INSIGHTS

NEWS AND INSIGHTS FROM IGNIVA

November 12, 2016

Start-Ups for Start-Ups: The Rise of the Incubator

BY AURELIA BONITO

With the rise of tech start-ups in recent years, has come the rise of start-up incubators. According to Entrepreneur, The National Business Incubation Association has over 1, 400 members in the US and a further 500 members spread across 60 nations. The irony is, of course, that these incubators are themselves just as much start-ups as the ones they welcome through their doors.

Usually, but not always, funded by universities, these institutions aim to nurture start-ups, providing mentoring, investment and co-working facilities. The majority are physical spaces, located in fashionable start up cities around the globe (London, Berlin, San Francisco etc.) but some are virtual – providing the same mentoring and investment opportunities, although perhaps without the same atmosphere as a physical incubator. This atmosphere is one of thought leadership and encouragement towards achieving a shared goal. For example, Sam Altman, president of Y Combinator (one of Silicon Valley’s top incubators), had this advice (via CNBC) for start-ups and those seeking to stimulate their growth:

insights04

'Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages that are still not fully understood by most founders and investors. I expect that they will continue to do a lot of things well, have significant data and computation advantages, be able to attract a large percentage of the most talented engineers, and aggressively buy companies that get off to promising starts. This trend is unlikely to reverse without antitrust action, and I suggest people carefully consider its implications for startups. There will of course be areas where these companies are naturally weaker, and these are good areas to start companies.'

The obsession with incubators is now spreading beyond these traditional centres though, recently Indian Company NASSCOM announced that, as part of their mission to provide support for 10, 000 start-ups over the next decade, they would be doubling the number of incubators they have over the next decade. Also in India, iB Hubs, a Delhi based start-up incubator, has announced they plan to build 2, 500 smaller incubators across the country.

It’s not just India though, according to Pedro Rocha Viera, incubators have been instrumental in the rise of Lisbon as a start-up hotbed. He told RedHerring.com that, 'five years ago in Lisbon … most [people] didn’t even know what a start-up was. Incubators, co-working spaces and accelerators didn’t even exist at the time.' However, 'in recent years, Portugal has developed a significant number of world-class start-ups and programs like Lisbon Challenge, an ambitious 10-week acceleration program aimed at eager international tech start-ups, are key to this progress, for they help a large number of entrepreneurs develop and enhance their business ideas.'

One thing seems clear, as long as start-ups are here to stay, so are the incubators – and these start-ups for start-ups are springing up almost as quickly as the businesses they serve.