Find the Perfect Business Incubator for Your Startup
As an entrepreneur, I have come to realize that few things are more difficult than sourcing and securing seed money during the startup stage. Finding legitimate, active investors that are willing to buy into your big idea is a long, arduous road. When you need office space, supplies, and technology, you can’t afford to wait around for an angel investor to drop from the sky.
Thankfully, business incubators are becoming more and more popular and provide excellent support during early stages of growth. They do everything, from marketing and accounting to networking on your behalf – heck, they even match company founders with mentors and broker introductions with venture capital firms.
There are two approaches to consider when targeting a business incubator to partner with. You can choose to chase the tried-and-tested Old Guard, the teams that have been doing it for what seems like eternity, or you can set your sights on the newer, white-hot incubators that are absolutely revolutionizing the way that incubators operate.
Don’t worry; there’s no wrong choice here, as all of the programs listed below have outstanding reputations and boast some very impressive graduates. You can’t go wrong with any of these business incubators, so identify your niche and go get that funding!
The First Wave
As surprising as it may seem, the idea of a ‘business incubator’ isn’t all that new. Sure, the tactics and industries have changed, but some very talented minds have been fostering startup growth across multiple industries for years and years.
Timing is everything in the early stages of your startup, and incubators can serve as time-saving one-stop shops for everything you’ll need to get up and running. Who better to provide coaching, mentoring, networking, and organizational advice than a firm whose graduates have already secured over $1 billion in seed funding?
Massachusetts Biomedical Initiatives
One of the premiere biomedical incubators in the U.S., MBI launched in 1985 and has grown steadily since; the team has raised over $600 million in funding for its 50 graduated companies, and has grown to four locations (all in Worcester).
MBI’s notable offspring include GenToros (Worcester), which aims to find cures for a variety of genetic disorders, and ZATA Pharmacueticals (Worcester), which develops new therapeutic compounds based on nucleic acids.
Houston Technology Center
The Houston Technology Center focuses on energy and nanotechnology, two very dynamic and critical areas. HTC has been operational since 1997, but in the last decade alone they have aided 1,000 startups and raised $1 billion in funding. Just last year, HTC companies secured over $125 million. How’s that for startup cash?
The Center works with 60 companies at a time. Big-name grads include NanoRidge Materials, a manufacturer of carbon-reinforced metal alloys that are 10 times stronger than steel, and Hydro Green Energy, which focuses on creating hydro-electricity using naturally occurring water sources like rivers or streams instead of dams.
The Technology Innovation Center
TIC has grown 350 tech startups in the last 25 years and is currently the headquarters for 36 individual companies. It doesn’t look like they are slowing down any time soon – a new partnership with the Village of Skokie and Illinois Science + Technology Park enabled TIC to expand into an additional 6,000 sq. ft. facility earlier this year.
You may have heard their name before; some of the most famous graduates include Peapod, the original online grocery service, and The Whitewater Group, the team responsible for developing the precursor to Microsoft’s Windows.
The Research Park at the University of Illinois at Urbana-Champaign
Hey, another Illinois-based incubator! Fortunately for them, the setup over at Urbana Champaign is one of a kind; Research Park combines established firms and sapling startups under the same roof. You’ll see big names like Yahoo!, Sony, and Qualcomm alongside 40 unrecognizable startups at any given time.
Regardless of size or status, the companies at Urbana-Champaign employ over 400 student interns from one of the most decorated engineering programs in the country.
The Environmental Business Cluster
San Jose, CA
This eco-friendly incubator tends to target companies pursuing sustainable, clean-energy environmental tech. Since launching in 1994, the Cluster has pushed 150 businesses through the startup phase and into production, helping them securing funding along the way.
Recognizable graduates include Wasatch Wind, a wind tower manufacturer in Utah, and Redwood Rubber, a tire recycler in Northern California.
The New Age
There’s something to be said about the vitality of youth. I guess in this case ‘youth’ is relevant, but you get the point. While the incubators above have established themselves as perennial players, the young guns below have made remarkable strides in the early stages of their own existence. These are the incubators and accelerators that are currently dominating the startup space, listed in no particular order.
