave.
- Management: Incubators will also teach you how to manage your startup, keep up and compete with the leading companies in the tech industry.
You May Read: Equity Award Schedule – What Startups Need to Know
How Do Startup Incubators Work?
Startups have to apply to be a part of a program from these incubators, and the incubator will then validate the idea. If your idea is validated and they believe they can help you grow and be successful, they accept you as a part of the program.
Generally, incubators provide startups with co-working spaces, education, mentorship, and access to investors willing to invest in the tech industry.
It will allow your startup to take shape as you grow while costing less during the initial stages. Startup incubators also require you to commit to them for a specific period.
You May Read: Why is this the Perfect Time to Do an Online MBA?
Pros and Cons of Startup Incubators in a Tech Startup
Joining an incubator has many pros as well as cons; some of the pros are:
- If you are a part of a tech startup, your focus is innovation and creativity, as it will help you develop your product or service. An incubator helps you do so.
- Development and growth
- Meeting other tech startups in collaborative spaces helps you to learn from each other.
- You can tap into their extensive network to find angel investors or even business partners, and investors are more likely to notice you if you are a part of a reputed program.
- Support, mentorship, and quality advice
- Business grooming and a learning experience.
Some of the cons are:
- Lack of time for your matters as such programs run on a strict schedule.
- It is difficult to access reputed incubators and get selected for their programs because of the number of people applying.
- You might end up dependent on them for assistance, funds, or links.
- Demand for equity in your startup is common.
- Too many incubators, make it difficult to choose the right one.
You May Read: Reasons for Small Businesses to Partner with Charity
Tips for Choosing the Right Startup Incubator
It would be best to choose the right tech startup incubator as it can mean the difference between success and failure. There are some things you will have to do before committing to an incubator; some of them are:
#1 You will have to do Your Research: you must know all about the different incubators that offer programs to tech startups such as yours. You need to look out for their services, expertise, and what they bring to the table. Also, check how their services compare to your startup needs.
#2 Mentorship: Look out for their mentorship, as their guidance can be one of the significant differences. If their mentorship is good, then your success rate will be high.
#3 Timings: Choosing the wrong incubator might be the first mistake you make, but the second most common mistake you make is when you enrol in such a program. Applying early can help you get in on time.
#4 Consider the Equity Aspect of This: When you decide to join an incubator, you should also prepare the amount of equity you are willing to let go of, as most partners or investors will want equity.
#5 Ask for a Referral: You must meet up with those who have attended the programs from the incubators you are looking at and listen to their experience. It will help you understand and choose the right one for you.
#6 Set a Good Pitch: To enter such programs, you will have to pitch to the startup incubator, so be prepared beforehand and provide the best pitch for your company.
Top 15 Startup Incubators for Tech Startups
Here are the top 15 incubators for a tech startup:
#1 Y Combinator(USA)
It is considered to be the leading startup accelerator in the world. As one of the oldest incubators, they have helped Dropbox, Airbnb, Twitch, and Reddit. It was founded in 2005 by Paul Graham in Palo Alto, Silicon Valley. They successfully funded over 2,000 startups.
#2 Tech starts
Tech Starts was founded in 2006, and it is a worldwide network that assists in monetary terms and consultants. They helped produce over 1,000 companies valued at $8 billion.
#3 Angel pad
Ranked at the top every year of US accelerators by MIT’s seed accelerator benchmark since 2015 is Angel Pad. They worked with over 150 companies averaging $11 million in funding for each.
#4 Venture catalysts
It is India’s first integrated incubator. In its short lifetime, it has become the top startup incubator in the country. They provide guidance, tutoring, networking, and upskilling along with half a million to $1 million from venture capital.
#5 Startupbootcamp
Startupbootcamp was founded in 2010 and aims at the Internet of Things. They provide programs all over the world, helping startups with an average sponsorship of €1.16 million.
#6 Wayra
Started in 2011, Warya is a tech innovation hub based in Latin America and Spain. They have 11 hubs in 10 countries and provide the best programs for startups.
#7 Health Box
Healthbox is a startup incubator that focuses on the health industry. They seek startups with innovation in healthcare technology, processes, and key challenges to grow the sector.
#8 Melbourne Accelerator Program
Supported by the Univerisity of Melbourne, the program was founded in 2012. They provide the expertise and assist in growing your startup to succeed.
#9 Orange Fab
It is a French telecommunication corporation that offers programs to startups that focus on innovation. They connect corporations to late-stage startups, mainly focusing on US-based startups. But they also have independent programs in 15 other countries.
#10 500 Startups
Founded in San Fransisco in 2010, 500 Startups is a venture capital company that is all around the globe. They are in 20 countries and manage investments in 74 countries, aiming at startups inventing thriving ecosystems. They support them through a four-month seeding program.
#11 Ignite
It is one of the best programs in Europe that has funded over 150 companies since 2011.
#12 Startup Reykjavik
Founded in 2012, it is a guidance seeding level program that runs for ten weeks. They run the program every year from June to August.
#13 Metavallon
Founded in 2011 in Athens, Greece, Metavallon is a venture capital company that focuses on tech startups that innovate tech that combines with talent.
#14 Startup Yard
Europe’s prime accelerator Startup Yard was founded in 2011 in Prague, Czech Republic. They focus on startups that are into deep tech and decoding complex technological concerns. They offer such startups a three-month program and provide guidance and corporation partnerships.
#15 Buildit Accelerator
Founded in Estonia in 2014, Buildit aims to assist startups in the internet of things or hardware to their success. They select startups to fund every six months.
Best Alternatives to Startup Incubators
Not all startup incubators are equal, nor are the chances of every startup succeeding by associating with them high. This is why you should also consider other options. Here is a list of alternatives you can choose from to help your startup grow:
#1Hackerspaces/ Maker
Many think of maker spaces as the ideal setup for startups as they provide you with much-needed sophisticated equipment at a membership fee. As they become popular, more and more corporations, universities, and governments offer space or funds.
#2 Coworking Spaces of Different Styles
Coworking spaces are of different types; some are fully equipped, some are full of tech, and others offer a coffee machine. They offer various perks in different places. Similar-minded people and founders usually run these places.
They also might provide seminars and share their experiences in starting their business. They are ideal spaces and provide you with precisely what you need, allowing you to keep control of your startup and not be intimidated by sponsors.
#3 Research Institutes
If you are a founder without a startup, this is the best place for you. Research institutes take up ideas and turn them into startups. This option is for entrepreneurs, as these carefully created startups are made to succeed.
#4 Meetup Platforms
These are short meetups that push you to innovate and develop the technology. They are a crash course about becoming a successful startup.
#5 University Accelerators
These are programs set up by universities. They have set these up as the entrepreneurial drive in students is high, and they are more likely to share their ideas and work on them.
These programs offer different experiences and mentorship depending on the concept. However, the mentorship is only internal as there is no external mentor.
#6 Public Programs
Similar to incubators and accelerators, public programs offer startups a chance to grow. Their offering is identical to incubators but a little downscaled. Towns, cities, or counties mainly back them to retain talent in the area.
Ready to Choose an Incubator for You?
Selecting an incubator will be the right decision for your startup only if you are looking for what they have to offer. It can be beneficial for tech startups as incubators provide them with access to mentorship guidance and help them learn.
If you choose to enrol in any program, make sure you do your research and choose the right incubator for growth.