Startups are strapped for funds. There are so many ways to get funded such as bootstrapping, debt funding and equity funding. We have discussed bootstrapping in our previous blog. It’s a great way to pool in capital and make the most of whatever you have. But of course, it isn’t for everyone. There might be times you can’t afford more than 2 employees. Or worse, you might not be able to pay regular debt payments. In such instances, startups need to get creative and see what other ways are offered out in the business world.
Governments and universities usually offer incubator programs where startups can sign up and make use of the services they offer to grow their startup. Instead of excluding yourself, you get to be a part of something bigger which allows you to grow your business quicker and smoother. It’s the perfect way to carry your startup from an idea to execution.
Several decades ago, incubators were limiting themselves to offering their services to tech companies who solely looked to disrupt whole industries. Today, incubators provide their programs for a wide variety of startups from a multitude of industries. They not only offer funding but provide mentorship facilities as well as general support. If the statistic that startups that come from “incubation” survive longer than other startups do doesn’t peak your interest, we don’t know what will.
Here are some reasons why we think you should opt for your local incubator:
Less talk, more action
Incubators are the perfect environment for startups to reach their full potential. Along with resources, they are home to venture capitalists, mentors and plenty of angel investors who might be looking for what you offer. Along with guidance, many incubators offer tangible resources such as temporary office spaces, accounting services and a how-to on dealing with legal matters. In doing so, startups can focus more on the business itself – the product or service – instead of day-to-day administrative issues that slow down the actual business.
Moreover, with so many brains and so many great ideas in one space, the creativity is bound to explode and create so many more things you probably had no idea of. Lots of ideas bouncing off one another, giving birth to things you didn’t think were possible: that’s what an incubator is about. It’s an exciting environment with even more exciting possibilities.
Unless your startup requires some real, lengthy attention, the average time most startups spend in an incubator is up to two years max. In that time, the business will share resources the incubator has to offer. For instance, sharing a phone system, setting up booths at a trade show together, get discounted rates for graphic design services – these are all just some of the ways pooling resources not only helps your business but provides you with the benefits as well.
You get access to office equipment, computer services, and labs and also share a multitude of overhead costs that exclude these utilities. It’s almost a lease agreement to use all the utilities and equipment an incubator offers. The agreement, however, doesn’t last forever. Most incubator facilities offer their services for 2-3 years with the rare option of renewing your lease. In other words, your startup better be successful by the time the lease is up.
You can help one another
There is something awesome about learning from the mistakes of others and not repeating them yourself. The mistakes that can prove painfully costly. Those are the kind of mistakes you won’t be able to avoid if you were not a part of support system like an incubator. Along with bouncing ideas off each other, you get to “scratch each other’s backs” and improve your product along with helping out your sort-of “partner-in-crime”.
Additionally, you could have access to other startups that provide the services you are actually looking for, allowing you to focus solely on product development and testing. This would not be possible if you are managing a 100 other things that have nothing to do with the product itself – something the incubator takes care of.
By having numerous entrepreneurs and their businesses under one roof, you can expect that the following things will happen:
- Support each other in their startup ventures
- Create business relationships that can prove useful in the future
- Discuss business-related topics
It’s a psychological support system that is just as important as obtaining resources and using administrative services in order to cut costs. Having someone in the same boat as you also boosts morale and encourages you.
Breaking into New Markets
If you can afford it, you can also make use of incubators in global markets. You are able to get support from international incubators that will allow you to use their free office space and allow you to focus on penetrating global markets. This lets you establish a presence in places where you might not have one. Established businesses can benefit from overseas incubators as they are unfamiliar with the local setting and the incubator can provide you with the right tools and guidance to get you started and expand your business.
Validity in the Business Community
Perhaps one of the best facts about being a part of an incubator is the legitimacy you gain through associating with one. Many an entrepreneur claims that once their startup became a part of an incubator program, the rewards included an air of credibility, not only among their peers but among both customers as well as vendors. You basically pass an important base test by simply being a part of the program. Potential investors will take you more seriously, customers will be more interested and vendors won’t hesitate to provide you with what you need.
Guidance from credible Mentors
Incubator mentors were once entrepreneurs themselves and have gone through the whole process. From defining their vision to implementing the strategy to foreseeing the future roadmap, your mentor knows what he/she is talking about because of their personal experiences. That doesn’t mean you won’t learn a few things on your own because each startup is unique and will have its own unique needs. For instance, your startup might be the first to expand internationally and hence, you will experience this unchartered territory on your own. But once you do, you will be able to pass on the dos and don’ts of international expansion to other startups in the incubator. That’s what being a part of an incubator is about.
Mentorship can lead to lucrative deals that even the most well-off startups can make use of. It never hurts to expand your network, you never know who could turn out to be a key potential player leading to bigger and better opportunities. It’s also great to attend networking events and make connections with other entrepreneurs in your area. Usually, you will find that your local incubator might be the one behind making these events happen – don’t miss out on them! Create relationships with people who have an industry focus and niche area specialization. You will be surprised at how useful these relationships with seasoned professionals can prove to be in the long run.
Entrepreneurial success is heavily dependent on being open to learning new things and to learning in general. You can never shut down your brain to new ideas and new people. This is what technology is about – it’s fast-paced and ever-changing – to keep up with the new, you need to be open to whatever learning opportunities that come your way. Lots of incubators offer workshops and yet, many others hold conferences or provide you with a free ticket to attend one.
Many incubators are either hosted by or are in a partnership program with established universities and academic institutions, allowing young entrepreneurs with the right tools to start their own businesses. Whether or not that is the case, all incubators have the sole purpose of empowering their members with lessons that will significantly increase their success rate.
Moreover, you are also learning from other startup teams that are a part of your incubator. The entrepreneurial ecosystem is the perfect ground for new ideas, new learnings, new relationships and new experiences.
As you can see, being a part of an incubator has many advantages. That’s not to say there aren’t any disadvantages to being in an incubator. Many entrepreneurs will let you know that an incubator doesn’t just solely exist to serve your purpose – it is a business as well. There is an “institutional DNA” where the incubators are subject to select certain startups for their own personal means. That, however, might prove to be an asset for your startup if the incubator your company is a part of has carefully chosen and selected the entrepreneurs that have been a part of their history. The leadership that comes with careful selection of great startups and even better entrepreneurs will prove to be the exact support your startup was looking for.