Learn how to validate your startup idea by pre-selling it, for only $80 (includes a free 1-hour consultancy call).
The Founder's Handbook
Get Free Access to The Founder's Handbook

This free Notion document contains the best 100+ resources you need for building a successful startup, divided in 4 categories: Fundraising, People, Product, and Growth.

100 Accelerators & Incubators
Download Our List of The Top 100 Accelerators & Incubators

This free sheet contains 100 accelerators and incubators you can apply to today, along with information about the industries and stages they generally invest in.

100 Top Unicorns
Download The List of the 100 Highest-Valued Unicorns

This free sheet contains all the information about the top 100 unicorns, including their valuation, HQ's location, founded year, name of founders, funding amount and number of employees.

Startup Incubators: What Are They, How They Work & The Top 5

Ad

Around Logo

Video calls radically reimagined for the new way startup teams REALLY work today. Try Around for free →

If you’re looking for ways to advance your early-stage startup through mentorship and networking, one option available to you is to join a startup incubator.

Whether you’re still in the initial idea stage of your business and want help developing a minimum viable product (MVP), or you already have an MVP and need guidance to build your sales and marketing strategies, an incubator might be just what you need to start moving your company in the right direction.

Keep in mind that, unlike startup accelerators, which usually give you some capital to help accelerate your startup in exchange for some equity in your company, incubators are not typically intended to be a source of capital in and of themselves. In fact, you usually have to pay a small monthly fee to participate in startup incubator programs. That being said, the networking opportunities provided by incubator programs can result in meeting potential investors and possibly securing capital from associated venture capital firms.

You may also want to read our Startup Accelerators guide.

What Is a Startup Incubator?

Startup incubator programs get their name from the fact that they are designed primarily for companies still in their “incubation” phase, or the phase in which entrepreneurs are still developing the ideas for their businesses and figuring out their business plans. The primary purpose of a startup incubator is to help founders turn their ideas into scalable businesses.

Incubator programs offer various resources for businesses, especially early-stage ones, including access to office space and coaching from mentors, who are typically serial entrepreneurs, founders, and venture capitalists themselves. 

Startup incubator programs usually have a minimally competitive application process, which helps ensure that the program is a good fit for both parties. Some incubators focus on specific sectors, while others admit startups from a wide variety of industries. Regardless of the industry, incubators want to work with innovative startups with a high growth potential.

How Long Do Startup Incubators Last?

Startup incubators usually offer long-term incubation programs of about 12 months or, in some cases, several years. This relatively long program length is because incubators are not designed to boost your startup’s growth rapidly but rather to nurture your business and provide you with the skills and knowledge you need to succeed as a founder and entrepreneur in the long term.

Application Processes of Startup Incubators

Since there is such a wide variety of startup incubators, the application process can vary significantly from program to program. However, incubator applications are generally not as complicated or competitive as startup accelerator applications.

To apply for a local or global startup incubator program, you will need to look at the specific organization’s website for an application form, or contact them directly and inquire about their current incubator programs. 

Most incubators require you to fill out a pre-screening form and provide some basic details about your startup to allow the incubator to evaluate whether or not you might be a good fit for their services. Note that not all incubators constantly accept new applicants, so you may not be able to apply for the incubator you’re interested in right away.

Do Startup Incubators Invest?

Startup incubators do not usually provide a sum of capital to startups that they accept to their programs. Their emphasis is on providing other valuable resources, including office space, training, and networking opportunities.

However, incubators are often closely connected to venture capital firms and angel investors, so you may have a chance to meet people who are interested in investing in your company during your time at an incubator.

When To Join a Startup Incubator?

Startup incubators are designed to help entrepreneurs in any development stage of their business. Unlike more competitive accelerator programs, incubators are not necessarily looking for entrepreneurs that already have an MVP or a fully fleshed-out business plan.

Since incubators often run for a year or more, they usually look for promising companies with long-term growth potential. So, if you have a business idea you’re working on, but you haven’t fully developed your product or service and acquired customers yet, it might be the perfect time to join an incubator.

Remember that most startup incubators are not intended to be a direct source of venture capital. So, if you’re strictly looking for funding for your business, an incubator may not be the right fit for you. You should join an incubator if what you’re mainly after is a collaborative space and a learning environment, where you will get to meet other people with experience building and growing startups who can help you solve early-stage business problems and develop your business plan and entrepreneurship skills.

Ad

Around Logo

Video calls radically reimagined for the new way startup teams REALLY work today. Try Around for free →

5 Benefits of Startup Incubators

1) Access to Office Space

One of the primary benefits of joining a startup accelerator is that they usually give you low-cost office space to use. If you started your company from your home or a college dorm room, access to a professional office space for a year or longer can really help support you and your company’s growth in its early stages.

Incubator offices not only provide dedicated desk space, conference rooms, and other workspaces, but they also come fully equipped with high-speed internet and other critical business infrastructure and equipment that you may not be able to afford just yet.

2) Mentorship and Advisory Services

While incubators don’t usually offer the same intense, personalized mentorship that shorter accelerator programs do, they still typically have a team of startup mentors and business professionals who are there to advise program participants. Having access to individuals with a deeper, more experienced knowledge base than your own is invaluable when you’re developing your business idea and trying to get your startup off the ground and running.

3) Help With Business Basics

Startup incubators often provide help with basic business needs, including accounting and financial management services, human resources services, local regulatory compliance, etc.

These business basics are something that every company needs to deal with, but they can be daunting to tackle for new startup founders. Not only does having these types of resources available through an incubator program assist you in areas you don’t have any experience in, but it can be a huge time and money saver, as you don’t have to hire outside professionals to help you.

