4 Signs that Your Startup Could Benefit from a Business Incubator
Most entrepreneurs understand the value of joining a business incubator or accelerator. The benefits of mentorship, technological infrastructure and facilities, and investment assistance are wonderful resources for startup companies. However, many founders may not always recognize the signs that their business is ready to align with an incubator. Here are a few signals to look for that indicate the timing may be right.
You have a product or idea, but no clear path to commercialization
The stereotypical entrepreneurial experience begins with a deep-rooted problem and an innovative solution, or at least that is how it should start. Regardless, most founders have the product or idea in mind but lack the strategy that will turn it into a viable and profitable business venture. This is where success is made; after all, understanding potential markets and customer segments as well as establishing corresponding business models are fundamental to a startup’s success. Business incubators can help pinpoint and validate market opportunities and further help develop a plan toward penetrating those markets. In addition, questions of licensing technologies versus selling outright and pricing/revenue models, among others, can all be answered by program experts and mentors.
You have a founder, but you need to build your team to grow
What if I told you that you may not be the right person to run your business? It is a question we often pose to our client companies at the Center for Entrepreneurial Innovation (CEI); it is meant to expose the false logic many entrepreneurs have that they should be the sole leader and voice within their business because they "own" the idea. In reality, many are skilled technologists completely bereft of even a rudimentary business acumen. Regardless of their own savvy, it takes a complementary team to launch and scale a company successfully as evidenced by the fact that four of Sujan Patel’s top seventeen skills required to succeed as an entrepreneur relate to networking, hiring and building a team. So if you are able to recognize the need for a CFO, COO or at least a co-founder of some type then a good incubator should be able to help you identify key players and strategists with whom to surround yourself.
You've experienced success, but you need help scaling up (or conversely you have hit a lull, and you need to reignite your business)
We are all familiar with the terms “scale” and “pivot.” Business incubators can help with both. Whether you are hoping to expand your business beyond your current means or are looking to break a streak of stagnation, these programs can allow you to identify new market opportunities, streamline operations to improve efficiency, and/or reshape your business model to cut costs and grow revenue. One of the best examples we have at CEI is Paraffin International Inc., which has developed the Oprah-featured gLOVE Treat and entered our program with a validated retail market. However, the founding team needed assistance in commercializing in the medical space where its product has tangible benefits for arthritis and other conditions. CEI thus aligned resources within its network and the industry to strategize and support Paraffin in this effort.
You need investment and are willing to be patient and coachable
It is not enough to simply need funding as a reason to join an incubator or accelerator. Yes, some provide modest, direct funding and others provide connections to its investment networks for seed and venture rounds, but the true value actually stems from helping prepare you and your business for investment. This goes beyond effective pitch practice - although that is important - to include assisting with proper startup valuation, developing funding strategies and milestones as well as grant identification and writing. The key is to be patient and not expect an immediate investment check upon joining a program; for instance, our advisors at CEI believe that it takes 6 months from the moment a need for funding is identified to the time a company actually solicits from the investment community. This hypothesis is confirmed by Justin Lafazan, founder of Millenial Marketing Strategy, who believes that exaggerated success stories of million-dollar Kickstarter campaigns and mobile app acquisitions have distorted the hard realities of fundraising, which requires detailed analysis and strategic planning (The 4 Resources Millennial Entrepreneurs Need To Succeed).
Once you've recognized the signs, now what?
Check out our questionnaire for determining WHICH incubator or accelerator is a good fit for your startup.