Incubators support startups through the early and fragile stages of their growth. Their main objective is to help entrepreneurs avoid the mistakes of others, save time and money and increase their survival rates. This, in turn, leads to job creation, regional development, and economic growth.
There are over 7,500 business incubators around the world, most run as ‘not-for-profits’ and approximately one-third are associated (directly or indirectly) with a post-secondary institution. Incubators are now a global phenomenon with a number of sector specific incubators cropping up in every city of all sizes.
And guess what 90% WILL Fail. And the reasons are NOT hard to find:
#1 reason: most incubators focus on offering “cheap & fancy” tenants office space and a high speed internet connection as the selling point to attract entrepreneur memberships.
#2 reason: And mistake providing discounted legal services, accounting and shared kitchen as program content.
#3 reason: Selling “networking” / “connection” to Mentors (unfortunately, mentors who have done nothing closer to the entrepreneurs they are mentoring), Investors, VC, as a value-added service. The daily LinkedIn postings from the excited founders team is a testament.
Start-ups require an unbiased evaluation of their management capability and Incubators assisting them in filling the gap, especially when founders are scientists or technologists with no commercial experience.
- The challenge, in most cases, is actually due to the lack of capabilities of those working in the incubator, who may not themselves have entrepreneurial or business experience necessary to advise and mentor start-up founders.
Another criticism of incubators is use of funding the start-ups as a success metric, which is inherrently flawed criterion for incubators who should be supporting ventures for self sustainability and organic growth with no external financing.
- A key challenge for many startups is customer validation, undue attention to financing detracts them from focusing on critical customer validation activities.
What do startups really want from these Incubators? Business incubators should focus on supporting young businesses in 2 things to bring real value for their existence: Bridging, and Curating.
- Bridging: Connecting start-ups to fill the gaps in their capabilities with vetted and proven industry experts & service providers.
- Curating: Connecting start-ups to gain reference customers for customer validation and product-market fit.
Now, let’s dive into the critical ‘Bridging” support, this requires the incubators have a rich community of ”vetted and”proven” experts and service providers who can really – underline and bold really here – help entrepreneurs fill their management capabilities like tax advisors, fractional CFO who can back their claimed experience from a credible list of founders and not just from LinkedIn content posts and taglines.
Incubators are in the best position to shield startups from fake mentors and service providers who just claim outrageous outcomes with no credibility. Think about it – We select a restaurant based on its ratings and feedback, and why do we take somebody’s words and tagline to believe that they are credible.
As a technology entrepreneur, we still use word-of-mouth to get referrals to honest, credible and trustworthy service providers and not use technology to seamlessly connect and explore multiple providers and compare them based on our unique needs.
With social media filled with people driving personal brands, Incubators should invest in building a marketplace exclusively for their portfolio customers to review, discuss and decide on engaging the right, appropriate and credible service providers that will help them succeed.
This is exactly where ServiceFlow can help Incubators.
A self-serve marketplace experience that aims at providing the portfolio companies a marketplace of vetted service providers that are vetted by the incubators and have visible (reviewed) credentials to fill the management gaps needed by the entrepreneurs to succeed.
ServiceFlow will help you achieve this from soup to nuts in 8 weeks. Our proven marketplace solution:
- Is designed to help Incubators connect their communities of service providers, vendors and VCs to their portfolio companies. With opportunities to monetize on the resulting network effects.
- The needs of the portfolio companies can be tracked and measured to show as a data for more funding opportunities.
Funding to the Incubators should be against their success in helping start-up companies validate their business, gain reference customers and build a repeatable business model. And for the rest of the amenities like a cheap office space, legal documents and QuickBook files should not be their concerns.
Let us show you how, contact us at firstname.lastname@example.org for a demo.