The New Face of Incubators: A Faster, More Focused Road to Small Business Success

Organizations that help launch successful start-ups were hot during the dot-com era when there were tens of thousands worldwide, according to statistics from the National Business Incubation Association (NBIA). Since the dot-com bubble burst in 2000, the number of business incubators has dropped to 7,000 globally and 1,400 in North America. However, they still serve more than 27,000 companies and are responsible for more than $17 billion in annual revenues (also in North America).

Following the economic downturn, there are small business incubators that are hoping to fill the gaps created by widespread job losses with local film and video production companies, design firms and other creative-sector industries. These types of incubators typically offer small businesses the access needed for resources, ranging from strategic business counseling to development support.

How to Start

evergreen industry.pngIf you are a new or start-up small business seeking incubator support, you need to prepare a detailed business plan a comprehensive start-up marketing plan and assemble a qualified staff. These employees should include a CEO, CFO, IT Director, and marketing and sales directors, as well as experienced external resources in areas such as accounting and legal counsel.

Industries of particular interest to incubators are green tech, clean tech and alternative energy. While the technology sector remains the focus of 39 percent of incubators, evergreen industries such as food and the arts can still find a receptive audience.

The Details

In the dot-com heyday, only some incubators took an equity stake in the companies they developed. Typically, incubator services focus more on “acceleration” –helping find senior leadership, securing venture capital, structuring financial plans and building a board of directors – and, in exchange, seek as much as a 70 percent stake. Additionally, they provide client assistance with such basic but time-consuming services such as marketing, sales, IT, finance and administrative staff development. There are more than 1,200 U.S. business incubators housing tens of thousands of entrepreneurial companies that help startups of all stripes take root, providing resources to turn them into thriving, growing companies. Not bad for an industry that saw such a tremendous decline following the dot-com bust.

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