What is an incubation center?

Question frequently asked by entrepreneurs, business and academic leaders include “What is an incubation center?” or “How to start an incubation center?”

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A business or startup incubator is a program managed by corporations, educational institutions or government agencies that provide an environment for startups to develop by providing services such as management training and office space.  Startup incubators are usually non-profit organizations. The term “incubator” or “incubation center” are interchangeably used for a collaborative environment designed to help new startups succeed.

The term takes off from biological “incubators” where young ones are hatched and nurtured. Universities, scientific, research, governmental agencies and even public corporations around the world manage incubation centers to nurture startups.

hackerlabincubator

Image Credit: Intel Free Press

Incubators are generally established in or around startup-hubs, in geographies where startup ecosystem exists, or in locations where governments or businesses want to promote entrepreneurship. We generally think of Silicon Valley in America or Bangalore in India as an ideal location for incubators but they are more widespread. (Tip: google on your city or state with the term “incubator in,” and you are bound to be surprised!)

As more entrepreneurs enter the startup world, the number of startup incubators also continues to mushroom. Incubator focus on a few key aspects, including

  • Operational team and Management – The purpose of a startup incubator is to help entrepreneurs grow their business. Hence, the team that manages the incubator should be driven and empathetic to the needs of startups. Operational management teams:
    • Manage the operations and resources required by startups. This lets startups and entrepreneurs focus on their idea.
    • Operational teams and managers should manage the overall infrastructure, location and networking between startups and mentors.
    • The operational team should also be in a position to identify a set of advisors and mentors from industry, faculty and the investment community.
  • Training and mentoring – A key reason startups and founders queue up to be in an incubator or incubation center is because of training, mentoring and networking opportunities
    • Incubators associated with educational institutions may provide access to lectures, classes, and other training.
    • Likewise, corporate incubators may provide mentoring and networking with corporate peers
    • Conduct periodic workshops and events like Hacker labs, Bootcamps, Hackathon etc
    • Management team support – Startups and entrepreneurs have specific management needs. While founders like to be “hands-on” on all aspects of a startup, being in an incubator will help them network, observe and learn from their peers. Such networking can help in hiring and scaling up operations too.
    • Networking can go beyond training and mentoring. For example, investors who are part of the incubators get an opportunity to observe startups, entrepreneurs, and their teams up-close. They can also gauge early success to invest more, and help struggling entrepreneurs.
  • Incubators will need some basic infrastructure for functioning, including:
    • Office Space and Furnishing – chair, table, cubicles, conference rooms
    • Network and Connectivity – wi-fi/internet, telephone, electricity
    • Technical infrastructure – software , printer, scanner, copier, other technical infrastructure
    • Other Services – maintenance, security, coffee, and break area, restaurants nearby or catering service

Other forms of Incubators include Makerspaces or “Maker hubs”  – These are centers established to nurture Do it Yourself (DIY) or “Makers” The rise of the maker culture is closely associated with the rise of hackerspaces, Fab Labs and other “maker spaces”, of which there are now many around the world, including over 100 each in Germany and the United States.

Well managed incubators and support system for startups can nurture an ecosystem of successful entrepreneurs.  Even the most basic services required by incubators comes at a cost, which incubation centers invest in. Corporations, universities or government agencies that sponsor the incubators by funding part or  the entire expense.

 

Other References:

  • Eight Reasons Startup Incubators Are Better Than Business School – Forbes
  • The Hackathon Fast Track, From Campus to Silicon Valley – NY Times
  • 50 Amazing Startup Incubators and Accelerators in India – Inc magazine
  • World’s biggest startup incubation centre to be set up in India –  The facility is to cost around $300 million and will incubate 5,000 startups in five years. | ZDNet
  • Tata Sons to set an incubator in Pune or B’luru – The Economic Times