Innovations in the Making: 4 Reasons to Invest in an Incubator Business

What Is an Incubator?

An incubator creates the perfect conditions for caring for its charge, so it should come as no surprise that an incubator business specializes in providing start-ups with the resources they need to ensure their success. As a result, incubators come in a wide range of forms to serve a wide range of clients, which provides would-be entrepreneurs with some tantalizing possibilities.

Here are four reasons that potential entrepreneurs should be interested in starting an incubator business:

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High Demand

There are reasons to believe that incubators will become increasingly in demand for the foreseeable future, which in turn means lucrative opportunities for their owners. The technologies of the Digital Age have made it easier than ever for interested individuals to start their own businesses, meaning that more people are seizing such opportunities to become their own bosses.

At the same time, more employers are making the switch to temps, freelancers, and independent contractors. The U.S. Bureau of Labor Statistics predicts that 40 percent of the American workforce will fall into one of the four aforementioned categories by 2020. Combined, these factors ensure that incubators will have plenty of work and plenty of resources in the future.

High Reward

Successful incubators provide their owners with significant rewards. In part, this is because of the high demand for their products and services, which means a reliable stream of revenue. However, it should also be noted that incubators are associated with start-ups rather than businesses at other stages of the business life cycle, meaning that incubator owners have plenty of opportunities for capitalizing on these businesses’ high-risk, high-reward tendencies while minimizing the risk to their own revenue-earning operations.

Choice of Niche

Incubators tend to be specialized because the productive resources that can help businesses in one sector might not be useful for businesses in another sector. As a result, people who start an incubator business can choose their own niche of the market instead of competing with all of the other incubators out there, which is important for a couple of reasons.

First, this enables them to put their particular expertise and experience to excellent use, thereby making it easier for them to succeed. Second, this reduces their head-to-head competition with bigger and more established businesses, which is one of the leading causes of entrepreneurial failure.

Personal Fulfillment

Finally, it is important to note that a fair number of people receive an enormous sense of satisfaction from seeing a start-up prosper, so much so that some incubators are nonprofits. Regardless of whether their business is intended to earn a profit, incubator owners can count on being able to live up to their potential while helping others do the same, which can be important for those interested in the process of self-actualization.

Further Considerations

With that said, starting an incubator business comes with its share of challenges, so interested individuals should seek out further sources of support such as Venture X before reaching for their dream. Contact Venture X for more information about how you can realize your entrepreneurial dreams by opening an incubator business of your own.

Frequently Asked Questions About Opening a Startup Incubator

When the phrase “startup incubator” is bandied about in the office, there’s usually an equal mix of confusion and double takes coupled with knowing nods of assent. The concept, though, isn’t that hard to unpack if you take the words individually and see what they equal when combined.

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How do startup incubators help entrepreneurs realize their ideas?

A startup incubator is a collaborative initiative—undertaken and sponsored by private and public sources—with the intent of facilitating startup success.

Typically referred to simply as “incubators,” these initiatives are designed to allow entrepreneurs the chance to more directly pursue their ideas without getting tied down with issues that prevent some startups from getting off the ground.

Incubators are frequently conducted and financially sponsored by business schools attached to universities, other academic institutions, and even private actors interested in solving a real-world or practical problem being researched by an entrepreneur.

Example: Instead of tackling global problems and providing an incubator for entrepreneurs seeking to mitigate the world’s energy issues through green energy, many incubators are regionally focused.

The latter might, for instance, sponsor entrepreneurs looking to curb local problems rather than those who are researching issues that have a broader, international scope.

What sorts of tangible services do incubators provide entrepreneurs?

Startups can face a lot of problems getting their ideas launched, and incubators have developed strategies over the years to help entrepreneurs overcome many of these early hurdles.

That’s why incubators provide two main services designed to water the seeds, so to speak, and allow entrepreneurs’ ideas to fully blossom. These two services are providing seed (i.e., startup) money to defray early equipment purchases, for instance, and providing workspace accommodations.

On the latter note, many entrepreneurs are following national trends and choosing to work in coworking spaces. Why? Because they typically allow for more synergistic collaboration among entrepreneurs in similar positions, as well as access to mentoring and brainstorming opportunities.

Do incubators offer more nitty-gritty skills to help out startups?

Startup incubators can provide entrepreneurs—depending on their position and prior experience—with business and management skills, presentation skills, e-commerce solutions, better access to private loans, strategic assistance, and help with regulatory compliance in the entrepreneur’s particular industry.

Startup incubators can also provide skills as qualitative as better business etiquette and as tangible as legal counsel. Other skills may include assistance with negotiating patent filings and understanding the nuanced intellectual property issues they may face in the future as they develop into industry rock stars.

Incubators, in summation, can connect entrepreneurs with a host of professionals from the fiscal and legal sectors to help their ideas grow into thriving organizations. Startup incubators work with accountants, lawyers, and venture capitalists who are eager to get in on the next big thing.

In what ways are startup incubators and startup accelerators different?

The terms “incubators” and “accelerators” are often used interchangeably in business and venture capital circles, but there are some distinct differences that entrepreneurs and franchisees in coworking environments should be aware of.

The difference between the two, essentially, is that accelerators are shorter in duration, typically much more selective, and focused more on mentorship, while accelerators seek to compress, say, two years of business acumen into three to six months—no small feat.

Startup incubators are a different animal, according to the Harvard Business Review. Incubators don’t center around cohorts or mentorship as much as accelerators do, and they take in a wider range of entrepreneurs at different stages of development.

If hosting seminars and overseeing entrepreneurs hard at work in a coworking space appeals to you, check this out.