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Private Incubator: A Beginner’s Guide

By gswardman April 11, 2022

Some of the most successful companies today were started by independent entrepreneurs in their garages, home offices, or university dorm rooms. Things are a lot easier for today’s entrepreneurs and innovators thanks to private incubators and accelerators.

This guide explores the topic of private incubators with an emphasis on their role in forming and shaping startups in today’s competitive environment.

What is A Private Incubator?

An incubator is an entity set up to help budding entrepreneurs actualize their ideas at the seed stage. Incubators can provide a whole range of services and assistance to startups with the most common being things like providing office space, small business development, mentorship, and essentials like IT infrastructure.

Depending on the business model and funding, some small business incubators provide a wider range of services and assistance such as training, basic funding, administrative assistance, networking opportunities with other firms and VC firms, business advisory, and business registration. However, most incubators focus on giving startups the basics to get started and creating a successful business.

Most incubators are set up by governments, academic institutions, non-profit organizations, and private firms or individuals. Private incubators fall under the last category because they are run by private firms or individuals.

For the sake of comparison, public incubators like those set up by governments, non-profit organizations and academic institutions are usually free to join but may not be accessible to every budding entrepreneur. In some cases, you will only get the basics like co-working space and a chance to network with other aspiring entrepreneurs.

Free incubators set up by non-profit organizations and academic institutions may also be categorized under private incubators in some cases. The choice between public and private incubators usually comes down to an entrepreneur’s circumstances at the time they are starting, business plan, their preferences, and what they have access to.

What Do Incubators Provide?

You’ll get a wide range of services and assistance from an incubator or startup accelerator when you are starting. This makes it easier to work on your ideas and improves your chances of actually getting out of the seed stage. Some of the most common services provided by private incubators today include:

Office Space/ Physical Address

Private Incubator's Office Physical Address

We mentioned in the beginning that entrepreneurs in the past usually started their business from random locations like garages and dorm rooms.  You’ve probably heard stories of the likes of Steve Jobs, Hewlett Packard, and the rest. Of course, a good number of entrepreneurs today may follow the same route if they prefer it or do not have access to an incubator or office.

One of the common services or resources you will get from most incubators is office space. Incubators usually operate from a physical location where budding entrepreneurs can walk in and operate as a business at the initial stage.

There are several advantages to having access to an incubator’s office when you are starting. Here are some:

A Physical Address for Credibility

Depending on the nature of your business or idea, a physical address can help you get your first clients, gain credibility and have a place where you can be found or accessed for other day-to-day business activities. For instance, you can put your physical address in your business cards so that clients can reach you or visit you for meetings.

Meeting Space

Regardless of the kind of industry you are getting into or what market you are targeting, you are gonna need to hold a few meetings from now and then. It could be an internal meeting where you discuss ideas and where teams get work done or meetings with external stakeholders. Most business incubators offer excellent meeting spaces like fully-equipped conference rooms.

For most private incubators, meeting spaces are usually shared and part of the package if it’s a paid service. However, some incubators will offer meeting space as a separate space that entrepreneurs can hire as and when they need them. These meeting spaces can also be a good place to meet other entrepreneurs and share ideas.

Office Resources and Supplies

private incubators' office resources and supplies

The private incubator’s co-working space also comes with the necessary resources (like computers, desks, and Wi-Fi) as well as basic office supplies like stationery and snacks. The number of resources and supplies you get depends on how well the private incubator is funded and/or who owns the incubators.

Generally, well-equipped private incubators are more expensive and may be located in the fancier parts of the business districts in your area. Consider the cost of joining an incubator as compared to the value or projected revenues from your startup company as a priority. There is no need to join a fancy incubator with free meals and world-class offices if you don’t have enough funding to see through the seed stage.

Office space is really important for young businesses especially those that will be dealing with customers directly or where you need to hire staff from different parts of town. You can manage with working from home or your dorm room if you don’t need these things but it’s something you should seriously consider.

Training Services

Another key service provided by most business incubation centers is training which can be in the form of seminars, events, and normal internal training programs.  For a young business or budding entrepreneur, you will definitely require industry training from time to time.  These training packages are usually tailor-made for early stage startups and can help you and your employees gain the necessary real-world skills you need.

