What is a Startup Incubator? Its Types And Services

As more people have been creating their own businesses as part of the tech startup craze, the number of startup incubators has also increased. According to ReadWriteWeb, the US is home to over 1,000 incubators. But, what is a startup incubator? Read on for an explanation.

Startup Incubators, Defined

A startup incubator is a collaborative program designed to help new startups succeed. Incubators help entrepreneurs solve some of the problems commonly associated with running a startup by providing workspace, seed funding, mentoring, and training (see list below for a a more extensive list of common incubator services). The sole purpose of a startup incubator is to help entrepreneurs grow their business.

Startup incubators are usually non-profit organizations, which are usually run by both public and private entities. Incubators are often associated with universities, and some business schools (such as Columbia or McCombs) allow their students and alumni to take part in these programs. There are several other incubators, however, that are formed by governments, civic groups, startup organizations or successful entrepreneurs. 

While most of the media emphasis focuses on tech startups, incubators aren't just limited to one industry. In fact, the focus of incubators varies by region. North Carolina, for example, is home to five incubator farms. Given the strength of its restaurant and fashion industries, NYC is home to several incubators for both food and fashion. There are also all-purpose incubators that consider all kinds of startups, regardless of industry.

While many people associate business incubators with the tech boom, this is not a new concept. In fact, the first startup incubator -- the Batavia Industrial Center -- was formed in 1959. The Batavia Industrial Center was founded in response to Batavia, NY's high unemployment rate and as a way to repurpose a vacant industrial building. Given the origins of the business incubator, it makes sense that the concept is making a huge comeback during the time of the Great Recession.

What are the Most Common Startup Incubator Services? 

Here is a list of the most common services provided by business incubators:

• • Help with business basics

• • Networking opportunities
  • Marketing assistance

• • High-speed Internet access

• • Accounting/financial management assistance

• • Access to bank loans, loan funds and guarantee programs

• • Help with presentation skills

• • Connections to higher education resources

• • Connections to strategic partners

• • Access to angel investors or venture capital

• • Comprehensive business training programs

• • Advisory boards and mentors

• • Management team identification

• • Help with business etiquette

• • Technology commercialization assistance

• • Help with regulatory compliance
  • Intellectual property management and legal counsel

List of Startup Incubators in the US

Here are some of the most famous startup incubators in the US, as featured in Forbes Top 10 Hottest Startup Incubators list:

• Y Combinator - Founded in 2005, Mountain View, CA based Y Combinator has launched 300 tech startups. Y Combinator's most famous graduates include Dropbox, and Airbnb.

• 500 startups - Also in Mountain View, 500 Startups is both an accelerator and a seed fund. Member startups have access to a worldwide network of 160 expert mentors.

• TechStars - With programs in five of the top startup hubs (NYC, Boston, Seattle, Boulder, and San Antonio), TechStars hosts 12 week mentoring programs. They recently launched the Unifed Seed Accelerator Application, a startup version of the Common Application used in higher education which enables entrepreneurs to apply to nineteen accelerators using one form.

• Excelerate Labs - Based out of Chicago, Excelerate Labs is a 13-week summer program culminating in a "Demo Day" where startups pitch to area investors.

• Capital Factory - Austin-based Capital Factory gives its members continuous access to 20 mentors. Founder Joshua Baer is one of the professors for the University of Texas at Austin's "One Semester Startup" course.

This article was originally written in May 2012 and was updated in October 2019.