Whenever a business firm engages primarily in fostering an early-stage company in support of its early developmental phases until such a time when the company can run smoothly and seamlessly without further support from the business firm is ideally known as an Incubator or Business Incubator. A business incubator’s role is basically to accelerate the process of creating a successful enterprise by providing start-ups with a wide range of integrated support.
Much as an incubator works as a-one-stop-shop for start-ups and plays a key role in the success or failure of a prospective firm they are there for the ‘almighty dollar’. An Incubator as the name suggests is where ideas are translated into viable and practical use and the business incubators are increasingly essential and crucial for strengthening start-ups and overall development in an increasingly globalized platform.
The Incubator can be a for-profit enterprise or a non-profit entity and usually provides:
- crucial assistance through the following methods: Furnishing physical location space; financial capital access and offering staggered experience from credible and certified business and management-level executives
- crucial provision of research and informational resources through effective partnerships with government agencies and local universities and colleges
It is widespread knowledge that successful companies such as Dropbox, Disqus, and Reddit would not have been the roaring success they have become without input from business incubators (e.g. Y Combinator). In return an incubator firm strives to gain shares in the company in exchange for services rendered and benefit in the financial windfall once the start-up company turns a corner and is making profit.
Business Incubators are generally classified in three ways:
- General/Mixed use incubators deal are committed to promoting regional, industrial, and economic growth via business development.
- Economic development incubators main purpose is to stimulate economic objectives like job creation and industrial restructuring with local government aid.
- Technology incubators are a darling with most entrepreneurs looking to make a mark in Silicon Valley simply because they aggressively promote the development of technology-based firms.
USA takes the cake for being the country with the most productive business incubators and this is no accident as they have been at it for more than a century and the rest of the world follows it hot on the heels. Most venture capitalists are fond of technology incubators because the return-on-investment (ROI) can run in the millions of dollars and all need to get on the bandwagon of crazy innovation that’s fresh and untried in the market before the venture capitalists come calling and dangling some mighty checks to entice a start-up.