When one is in the kitchen, one will however always have a choice between cooking everything from the scratch or either using pre-mixed ingredients in order to make the process quicker and easier. Starting a business isn’t thus all that different. The decision on which an incubator, if any, one should thus join boils down as to how much of entrepreneurial sauce one can, want and should however try in order to make on his own. Entrepreneurs however have a limited time, knowledge and the resources. Therefore they are also required in order to focus on what matters most to them and as to what they need in order to do better than their competitors. But the rest still thus needs to get done and that’s where the incubators can however be of great help. But because incubator services generally come at a price — cash, equity or opportunity costs — this is thus a serious business decision in order to be carefully evaluated.
A business incubator is a company that generally helps the new and startup companies in order to develop by providing the services such as a management training or an office space.The National Business Incubation Association (NBIA) thus defines the business incubators as a catalyst tool for either the regional or the national economic development. NBIA likewise arranges their individuals’ hatcheries which is by the accompanying five hatchery sorts including scholastic foundations; the non-benefit advancement partnerships; for the – benefit property improvement wanders; the investment firms, and the blend of the above. Business incubators however differ from the research and the technology parks in their dedication to the startup and the early-stage companies. Research and technology parks, on the other hand, tend in order to be large-scale projects that generally house everything from the corporate, government or the university labs to the very small companies. Most of the research and the technology parks also do not offer the business assistance services, which are the hallmark of a business incubation program. However, many of the research and the technology parks house the incubation programs. The purpose of this article is to make the reader aware of the 5 questions which every startup should ask before choosing an incubator. The available evidence on the usefulness of the incubators thus suggests that the survival rate of the incubated firms could however be more than three times higher than the non-incubated firms. In fact, the survival rates could thus be as different as more than 80 percent
The purpose of this article is to make the reader aware of the 5 questions which every startup should ask before choosing an incubator. The available pieces of evidence on the usefulness of the incubators thus suggests that the survival rate of the incubated firms could however be more than three times higher than the non-incubated firms. In fact, the survival rates could thus be as different as more than 80 percent of the incubated startups as and when it is opposed to the overall survival rate of about 20 percent for all the startups. The research thus also suggests that the incubated firms generally grow faster than their non-incubated counterparts. While the growing popularity of the incubation model, it thus also helps in suggesting the importance of choosing wisely. If one likes these higher odds and then results in choosing to startup at an incubator, here are some questions which one would need to consider:
1. What can one do and what should the others handle?
While some of the folks generally consider the incubators to be the places for a cheap physical space and the shared office services, most of the incubators thus now provide a variety of the value-added services which are ranging from the help with the business infrastructure and the regulatory compliance to assistance with the loans and then networking with the potential advisors and mentors. Some of the incubators thus also facilitate angel and the venture capital investments, as well as also helps to set up technology transfers and the strategic partnerships.
Therefore, the first question to ask is:
What kind of support services could the business use?
Does one only want cheap workspace or does one also want tax breaks?
What about mentoring and the networking?
Does one have enough management experience?
Can one acquire these services cheaper through the network than through the incubators?
One must carefully assess each of these factors along with the relocation limitations should thus considerably narrow down his choices.
2. Does one need the help of a specialist?
If one needs significant knowledge transfer for the advanced technology development, incubators at the research universities are however probably the best bet. These schools however have human capital, a knowledge base, access to the grants and resources and other enabling infrastructure in order to help one to succeed. If the speed to market and access to the capital is one’s need, for the -profit private incubators such as Y Combinator, Intend Change and the Dreamit Ventures are thus the way to go. If one’s startup would however make an existing big company even more competitive, then their in-house “intrapreneurship” incubators should however top the list. Finally, if the venture helps the local economy and the employment one should thus also consider public business innovation centers for the easier access to the government subsidies such as rent and tax breaks.
3. Are their current startups on one’s wavelength?
During the process of choosing an incubator, one must make sure in order to check out current and the past startups in their programs. This is thus important for two reasons. First one needs to make sure that the incubator is thus a good fit for one as the research shows that the firms that however compete in markets or the technologies that are however closely related to their incubators’ specialization generally tend to do better than those that generally do not. Secondly, the research however also indicates that the previous success of the incubator and the firms in its program is thus one of the best predictors of success for the future firms in the same program. In fact, a greater proportion of the high-growth firms generally tend to come from the large and the successful incubators.
4. How much is one willing to spend?
Participation in the prestigious incubators that generally provide higher value-added services thus comes at a greater price. The Hybrid venture capital-incubator programs, such as Intend Change, often involves in giving up a greater proportion of the equity. Such incubators however result in lowering the risk as well as the upside potential, which is why one should however consider post-investment valuation for the purpose evaluating them.
5. What else is one looking for?
There are also several other factors that are required to be considered for the purpose of evaluating the incubation programs, including their policy on graduation and exit, the level of the psychological support, ability in order to keep trade secrets and the openness to double-loop the learning and the exchange of knowledge. Some of the incubators expect progress at the set times and also others go by milestones such as the firm revenues. Some of the programs also have managers who are however too busy and the other participants too are competitive in order to provide any support. Others thus have a culture of assisting in and thus celebrating one another’s success. One however needs to be clear about his own expectations on such issues and then is supposed to make sure the program meets the needs.
This article has been contributed by Simran Setia, Tax Expert- Gst Return Filing