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The failure rate of US startup companies after five years stands at over 50 percent, and over 70 percent after 10 years. Starting a business from the idea stage to the point where a final product is introduced into the market is no mean task. Some of the common challenges that startups face include limited funds, limited access to markets, lack of support services, as well as challenges with personnel. The journey is bound to be even more challenging when someone who is new to entrepreneurship does not know how to overcome these hurdles to grow their business. This is why it has become important for various organizations to provide relevant solutions.
The good news is that startup incubators exist to nurture business ideas and make it easy for entrepreneurs to ensure the success of their businesses. Some of the services that incubators offer new businesses include low-cost workspace, access to mentorship and expertise, and working capital. Entrepreneurs also get the chance to work around entrepreneurial businesses that have a similar focus as theirs. Before applying to and joining an incubator program, entrepreneurs need to understand the different options available to them. Below are a few things you may want to know.
What is a startup incubator?
If you are looking to start off your business on the right foot, you should consider turning to a startup incubator or accelerator for help. While these two are sometimes used to represent the same concept, several key distinctions set them apart.
Startup incubator vs accelerator
A startup incubator is a collaborative program whose purpose is to help new startups that are at a very early stage to grow and succeed. Incubators are designed to help entrepreneurs deal with most of the problems associated with launching a startup. In most cases, startup incubators are non-profit organizations, and they tend to provide a physical base for startups and nurture them for a significant period of time.
On the other hand, the startup accelerator business model can be defined as a fixed-term, group program that focuses on training and mentorship. Whereas incubators are more suited for early-stage business ideas, accelerators are tailored to help fledgling businesses scale up by speeding up growth. Startup accelerators can provide access to support and funding, help refine the business model, and boost the likelihood of attracting investment in the future.
Lastly, a venture studio is a new model for budding entrepreneurs that combines both company building and venture capital. Mostly, venture capital firms and accelerators focus on startups and invest money in exchange for equity to promote fast growth. Venture studios are companies that tap into their in-house expertise to invest funds to build companies from scratch, and therefore often take a higher percentage of ownership. High Alpha pioneered the venture studio model and was the first company to combine the capital and company building business models in 2015.
If you are to know the best option for your startup, it will be necessary to compare an incubator vs. accelerator. This will ensure the organization meets the unique needs of your startup.
How does a startup incubator work?
Simply put, a startup incubator is an organization that helps new companies to grow and achieve success by providing important business services such as office space and management training. While a good number of people know the answer to how do startup accelerators work, very few can clearly describe the inner workings of an incubator.
Generally, since startup incubators are funded by universities or economic development organizations, they do not provide funding to startups. The organizations do not also seek an equity stake in the companies that they support. These organizations raise money for their operations from corporate, government, and investor sponsorship, participants, paying for participation, profits from liquidity events and royalties from IP commercialization.
Before seeking to know how to start a business incubator, you should focus on how the organizations ensure the successful running of their operations. This has a lot to do with the business model that the startup incubator embraces. There are several models that startup incubators can use. These include the incubator model, the pay-it-forward model, the developing entrepreneurs model, and the new work environments testing model.
Startups that join an incubator are likely to benefit from shared operating costs, administrative assistance, legitimacy in the community as well as working around fellow entrepreneurs.
Startup incubator business processes
The business incubation process is a unique and flexible mix of business development that focuses on people and infrastructure. With the difficult and vulnerable stages that characterize the transition from an idea to an existing business, incubation helps to ensure that new and small businesses are nurtured and get the help they need to survive, grow and succeed.
One of the best ways to join an incubator is to speak to the entrepreneurs currently in the program. This will give you a picture of how long they have been there, what their growth goals have been, and the particular successes they have achieved over that period. You can also consider looking at the alumni to establish whether they have recorded success after leaving the startup incubator. This will give you some information on the quality of the incubator program. However, making an informed decision will also require that you find out whether they use the for-profit incubator business model.
For a new company, being part of an incubator means having the physical space required to launch your business. Also, you will get administrative assistance that will help you overcome some of the common challenges that startups face. You will also be exposed to a competitive environment full of ideas from fellow entrepreneurs. What a startup incubator does is to prepare a business for the next stage where they can benefit from a startup accelerator structure and startup accelerator business model to grow their businesses further.
Startup incubators around the world
Any entrepreneur around the world looking to set up a business should know where to find the best startup incubator. With the world moving in the direction of small businesses and entrepreneurship, there has been a rise in the number of startup incubators.
Global startup incubators
Today, there are incubators all across the world that provide the information and support that new companies need in their early years. Most global startup incubators have the resources, experience, and connections that can ensure the survival and growth of startup businesses. Here is some information to help you as you seek support for your business idea or startup business.
Since 2010, the city of Manchester has recorded a 62% increase in business activity. With a five-year survival rate of 39% for business startups, Manchester is one of the top cities to launch a business. Apart from London, several top cities have a vibrant enterprise ecosystem. The good news is that there are also startup incubators and accelerators that provide the support required to boost the growth of businesses. Some of the organizations that you can turn to for administrative assistance and advice include Fintech accelerator London, Techstars London, and Startup Hub London. When looking for a startup incubator UK or startup accelerator London, be sure to look at what they offer before joining.
The US and India are also great places to launch a business, considering budding entrepreneurs receive support and mentorship from some of the best incubators and accelerators. With about 20% of small businesses in the US failing in their first year, working with startup accelerators NYC can help to ensure new companies survive. The same applies to India, where entrepreneurs have to identify a startup accelerator India and startup incubators in India that will add value to their young businesses.
Startup incubators and resources in Indianapolis
Indianapolis is home to a number of startup incubators that have achieved great success over the past few years. Today, early-stage companies that focus on innovation can get support, mentorship, and quality advice. Read on for more info about Indianapolis startup jobs:
TechPoint Indianapolis aims to create opportunities by bringing together talent, universities, government, philanthropies, and tech companies in the city. Through the job board, companies that are included in the Tech Directory are in a position to identify and recruit talent. This is in line with the organization’s goal of creating new opportunities. TechPoint organizes several community events to make it possible for residents of the area to learn new skills, make connections, or just stay updated with what is happening around the town. With a special focus on the Indy tech community, Techpoint events include awards to celebrate and connect the tech community in Indianapolis.
Indianapolis startup incubators
One of the best things about Indianapolis is that upcoming entrepreneurs have access to a number of startup incubators. Some of the incubators that exist in and around this location are IdeaGist, Flagship Enterprise Center (FEC), Purdue Research Foundation and Innovation Center. The organizations provide management assistance, marketing support, technical support services, and workspace. Indianapolis accelerators include Techpoint, AcceLINX, SproutBox, DeveloperTown, and Rose-Hulman Ventures. A good number of these organizations have played an important role in the growth of Indy tech, promoting business activity in and around the city. This has also led to the successful setting up of numerous companies by creative entrepreneurs.
In 1997, the city got the first big tech entry that propelled it to the tech hub that it is today. Today, members of the Indy tech community can benefit greatly from Indianapolis tech news resources like the Indianapolis Business Journal or TechPoint, communities like the Indianapolis Technology Association, and incubators like Powderkeg Indianapolis.
Companies like Software Artistry, Aprimo and ExactTarget helped shape Indianapolis into the tech hub that it is today. IT jobs grew by 17% from 2009 to 2014 and central Indiana gained more than 5,000 computer and IT jobs during those years. ZipRecruiter, a job search engine, listed Indianapolis as the number-six up-and-coming city for tech jobs. The cost of living in Indiana is much lower than competing tech hubs: a $272,891 salary in San Francisco is roughly equal to a $100,000 annual salary in Indianapolis.