4) Networking Opportunities

Another of the biggest benefits of joining a startup incubator is the different networking opportunities they provide. From advisory board members and mentors to venture capitalists and other startup founders, you’ll have the opportunity to meet all kinds of people in the business world during your year or longer at an incubator.

These networking opportunities can result in business partnerships, investment capital, and other lasting connections that can help you and your business succeed.

5) Help Refining Your Ideas and Plans

Think of a startup incubator as a university program for your business that teaches you everything you need to know to set you up for success. During the time you spend at a startup incubator, you’ll use all the available resources to turn your early-stage business idea into a viable product or service, with a business plan that you can actually profit from.

Besides that, you’ll develop personal business skills that will help you be a more successful entrepreneur in the long run, on both current and future projects.

Best 5 Startup Incubators

With thousands of startup incubators located in different countries across the world, it can be overwhelming searching for the right incubator for your business. Below, you’ll find five of the top global startup incubators to take a look at and consider applying for:

1) Capital Factory

Capital Factory

Capital Factory connects entrepreneurs in Texas with potential investors, employees, mentors, and customers. The Austin-located incubator program offers a large co-working space, admission to tech-focused events, and access to its network of mentors.

The company serves startups in all stages, providing entrepreneurs and their companies with the services they need to reach the next level in their development.

Location: Austin, Texas, USA

Industries: Transportation, digital health, education technology, government and military, marketplaces, virtual reality, artificial intelligence, big data, and more.

How to apply: Fill out the community membership application here.

What they give: Office space on a month-to-month basis, onsite amenities, access to a VR lab, advice from 150+ mentors, introductions to investors, special events, and pitch competitions.

2) The DMZ at Ryerson University

The DMZ at Ryerson University

The DMZ is the #1 university-based tech incubator in the world, according to UBI Global. The organization is committed to helping tech startups with high growth potential scale, fostering a vibrant startup community, and fuelling innovation in Canada. The DMZ provides entrepreneurs with the tools and services they need to build, launch, and scale their startups.

Location: Toronto, Canada

Industries: Tech startups in a variety of industries.

How to apply: Read the application requirements and apply here.

What they give: Access to office space, investors, target customers, industry-leading experts, and community events, as well as marketing, operations, talent sourcing, and financial management support services.

3) Seedcamp

Seedcamp

Seedcamp is Europe’s biggest collective of investors, angels, and founders. The incubator VC firm provides founders with a global network of advisors to help them overcome common startup business challenges through training, consultancy, and other business services. Seedcamp also helps pre-seed startups raise funding through introductions to investors and co-investments in funding rounds led by other VC firms.

Location: London, UK

Industries: No specific industries. Focuses on European seed-stage companies.

How to apply: Fill out the pre-seed admission form here.

What they give: Support in finding product-market-fit, building out sales and marketing capabilities, understanding how to grow your team, and introductions to a global network of operators and investors.

4) TechNexus

TechNexus

TechNexus is a Chicago-based startup incubator that offers a huge collaborative office space and access to a global network of partners, accelerators, and venture capitalists. They work closely with companies to identify areas for growth, build new and better products, enter new markets, implement new business models, and more. TechNexus also provides small investments to selected early-stage companies and connects companies they work with to other sources of venture capital.

Location: Chicago, Illinois, USA

Industries: No specific industries. Mainly focuses on seed-stage and series A-stage B2C and B2B companies.

How to apply: Email TechNexus at collaborate@technexus.com.

What they give: Consultancy and mentoring, recruitment and network support, leadership coaching, corporate customer partnerships, sales channels, co-marketing campaigns, co-developed products, collaboration capital and venture capital, and access to TeamWorking in-person office space.

5) Wayra

Wayra

Wayra was originally launched in Colombia and is backed by Telefónica, one of Latin America’s and Europe’s largest telecommunications companies. Wayra connects disruptive tech startups with Telefónica’s ecosystem and customers to help them scale up and accelerate their businesses. Wayra has hubs in 9 countries, including 6 in Latin America and 3 in Europe.

Location: Colombia, Argentina, Chile, Peru, Mexico, Brazil, Spain, Germany, and the UK

Industries: IoT, Video, Big Data, AI, Cybersecurity, Fintech, Blockchain, Edge, and more.

How to apply: Apply to their next activation program here.

What they give: Preferred access to Telefónica’s platforms, technology, and experts, testing of new products and services, opportunities for investments, and connections to 350 million+ potential customers.

Should You Join an Incubator?

While many startup incubators are geared towards new founders, they can provide exciting opportunities to startups at any stage in their growth. Whether you have a budding idea that you want to turn into a prototype or an MVP, or you already have a product or service that you need help scaling and selling, you can certainly get value from joining an incubator.

There is a huge variety of incubators, so make sure to do your research about different startup incubators to find one that can provide you with the specific value you're looking for. Most incubators offer some things in common, including access to office space, consultancy, and networking opportunities, but some incubators specialize in certain areas that might be more or less suited to you and your company. 

If you’re trying to choose between a startup incubator vs. a startup accelerator, keep in mind that startup incubators are less focused on providing actual funding. They can introduce you to potential investors and can save you money in certain areas of your business, but don’t expect to receive a big chunk of venture capital when you join an incubator. Because many incubators charge a small fee to their members, they can even be a good fit for seed-stage or series A-stage startups that have already received some type of funding.

The All-In-One Newsletter for Startup Founders

Every week, I’ll send you Failory’s latest interviews and articles and 3 curated resources for founders. Join +16,000 other startup founders!