Entrepreneurship. Business Incubators and their Services

Business incubators are facilities that provide entrepreneurs with an inexpensive start-up environment and a range of administrative, consulting, and networking services.  According to a 2010 study by the National Business Incubation Association (NBIA), the survival rate of startups using business incubators is 87% compared t0 44% for startups that didn’t use incubators.   At that time there were approximately 41,000 startups using 1,200 incubators across the country.

Every state in the U.S. is home to incubators designed to serve as homes for start-up companies and promote innovation. The website www.angelscorner.com/articles/incubators.htm provides a list of links to major U.S. incubators. Incubators became widespread with the explosion of start-up companies in information technology and computer fields in the late 1990s. Not all incubators include wet laboratories in their facilities but many do particularly due to the growth in numbers of biotechnology start-ups.

Some incubators are affiliated with universities. Others are operated by venture capitalists. Others are quasi-government operations.  For example, the Iowa State University Research Park has more than 50 start-up firms as tenants (http://www.youtube.com/watch%3Fv%3DB2Wv7c-l0Ho). It enables entrepreneurs to link technology creation, business formation (including potential access to capital) and development assistance. Located on a major university campus, it is also near federal laboratories.

One of the three incubators in the SPARK Regional Incubator Network (SRIN), the Michigan Life Sciences Innovation Center in Plymouth, Michigan, offers entrepreneurs wet laboratory facilities. Besides laboratories, the 57,000 square incubator includes offices and conference rooms, a loading dock and ample parking. Lease rates are affordable for start-up companies.

Getting in

Gaining access to incubator facilities  is more than just renting space. The start-up company has to meet specific requirements. One has to apply for it. The start-up company’s business plan, management team, capitalization and time to commercialization are evaluated. Its operations must be compatible with the available incubator space including environmental permitting, major equipment and utilities requirements.

Once established as tenants, start-up companies cannot stay in incubators forever. Most incubators limit initial leases to no more than three years with the possibility of one- or two-year renewals.

Incubator services

Some incubators offer start-ups reduced rental rates with the rents gradually increased to the prevailing market level in the area. Incubators usually provide reception areas and meeting rooms, secretarial and postal services and office equipment such as photocopiers and projection equipment for meetings. Incubator tenants share these and other overhead costs.

Many offer services designed to facilitate the development and growth of start-up companies. Business incubators often provide courses in entrepreneurship and seminars on topics of interest to entrepreneurs such as intellectual property protection, access to capital. Business incubator managers also serve as facilitators connecting entrepreneurs to firms and individuals providing services they need such as local artisans such as glass blowers and electricians as well as consultants and advisory services.

A recent survey of National Business Incubator Association members indicated that 83% of incubators provide entrepreneurs with access to seed capital. Also, 76% provide assistance in obtaining federal grants. 74% assist entrepreneurs in preparing financial proposals.

Some incubators with wet labs offer tenants shared access to instruments that would be used by each only a fraction of the time and routine laboratory services. Some offer access to sophisticated laboratory services that are often outsourced in small established companies.

John Borchardt is a chemist and freelance writer who has been an ACS career consultant for 15 years. He is the author of the ACS/Oxford University Press Book “Career Management for Scientists and Engineers.” He has had more than 1200 articles published in a variety of magazines, newspapers and encyclopedias. As an industrial chemist, he holds 30 U.S. and more than 125 international patents and is the author of more than 130 peer-reviewed papers.

One Response to Entrepreneurship. Business Incubators and their Services

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