Mountain View, CA
If you’re looking for a cutting-edge accelerator with their thumb on the pulse of the market, Y Combinator just might be your best bet. Started by coder cult-hero Paul Graham in 2005, Y Combinator has helped launch over 300 tech companies in six years. Six! And these aren’t just some no-name, no clout companies either; Graham & Co. have been responsible for growing companies like Reddit, Airbnb, Loopt, Clustrix, Coinbase, Dropbox, and Disqus, among countless others.
The incubator typically invests a small amount, $10,000 to $20,000, for less than a 10% stake in each startup that is invited in. YC brings each venture out to Silicon Valley for three months, provides them with seed money, and introduces them to an extensive network of big-name entrepreneurs and financial advisors.
A popular saying at Y Combinator: “The kind of advice we give literally can’t be bought, because anyone qualified to give it is already rich.”
Not interested in exploring Silicon Valley to kick-start your startup? Former VP of Skype Paul Kline, coupled with private equity guru Reshma Sohoni, have created an interesting alternative. Seedcamp, founded in 2007, is a 2-for-1 special; half investment firm, half entrepreneurial boot camp.
Startups that make the cut are given 50,000 euros and access to a weeklong training camp in London, held in early September of each year. Seedcamp provides unrivaled access to hundreds of volunteer mentors – from product developers and lawyers to financiers and other entrepreneurs – for a hefty chunk of company equity, about 9 percent.
San Francisco, CA
Founded by a dynamic husband-and-wife duo and back by an all-star cast of Google execs, AngelPad has made quite a splash in its first five years. The San Francisco-based accelerator has launched a total of 115 startups in just 60 months. Companies that go through the AngelPad program secure a $20,000 equity investment and up to $100,000 in convertible debt from two confidential venture capital firms.
This seed-stage accelerator sees nearly 2,000 applications for its 12 available slots each term, making it one of the most competitive and desirable programs in the nation.
Web-based companies need look no further for funding – Dreamit Ventures founder Michael Levinson is all ears. Levinson, with partners Steven Welch and David Bookspan, launched DreamIt Venutres in 2007, aiming to get big dreamers out of their garages and into a real workspace.
Ventures that make the cut receive up to $25,000 in cash, three months of office space, $75,000 worth of legal, accounting and PR help, and weekly access to a roster of 20 seasoned entrepreneurs and investors.
For their assistance, DreamIt takes a 6 percent equity stake in each startup. Levinson and the team at DreamIt have been known to play matchmaker, too; they’ve paired promising startups with business strategists and software developers eager to join a young firm.
TechStars is a “global ecosystem that helps entrepreneurs build great businesses.” Started in 2006 by David Cohen, Brad Feld, and David Brown, TechStars is best known for its intensive 12-week mentor programs that run in seven different U.S. cities. Startups attract an average of $1 million in funding after being accepted into Cohen’s program, and as of this year can now apply to 19 separate participating incubator programs with just one simple application.
Its seven locations in Atlanta, Austin, Boston, Boulder, Chicago, New York City, and Seattle, host 10 teams for three months of the year on rotation, funding each team member between $6,000 and $18,000. Startups that opt into the program surrender a 6 percent equity stake in their company, but have the chance to conclude the program by pitching to hundreds of venture capitalists and other investors.
Austin-based Capital Factory found its ‘thing’ pretty early on; startups accepted into the program get a $20,000 investment, $20,000 worth of perks (office space, brand and logo development, accounting and financial services, PR help, and legal assistance), and 24-hour access to a panel of 20 mentors. Are you seeing a pattern here?
The team at Capital Factory prides itself on the mentors it makes available to participants, including SKYLIST founder Joshua Bear, ApartmentRatings.com founder Jeremy Bencken, and Smart Bear founder Jason Cohen. Startups trade a 5% equity stake in their company for a chance to complete the 10-week program.