What is a business incubator?
If you are looking to start or grow your business, then you might be thinking about using a business incubator. But what are they and what do they actually do? Are they the same as business accelerators or different? Here we try and clarify some of this growing area of business development.
Businesses incubators are usually physical spaces, available on relatively flexible terms, which provide services to support start-up businesses
Both business incubators and accelerators help new and start-up companies through the early stages of growth. The difference between the two appears to be that whilst accelerators are geared more around funding, incubators are more focussed on providing a physical space where entrepreneurs can come together to work and learn. The rent that incubators charge helps fund the services they provide.
Rents are usually fairly low and flexible, on a month by month basis, with an open-ended duration. Members can stay for as long as they find it worthwhile, usually up to two years. Tenants benefit from training and mentoring that can help them turn their business ideas into reality.
Maintaining your business equity
A key difference between incubators and accelerators is that accelerators are usually looking for equity in your business, in order to compensate for the growth opportunities they provide. If you are keen to grow your business quickly and are prepared to accept external investors then accelerators would be the right choice for you. But if you want to remain 100% in control and are happy to accept a slightly slower pace, then an incubator would suit you best.
Open to (almost) all
Because of the nature of the services provided and the equity involved, accelerator programmes are highly selective. It can be a gruelling application process, which may lead to disappointment. Incubators are much less selective, and can therefore offer a gentler approach to growing your business.
More than a co-working space
Business incubators do share some characteristics with co-working spaces, which are becoming increasingly popular. However, there are some key differences. Co-working spaces also offer fairly flexible, low rents, from just a ‘desk for the day’. Depending on the facility, some will also offer relevant seminars and networking opportunities. But business incubators are more selective than co-working spaces. In most cases you can’t just book a desk – you will need to apply for space and present your business plan.
Did you know?
According to a recent Government report, there are currently 205 active incubators in the UK, supporting around 3,450 new businesses a year (or 6,900 businesses at any one time).
Business Incubators and Accelerators: The National Picture, April 2017
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