Business incubators are institutions that support entrepreneurs in developing their businesses, especially in initial stages. These are organizations geared towards speeding up the growth and success of start-ups and early stage companies. Incubation is usually done by institutions which have experience in the business and technology world.
Incubation support includes providing technological facilities and advices, initial growth funds, network and linkages, co-working spaces, lab facilities, mentoring and advisory support. They are often a good path to capital from angel investors, government organizations, economic-development coalitions, venture capitalists and other investors.
Most of the incubators have potential capital to invest in growth startups, or have links to potential funding sources. They provide access to compliance services from professionals such as accountants and lawyers; not to mention the invaluable mentoring and networking support available at the incubation center, through the staff and other entrepreneurs at the incubator.
As early stage hand holders, incubators act as an integral part of the start-up ecosystem. They act as a catalyst for both regional as well as national economic development. There are different types of incubators: Academic institutions; Non-profit development corporations; For-profit development ventures; Venture capital firms, and combinations of the above.
Incubators vary in their strategies. Some are located in an actual physical space meant to foster networking between incubatee entrepreneurs and others in entrepreneurial space. While others operate on a virtual basis. Incubators sometimes call themselves accelerators instead, often when they are geared towards jump-starting businesses that are more developed. Also, business incubators differ from research and technology parks in their dedication towards supporting start-ups and early-stage companies. Research and technology parks tend to be large-scale projects that house organizations ranging from government institutions, corporates, university labs to very small companies. They seldom offer business assistance services, unlike business incubators. Rather, it will be good to say that business assistance services are the hallmark of business incubators.