Entrepreneurs v. Super Incubators (and Everything in Between): A New Era of Resource Confusion

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First off, I promise there will be no spoilers of Batman v. Superman in this post, in case you were worried. Instead I am going to try and clear up the (very) muddy waters of entrepreneurial support organizations. With so many options and - as I will illustrate - nuances within those options, it can be very difficult for startups to navigate the world of professional business resources and services. Hopefully, this post helps make it easier.

Business Incubators

Around since the 1950’s, business incubators typically offer a longer gestation for its members to develop and rarely exchange funding for equity in their client businesses. Although most entrepreneurial support organizations as a whole measure overall economic impact, many incubators report job creation (among other statics) as a core metric due to federal and/or local funding requirements to advance economic development initiatives. The service-based models of incubators are geared toward scaling primarily early-stage or pre-revenue businesses through customer discovery and product development and subsequently toward commercialization. Therefore, many have a broad range of industries which they can support. Although the results of business incubation are mixed, tangible benefits can still be garnered by members.

“Super” Incubators
A unique subset within incubation deals with the rise of the “super” incubator. As more and more resources entered an increasingly-crowded marketplace, business incubators needed to adapt to meet the evolving needs of entrepreneurs - particularly at different stages of development. Therefore, many began to incorporate services of coworking spaces, maker spaces, accelerators, etc. Some outright created physical infrastructure dedicated to these alternative offerings. Thus, the term “super” incubator was born to describe programs that adopt multiple structures of support. An example of this would be NACET (Northern Arizona Center for Entrepreneurship and Technology) in Flagstaff, Arizona, which has a traditional incubator model, an accelerator facility for growth-stage companies, modified coworking in its Maricopa Center for Entrepreneurship (MCE) and more.

Corporate Incubators / Intrapreneurship
Corporations are getting in on the incubator game too. Many have venture funding arms to their business, but some have taken it further and actually created programs designed to nurture innovation from both the community as well as within their own employee base (the latter commonly defined as intrapreneurship). The traditional incubator model holds steady, even within corporations, by focusing heavily on business development and mentorship. The big advantage of being part of a corporate incubator is the fact that they are often well-funded with tremendous resources at their disposal that a typical program would not have. Regarding internal innovation, intrapreneurship centers on identifying solutions to company problems and/or capitalizing on market opportunities. These efforts could lead to new company practices, product ideas, or even startup company spin-outs, all of which can add diverse revenue streams to the bottom line. Adobe is a fantastic example of intrapreneurship, with its own Kickbox program.

Accelerators

Accelerators have significant difference from the traditional incubator, but the core outcome of helping businesses scale remains. Early accelerators focused primarily on software-as-a-service (SaaS) businesses but have evolved to hit on pretty much every industry vertical you can imagine - from cleantech to medical device to nonprofits. They have shorter program periods, often one year or less, and typically culminate in a demo day or showcase event in front of investors and/or the community. In addition, many offer funding as a result of acceptance; the goal is to (not surprisingly) accelerate the growth of its members, and they therefore recognize the importance of investment in that process. In fact, many studies cite the main advantage of accelerators as its direct and indirect access to capital - proven by recent data that one-third of all US startups that raised a Series A in 2015 went through an accelerator program.

Coworking Spaces

Although a relatively new phenomenon, the coworking culture has exploded over the last five years, particularly as the traditional workplace has evolved to accommodate telecommuting, distributed teams, and solopreneurs / freelancing. In our experiences, we have identified 2 types of coworking spaces: collaborative and transitional. Collaborative coworkingintends to attract a diverse member base within an open-concept facility meant to encourage “meaningful collisions,” as I’ve heard it described. These spaces often surround its members with events and other culture-building activities to inspire such collaboration. Few, if any, offer typical business development services, but members benefit from working with and alongside other creative individuals. Transitional coworking focuses more on traditional business constructs, both on an individual and organizational level. For instance, many businessmen and women need a temporary meeting space for a few hours or a quick drop-in spot to log on before their next meeting; similarly, on the organization side, some businesses only need a few desks or a small office for a few months while they continue to grow, and it may not be cost-effective for them to lease their own office. In both of these cases, they coworking space acts as a bridge and its pricing tiers usually reflect that. Regardless of the differences, both types of coworking provide space, shared amenities and less overall structure compared to their incubator / accelerator counterparts.

Unofficial Coworking / Entrepreneur Hangouts
If you are an insider within your ecosystem, chances are you know where all the “cool kids” hang out. It may be a neighborhood coffee shop or eatery, and it is usually is a place (or several) where the most important handshake agreements and business deals get done. Sometimes it is just a great spot that captures the vibe of a bustling city, but it is often THE place to connect - not just plugging into technology but into your community as well.

Startup or Business Plan Competitions

Dedicated primarily to ideation or early-stage companies, startup competitions (such as Startup Weekend) are designed to help entrepreneurs through the critical phase of problem discovery and customer validation. Basically, it aspires to help you learn whether or not a particular business idea is worth pursuing before you go all in with it. The lean canvas business model is a dominant resource for these initiatives with a strong penchant toward “failing fast.” Locally, Seed Spot has numerous weeklong bootcamps engineered to help entrepreneurs through this process.

Executive Mentor Programs

Exactly as it sounds, an executive mentor program provides coaching to founders and/or C-suite executives of growing companies to help them navigate the startup waters. Some may be broadly focused and offer a vast array of expertise, while others may focus on specific skill sets (e.g. pitching for investment, import/export assistance or business model development) in an effort to fill a targeted gap within a company or founding team. These services have unique advantages in that they may not be as expensive as joining an incubator or accelerator, but still offer the same great benefit of access to business and industry expertise.

Executives-For-Hire

Last but not least, there are some organizations and individuals that will simply function as your founding or executive team in exchange for a cost - the latter of which may be a direct fee, a percentage of company ownership, or a combination of the two. If an entrepreneur does not have the knowledge or skills to take a particular product to market, he/she may hire someone (or a small team) who has those abilities. For example, Phoenix-based MediCoventures provides strategic services with its expert team and a co-location with lab space, all with the purpose of commercialize ideas in the medical device space. They help ramp up the idea, develop a physical product (if necessary), and get the product to market. At that time, they exit and turn the reins over to a seasoned growth-stage team. In addition, there are also on-demand C-suite service providers who have similar offerings.

Greg BullockComment