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On average, it takes 2-3 years for startups to make profits, and only 40% of startups are profitable.
1 out of 10 startups succeed and the common reason for failure is a lack of product demand, marketing, financial, and operational challenges followed by a few others.
Business incubators address such issues faced by startups in their initial stage and provide services like assistance, working space, seed funding, mentoring, training, and networking.
According to National Business Incubation Association currently, there are more than 900 affiliated business incubators worldwide.
What is a Business Incubator?
A business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a full-scale range of services from management training and working space to venture capital financing.
Business Incubators are generally sponsored by public institutions such as colleges, universities, private companies, and municipal entities.
Startup incubators are majorly preferred since they help startups in keeping their expenses low by providing basic services like shared telephone, high-speed internet connectivity, beverages, production equipment, well-designed meeting rooms, secured lockers, etc.
Benefits of Choosing a Business Incubator
Services offered by business incubators are shared with all businesses located at the incubator, therefore it helps reduce overhead and operational costs.
Business Incubators offer co-working office spaces at below-market rates with all basic facilities.
Some of the startup incubators also provide financial assistance like bank loans, and loan funds, which makes it easier for entrepreneurs to raise funds for their business needs.
Startup incubators also provide comprehensive business training programs, connections to strategic partners, and access to angel investors or venture capital.
Legal compliances are an important aspect that needs to be taken care of based on the operating location of the business, business incubators provide help and guidance with regulatory compliance, intellectual property management, and legal counsel.
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How Does One Get Into Business Incubator?
Business incubators are limited and they have finite and limited resources they could offer to startups.
Therefore, the selection process has a specific set of criteria that a startup needs to meet to get into business incubators. These eligibility criteria will vary depending on the program.
Startup incubators have a selection process that primarily focuses on new businesses that have either entered the market recently or are planning to enter the market. Therefore, startup incubators generally accept fairly new and emerging businesses.
Startups need to have a unique business idea, a viable business model, a committed team, and a defined market opportunity. These are a few checkpoints incubators review to check if the admission criteria are met.
This is to ensure that the resources are offered to nurture the best startups having higher chances of success with assistance and mentor guidance.
When to Apply to an Incubator?
Business incubators are designed to support and foster developing businesses. They are ideally not designed for the growth and scaling of a business.
Incubators are best suited for those who are in the initial stage and need assistance in terms of networking, market research, links to strategic partners, or mentorship.
Most incubators require that applicants have at least some levels of development to be eligible this might include having a working prototype, having launched an MVP, or having conducted customer interviews.
Furthermore, an applicant must demonstrate that their startup is ready to take advantage of the resources and support provided by the incubator.
Normally after the application is submitted including the necessary details the admissions team member will review and contact for further discussions generally, the process takes around 2 weeks to 3 months depending on the program and individual circumstances.
Business Incubator Offerings Post Selection
Being accepted into a startup incubator is an exciting opportunity that can offer a lot of facilities required to take your business to next level.
Depending on the business stage various training programs would be suggested and mentorship would be provided by the business incubator.
Post-selection startup incubator offers the most important services like business advisory services, access to a network of other potential entrepreneurs, guidance, and mentorship.
Startups also get access to angel investors, comprehensive business training programs, and help with regulatory compliance.
Access to facilities provided by business incubators coupled with eCommerce solutions helps in running a business efficiently.
On average, a startup spends 2 years at a business incubator. Programs offered by the incubators may vary, but all have the same end goal of launching a fully functioning small business.
Incubators have a graduation process with benchmarks and metrics for every startup to chalk out a way for future growth.
While most of the successful startups in business incubators belong to the data and technology industry, incubators aren’t limited to one industry. Incubators are open for various verticals such as the fashion industry, food, hospitality, blockchain, etc.
Are Business Incubators Good for Startups?
It is observed that startups accepted and part of business incubators stand out with a higher chance of success as they are offered guidance and mentorship.
Surrounding with like-minded people, experts, and angel investors along with a positive working environment is like icing on the cake.
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