Home 3 critical challenges your business incubator should solve

3 critical challenges your business incubator should solve

To develop an idea into a business, incubation seems to be the new industry “normal.” There are thousands of incubators worldwide and each year that number is continuing to grow. There are private, public and corporate incubators, many with a distinct focus on local economies, global, communities, or a specific vertical.

At this point, it sounds like variations of ice cream. Over 9,000 flavors, all around the world. If there’s incubation happening, it’s because there is a demand from companies, and because the companies that incubate probably accelerate beyond their competition.

Incubators originated in New York during the late 1950s as co-working spaces offering affordable office space and shared resources to local entrepreneurs. As they evolved, incubators began providing mentor advice in the mid-1980s. By the mid-2000s we saw explosive growth when a new wave of incubators including 500 Startups, Techstars, Y Combinator all provided access to exclusive networks and investors.

Combined with crowdfunding, incubation is now seen as the royal path towards venture capital investment. Going down this path will provide you with a cheaper and faster route to a successful round of financing.

All is sound and clear. Or is it?

Let’s take a step back and start with what it mean to “incubate.” To incubate means “to cause or aid the development of an idea.” Notice, that a company’s stage is not mentioned in the definition. More recently there has been a pushback on joining incubators due to a feeling to late-stage for them. But as entrepreneurs, we always need support and to be incubating what we do. Incubation plays a significant role in the developmental success of our companies.

Now back to the why. Over 90% of startups will fail to make it past their first round of financing or being able to generate revenue. Only 10% have a chance to survive beyond and push forward on developing a company; a chance, not a guarantee. Today ninety percent is high, but we can see that number decline as more entrepreneurs take advantage of programs like incubators.

But to do so as entrepreneurs, you need to be aware of the drawbacks with current structures of incubation programs.

#1: Pace

Traditional incubation programs today can be long and drawn out, lasting anywhere from 4-12+ months. During that time you’re left on your own with little action in between. This duration provides a disservice to the entrepreneurs involved by not helping them quickly validate their idea early enough so that decisions can be to more forward or pivot to another direction. Instead, this crawling pace encourages slow company growth and development leading towards a higher likelihood of failure.

#2: Attention

Most incubation programs today work with a cohort size of 50-100+ startups. This is in part due to the nature of how they generate revenue (yes, they’re a business too) have to bet on a large number of startups to ensure they see a profitable return. Which means you become a number. Sadly, this is a structure built for fast winners, and everyone else falls between leaving you on your own, little personal support, or being given a helping hand.

#3. Network

This is what most entrepreneurs fail to truly capitalize on while a part of an incubator program today. Good programs survive and thrive on their strong networks of mentors and investors who each have given their time and resources for support. But most programs fail to help entrepreneurs understand the network’s value and entrepreneurs fail to capitalize and to build meaningful relationships with those inside the network. This leads to a higher chance of failure because when trouble arises entrepreneurs look back for attention from their program or hesitate on a pivot and take instead are on the path of a slow death.

Introducing the Alpha incubator program

Now almost forty years after the first incubator launch, we enter the fourth wave of incubators with a new program that is truly supportive and begins to stack the deck back in favor of entrepreneurs. Welcome the ReadWrite Labs Alpha program.

The Alpha program is built with the sole purpose of providing the initial support to entrepreneurs who are getting started, a little stuck on their next step or looking to enter the San Francisco / Silicon Valley ecosystem. Alpha’s focus is on Internet of Things (IoT) startups and provides office space in downtown San Francisco along with access to an exclusive global network of mentors, investors and corporate partners. The program is three months in duration for $2,000 USD and has been designed with data from working with over 100 top global IoT startups. No matter your stage, if you’re looking for support or growing your network strategically–and you want to be at the center of the action–join Alpha today.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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