Common training programs offered in private incubation centers include but are not limited to:

  • Management training
  • Technology skills
  • Team building and management
  • Communication and other soft skills training
  • Business Finance for entrepreneurs
  • Entrepreneurship training
  • Business law
  • Marketing seminars

The training component is very important and integral to being part of an incubator. You will find that having access to some of the training sessions in the incubator will help accelerate the implementation of your ideas, commercialization and avoidance of common mistakes budding entrepreneurs make.

The structure and cost of training programs in private incubators vary from one incubator to another. Some private incubators offer training as part of the incubation package while others offer them separately or as per needs. This is something to consider and enquire about when choosing a private incubator.

Consultancy/Advisory Services

Another important but often underrated service you will get in a business incubator is consultancy and advisory. Most private incubators and public/free incubators have people on hand that are skilled in various business disciplines to offer business support. Need help with patents and trademarks? You’ll probably find someone to help you with it at the private incubator.

Some incubators even hire external consultancy firms or experts to help entrepreneurs under their wings. Compared to searching for and hiring independently, this is a great deal for most early stage startups.

Mentorship Services

Mentorship is one of the important services you will access when you join a business incubator. There, you will find experts who will hold your hand and guide you along as you actualize your ideas and try to set up your business.

The quality of an incubator’s mentorship program can be judged by the experts they have in their payroll and the success of their mentorship program. Consider this when choosing an incubation center by doing a bit of research and reading the incubator’s online reviews on sites like CrunchBase, Google My Business, and Feedough.

Business Operation Support and Outsourcing Services

Some private incubators offer internal and externally sourced business operation services like bookkeeping, compliance, marketing, and advertising services. This way you can concentrate on your core idea and not have to hire extra staff for such tasks. In some cases, the company that owns the incubator offers these services either for a fee or at discounted rates.

What Are Some Benefits of Private Incubators?

In the past few years, private incubators have transformed the startup landscape in more ways than one. Some of the direct benefits of private incubators today include:

Reduced costs– Early-stage companies and budding entrepreneurs can save a lot of money at the seeding stage by joining a private incubator since most of the resources they need are available for free or at low-cost/ discounted rates.

They provide easy access to mentors and advisers– Not everyone is lucky enough to access some of the most skilled and renowned business leaders when they are trying to launch a business. You can jump this huddle by being part of an incubator.

Other advantages of joining a private incubator are:

  • Access to funding opportunities
  • Access to training and industry events
  • Easy access to advisory services
  • Access to office spaces and other amenities
  • Ready office and IT infrastructure
  • Networking opportunities
  • They provide a safe and conducive working environment
  • Some are supported by reputable institutions and organizations whose expertise and resources you can access
  • They can help accelerate or actualize your business ideas
  • Capital preservation
  • They can help with compliance- for instance where a physical address is required to register a business or hire employees.
  • Access to technical assistance

They are several other direct and indirect benefits you can get by joining an incubator as opposed to going it alone. Research has shown that early-stage companies that go through the incubation process have a better chance of becoming real businesses than independent startups.

What Are Private Incubators for Startups?

What Are Private Incubators for Startups?

Private incubators for startups are firms or establishments set up by private entities like VC firms, corporates, individual investors, and academic institutions to provide a range of services and resources to startup companies.  Private incubators differ from public or social business incubators in that they are privately owned.

In most cases, private incubators will have specific entry requirements and have a financial interest in the companies they incubate. For instance, some may need you to pay a fee to be part of their incubation program or offer some equity in your company. However, some private incubators are also completely free to join and offer financial incentives to successful startups. These act as a launchpad for budding entrepreneurs.

What Are the Types of Private Incubators?

There are several types of incubators out there mainly categorized according to their business model, ownership, ecosystem and industry. The most common types of private incubators you will find across the world are:

Virtual incubators

Virtual incubators

These are private incubators that do not take in startups or entrepreneurs physically. They allow you to access the many resources and help you need from a business incubation service without having to move to a physical location operated by the incubator.  Some well-known virtual incubators include Faster Capital, The Leap by Bridge for Billions, MVP lab by Mozilla, Supreme Incubator, dLab Virtual Incubators, among others.

Industry-Specific Incubators

These are private incubators dedicated to a specific industry and only take companies or individual entrepreneurs whose businesses are in that industry. For instance, some incubators are set up to help startups and entrepreneurs in the healthcare sector, biotech, life science etc..  Examples of such incubators in the United States include Cedars Sinai, Startup Health, Rock Health, and Jumpstart Foundry.

