The incubator concept is simple and appealing. It is a business support program providing services and an environment to promote the growth of early-stage companies. Incubation tenants generally receive access to specialized equipment, broadband and customized professional services, including capital and talent, debt and equity financing, government grant/loan assistance, and connections to business networks.
There are more than 7,000 incubators worldwide, more than half of which are mixed-use incubators that serve a combination of industries.1
Roughly 40 percent serve technology entrepreneurs while a small number of others are manufacturing or niche incubators (such as commercial kitchens serving food-based entrepreneurs or virtual incubation programs).
Currently, there are only a few incubators in the U.S. that openly promote services for retail business startups. Many new incubation programs are ‘cause’ or ‘solutions’ driven in response to the cycle of technology innovation that exists today. About 70 percent of all business incubators require a subsidy to maintain operations, but there are many sustainable models, based upon reasonable public and private funding sources.2
Recipients of business incubation services boast high success rates and substantially contribute to their local economies. According to the International Business Innovation Association (INBIA), member incubators report that 87 percent of their graduates are still in business after five years, in contrast to the 52 percent success rate among the general business population. NBIA research has shown that for every $1 of estimated public operating subsidy provided, incubators generate approximately $30 in local tax revenue. Incubator graduates (84%) stay within 10 miles of where they received services.
Cowork, Virtual & Lab/Life Incubation
In recent years, new models of incubation have emerged, offering unique methods of supporting entrepreneurs including Cowork, Virtual and Lab/Life incubation.
A 2009 publication of the Institute for the Future suggests that these, “pop-up labs, coworking hubs, mobile incubators and disposable research parks will provide flexible physical spaces in the future.where networks of investors, entrepreneurs, hackers and customers converge for collaborative knowledge creation and trust building, cementing relationships initiated and cultivated online. Overlaid grids of social software will enhance these spaces and knit them together in local, regional and global networks of collaboration.” 3
1 National Business Incubation Association. (February 2019). Business Incubation FAQ. Retrieved from http://nbia.org/resource_library/faq/index.php
2 Stein, Charles. (April 2009). NBIA Conference Presentation.
3 Institute for the Future. (2009). “Future Knowledge Ecosystems: The Next Twenty Years of Technology- Led Economic Development.”
The Incubator Spectrum
Microenterprise and Minority
Private Sector Approaches
Patience Leads to Success
Business incubation is not a fast process. Like entrepreneurship itself, business incubation requires patience and a long term view of success by community stakeholders.
On average, a business incubator will not generate measurable economic outcome for several years. It is however, a strong component of a comprehensive entrepreneurship support system and a means to create and encourage clusters of entrepreneurial businesses in targeted sectors.