Defining Incubators

Project

Defining Incubators
Project Information
Has title	Defining Incubators
Has owner	Anne Freeman, Libby Bassini
Has start date
Has deadline date
Has project status	Active
Subsumed by:	Ecosystem Organization Classifier
Has sponsor	Kauffman Incubator Project
Has project output	Content, How-to
Copyright © 2019 edegan.com. All Rights Reserved.

Introduction

The objective of this project is to come up with an objective definition of a high-tech high-growth incubator. As such, this project is related to our efforts to Formulate baseline attributes of incubators.

Working Definition

Incubator Definition Based on a Review of Definitions in the Literature

Accelerator Definition Based on a Review of Definitions in the Literature

Hub Definition Based on a Review of Definitions in the Literature

So far we are defining an U.S. tech incubator as follows:

1. Type of Company Incubated: Focuses on the development of high-growth, for-profit tech firms
2. VC-Backing: Some of its current or potential startups could raise venture capital in the future
3. Affiliation: Is for-profit, non-profit, or affiliated with a corporation, academic institution, or the government (or some combination thereof)
4. Location: Located in the US and has a physical premises
5. Services: Provides workspace, mentorship, and other resources to support the companies' growth
6. Duration: Startups do not all stay for the same fixed duration (though there may be a cap on duration)

* This definition will be updated/modified as we determine other characteristics that we want to include!!!

Characteristics Generally Used to Differentiate an Incubator from an Accelerator

1. Duration: Startups at an incubator generally do not all stay for the same fixed duration; Incubator does not have a fixed graduation date for its startups or has a program that lasts longer than one year
2. Investment: Incubator does not invest directly in the company or take equity in its startups
3. Cohorts: Incubator does not have limited-duration programs that ventures enter and exit in groups, known as cohorts or batches.1
4. Application Process: Generally has a less selective, competitive admissions process than an accelerator

Sources:

Incubator Definition Based on a Review of Definitions in the Literature

Accelerator Definition Based on a Review of Definitions in the Literature

Hub Definition Based on a Review of Definitions in the Literature

Entrepreneur.com's Definition of an Incubator

According to Entrepreneur.com's definition of an incubator, this term refers to an organization with the following characteristics:

1. Purpose: Supports startups entering the beginning stages of building their company;
2. Duration: Operates on a more open-ended timeline with a greater focus on the longevity of a startup than the speed of its growth;
3. Application Process: Generally has a less selective, competitive admissions process than an accelerator;
4. Resources: Provides firms with workspace, mentorship, and other resources to support the companies' growth;
5. Investment in Startups: Generally does not take an equity stake in the companies they support.

TechRepublic.com's Definition of an Incubator

According to TechRepublic.com's definition of an incubator, this term refers to an organization with the following characteristics:

1. Purpose: Matches companies with the best resources for them to be successful
2. Duration: generally operates on a more open-ended timeline
3. Organizational Support: can receive support from outside organizations including VC firms, angel investors, government organizations, and corporations
4. Market Area: can focus on a specific industry or incubate companies from broad industries
5. Services: varied in nature, can include mentoring/business advice, connections to other resources within community, and options to lease space month-to-month
6. Environment: collaboration in a physical space, focus on co-working environment

Small Business Administration Definition of an Incubator

According to an academic paper titled, Innovation Accelerators: Defining Characteristics Among Startup Assistance Organizations, written for the SBA, this term refers to an organization with the following characteristics (pg. 10):

1. Clients: varied client companies, can be from various industries
2. Selection Process: has a competitive selection process, mostly from local community
3. Duration: longer period of involvement with companies, can range between 1 and 5 years
4. Services: Access to management/consulting, intellectual property, and networks of entrepreneurs. Helps entrepreneurs develop skills for management and running a busineses
5. Investment: Generally, does not take equity and does not invest directly in the company

Venn Diagram from pg.14 shows overlap and distinct qualities of incubators and accelerators

National Business Incubation Association Definition of an Incubator

Based on the academic paper titled, Operational Definitions: Entrepreneurship Centers, NBIA defines an incubator as follows:

1. Investment: charge membership fees or monthly fees in exchange for office space and access to the incubator program services
2. Services: mentoring, training/education, networking opportunities within local community
3. Application Process: companies apply and are selected based on incubator's stated criteria/mission statement
4. Graduation: incubators have stated graduation policies based on milestones, growth metrics, or time
5. Duration: companies may join incubators on a rolling basis and can reside in incubator on a flexible timeline, typically 1-3 years

Definition of an Incubator from EDA Paper "Incubating Success"

This paper is from 2011 and may be outdated in classifying accelerators as a subcategory of incubators.

The research paper Incubating Success. Incubation best practices that lead to successful new ventures, with support from the U.S. Deparment of Commerce and the Economic Development Administration, categorizes an incubator using the following qualities:

1. Business Model: incubators can be classified as one of the following categories (pg. 15) - physical building with on-site management, virtual, international, accelerator
2. Industry Focus: incubators can be classified according to industry focus (pg. 17) as - manufacturing, mixed-use, technology, or service
3. By Lead Organization: can classify incubators according to their affiliation with other organizations (pg. 21) - university/higher education, for-profit, state, nation
4. Key Services: successful incubators provide certain key services (pg. 27) including:

• Assistance with Business Basics - accounting, presentation skills, business etiquette, marketing
• Legal assistance
• Access to Resources - capital, internet
• Networking - within the community, with other entrepreneurs