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September 11, 2018

Startup Incubator: The Good and the Bad!

Startup incubators are the companies that provide infrastructural support to a startup to develop and grow. The name of this program is inspired by the process of egg incubation. In the animal world, egg incubation is the period of time when a newborn is kept under the body of the mother to nurture its development.

Drawing analogy from this process, an incubator can be thought of as a company that provides the support to a startup to survive the initial phase of running a business. Today, incubators are a reality of the corporate world that provide infrastructural, technical and financial support to startups during their formative years.

But is it worth your time and money to join a startup incubator? Let’s weigh the pros and cons to find an answer:

Pros

Availability of Infrastructure

The best thing about an incubator is that you don’t have to expend time and money to find the best location for your business or get the best equipment for your team. Since an incubator is equipped with the entire requirements of running a startup, you don’t have to waste your resources on these things.

You Can Benefit From Coworking

Coworking is another benefit you can get by joining an incubator. Coworking provides you with the clerical staff and office attendants to accomplish your day-to-day tasks. Besides, you are able to rub shoulders with some of the best minds with whom you can imbibe some valuable experiences. It is a kind of co-intelligence which benefits every member of the team.

You Can Gain From Mentoring

Mentoring is an integral part of a startup. For any new business, mentoring is essential to set the right direction during its formative years and incubators provide you with the right source of mentoring. In an incubator, you are working under the guidance of seasoned businessmen who have sound experience in running a successful business.

However, you should remember that an incubator works with hundreds of entrepreneurs on daily basis. So you have to put your best foot forward to get the attention of mentors.

A Chance to Build Quality Contacts

An incubator introduces you to the startup world which means you’ll have a chance to meet the successful entrepreneurs, business consultants, lawyers, and industry experts who can help you in scaling your business. Besides, the networking can introduce you to the who’s who in your industry.

The collective knowledge and experience of these people will enrich you as an entrepreneur and will serve as a guiding source to run your business.

A Chance to Upskill Your Team

Training is a fundamental part of an incubation program. The majority of incubators invest in developing creative and technical skills of a startup team. To serve this purpose, they conduct training sessions and workshops to build the necessary skills of every member in a startup setup.

These training programs are a great source for your team to upskill themselves and the combined knowledge and skills of your team will contribute to the growth of your business.

Cost-Effective, Time Efficient

While an incubator will charge for the things they are going to offer you, it will be significantly lower than what you would bear when doing it all alone. Besides, the incubator will be taking care of the payment procedures for the utilities and staff that you will be using, so you will be free from going through the hassles of paying the bills and rent of the business which is a big advantage for entrepreneurs who constantly struggle with time and money.

Cons

Incubators Mean Business

Incubators are not social enterprises that seek to serve a cause. Neither are they the landlord who offers you space and infrastructure and then walks away with tenancy rent at the end of every month. In fact, they are very much part of a startup and take a keen interest in its growth at every stage. For them, it is a way to diversify their business portfolio and get their hands on better investment projects.

As a matter of fact, many incubators even offer capital funding and demand an equity share in return. There will be chances of a conflict of interests, creative differences or conflicting opinions. If at any stage an incubator comes to realize that the investment is not worthwhile, it can even shift its attention from you to a more viable startup.

There Can Be Coworking Glitches

Working under an incubator means you will be working along with other entrepreneurs. The majority of incubators prefer working with startups that work in similar industries. For entrepreneurs who are competing within the same niche, it can be a real hurdle to share the same space.

When you coexist with one of your competitors, you run the risk of privacy invasion. Besides, when you are working in an incubator, you are working with just another business. They’ll have the technical and creative personnel who might not suit your specific business model. All these things can have serious repercussions on the growth of your startup.

It is a Contract

Joining an incubator is a pure business affair. Whatever you expect from this partnership will be written in black and white. The biggest impediment in this contract is the length of tenure the incubator will want to engage with you. It is commonplace to see incubators making a 1-2 year contract which can be a big roadblock, if you want to scale your business.

In addition, you will be required to perform your job within a specific time cycle and pledge to give a certain number of hours to the business. So, the contract does have strings attached.

There Will Be Added Responsibilities

Joining a startup incubator comes with some additional responsibilities. When an incubator invests in your startup, it sees you as an opportunity to build its support system. Therefore, it will be expecting you to offer mentoring or technical advice to the new startups that join its team. In other words, you will have to dedicate a portion of your time to serve those startups.

Final Thoughts…

Working with an incubator has its share of pros and cons. Depending on your preferences; it can be a good and bad deal to join hands with an incubator. Mentioned above are some of the pros and cons based on the opinions of the majority of startups which make them subjective.


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Jasmine Demeester is an entrepreneur, public speaker, and an ace blogger at Dissertation Help Deal . An inspiring orator, she delivers speeches on entrepreneurship, business management, and business leadership to budding entrepreneurs. In addition, she likes to write blogs on the hottest topics on entrepreneurship, marketing, and business development.

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