What is a Business Incubator?

Business incubators nurture the development of entrepreneurial companies, helping them survive and grow during the start-up period, when they are most vulnerable.

These programs provide their client companies with business support services and resources tailored to young firms. The most common goals of incubation programs are creating jobs in a community, enhancing a community’s entrepreneurial climate, retaining businesses in a community, building or accelerating growth in a local industry, and diversifying local economies.



How do Business Incubators Differ from Coworking Spaces?

Like incubators, coworking spaces create an atmosphere that fosters entrepreneurship by connecting people who are facing similar opportunities and challenges. Coworking spaces differ in that most do not provide formal programming and services, so they also do not have set goals and graduation policies for tenants, whereas incubators are typically working to bring companies from point A to point B with the goal of sending them out to survive on their own.

How do Business Incubators Differ from Accelerators?

Incubators typically provide client companies with programs, services and space for varying lengths of time based on company needs and incubator graduation policies. Most accelerators take a group of companies, or a cohort, through a specific process over a previously-defined period of time, culminating in a public pitch event or demo day. Accelerators also generally make seed-stage investments in each participating company in exchange for equity, while many incubators do not make this type of financial commitment.

Are Business Incubators Worthy of Government Subsidies?

Government subsidies for well-managed business incubation programs represent strong investments in local and regional economies. Research has shown that for every $1 of estimated public operating subsidy provided the incubator, clients and graduates of InBIA member incubators generate approximately $30 in local tax revenue alone. InBIA members have reported that 84 percent of incubator graduates stay in their communities.

How Do Business Incubators Contribute to Local and Regional Economies?

Incubator graduates create jobs, revitalize neighborhoods and commercialize new technologies, thus strengthening local, regional and even national economies. InBIA estimates that in 2011 alone, North American incubators assisted about 49,000 start-up companies that provided full-time employment for nearly 200,000 workers and generated annual revenue of almost $15 billion. Business incubators reduce the risk of small business failures. Historically, InBIA member incubators have reported that 87 percent of all firms that have graduated from their incubators are still in business.

Used with permission. Source – www.inbia.org/resources/business-incubation-faq