Seed Accelerators

Seed accelerators are relatively small technology business incubators that tend to be specialized and short-term in nature. They are more geared towards businesses at the seed stage and dedicate their resources towards idea generation, nurturing, and protection through patenting. Most seed accelerator incubation programs are short-term in nature but quite intense and focused.

Corporate Incubators

As the name suggests, these are incubators or incubation programs set up by corporations to provide select startups or entrepreneurs the resources and advice they need to succeed.  The structure and purpose of the incubator vary from one corporate sponsor to another. Before you join any corporate incubator, be sure to read the terms of engagement and see if they meet your needs.

The Leading private Tech Startup Incubators In the USA

There are many reputable and successful hi-tech startup incubators in the USA especially in and around Silicone valley and New York. Here are the most successful ones based on the number of successful startups that have gone through their programs in recent years:

Y-Combinator

Y-Combinator

The brainchild of Paul Graham and other experts, Y-Combinator is perhaps one the most successful and well-known private incubators in North America. It doubles up as an accelerator offering a wide array of programs for startups.  Acceptance to their program is competitive but it’s worth it for the lucky who get in.

Y-Combinator is based in the United States but accepts applicants from all over the world. They even help you acquire the necessary work permits, visas, and company documents you need to set up shop in the United States. Companies that have passed through Y-Combinator include Airbnb, Door dash, Coinbase, Dropbox, and many more.

Techstars

Techstars

TechStars needs no introduction for entrepreneurs in the United States. TechStars has a global presence and selects 300 companies every year to add to its annual cohort. Techstars provides resources as well funding for startups in its program.

Merge Lane

MergeLane deserves a special mention in this list because it supports women entrepreneurs in the United States and beyond. This Colorado-based incubator and accelerator has had many success stories and in the recent past and continues to make an impact through its incubation programs.

500 Startups

No incubator list is complete without mentioning 500Startups. This is one of the most successful private incubators in North America. It is based in San Francisco but has nationwide coverage. 500Startups also doubles up as a venture capital firm providing funding to startups under its wing.

Edvenswa Tech

One of the top tech incubators focusing on software and artificial intelligence is this San Jose-based company known as Edvenswa Tech. Edvenswa Tech works with established corporates like PayPal Berkeley Haas and others to help budding businesses to grow and become successful organizations.

Top Tech Incubators in other countries and regions of the world:

Top Tech incubators in The United Kingdom

  • Barclays Accelerator- A private incubator set up by Barclays
  • Activate Capital
  • Collider
  • CyLon
  • Entrepreneur First

Top Tech incubators in Switzerland

  • Kickstart Innovation
  • Venture Kick Zurich
  • Mass Challenge Switzerland
  • FONGIT
  • DART Labs

Top Tech incubators in Norway

  • NGP Capital
  • StartupLab Oslo
  • TRK Group
  • Katapult Accelerator Oslo
  • Rocket57

Top Tech incubators in Sweden

  • Yuncture Inkubator
  • Impact Startup Bootcamp- Stockholm, Malmo
  • TechStars Oslo
  • Finova AS
  • Kjeller Innovation

Case Study: Airbnb – A Unicorn that Changed the world

Case Study: Airbnb – A Unicorn that Changed the world

The company that completely changed how people find and book accommodation online is a product of a highly successful incubation and private acceleration program. Airbnb, the idea, and the company were made possible through the careful guidance of Y-Combinator with direct involvement from Paul Graham himself.

Even when the company was staring at bankruptcy in 2009, Paul Graham -the incubator founder- himself took the initiative to guide the company to success by tweaking its advertising campaign. From a company that was dismissed at the initial stages, Airbnb weathered the initial storms and went on to become the global brand it is today.

Paul Graham is quoted saying that Airbnb was like cockroaches that would simply never go away no matter what.  Airbnb and other similar success stories from this world-famous incubator program are a true example of the importance of incubation. If it were not for Y-Combinator and Paul Graham’s interest in the idea, Airbnb would not have made it to what it is today.

Need help identifying and joining an incubator and becoming the next Airbnb? Hire a Private Incubator today with expert advice. What are you waiting for?  The world is ready for your big idea.