A unique form of mentorship open to entrepreneurs is incubators. Incubators combine traditional investment with a streamlined mentoring process to make entrepreneurs a successful exit. What is an incubator? Is an incubator mentorship right for you? let's take a look.
incubator basics
An incubator is a business coaching program run by a very successful former entrepreneur. Typically, the incubator will provide $ 10,000 to $ 30,000 in financing and take between 2% and 10% stake in the company.
Once you are in the incubator program, you will get access to their facilities and network. You will be able to work out of a shared office for free and take advantage of their in house legal and accounting services.
You will start your company as a whole group of other entrepreneurs at the same time. It helps to create a sense of team spirit to do a big task together.
In addition to access to the primary patron, you will also generally have access to a full range of other successful individuals. Incubators can bring in other successful entrepreneurs as mentors or speakers. They can also bring alumni of the program to talk and advise about their successes.
Downsides to working with an incubator.
There are some downsides to working with an incubator that you need to be aware of. First of all, they are very industry focused. The majority of incubators focus on the tech industry; However there are also incubators for green tech, biotech and industries.
Most incubators are looking for quick equity cashouts. This means that generally speaking, incubators want to help you create your idea, then your company has acquired a large amount of money for a short period of time. If you want to build your company for the long haul, then going with an incubator may not be your best bet. This is a very specific business model. Incubators operate under a very specific business model. They fund a set of businesses, while expecting a good portion of them not to succeed. Those who are successful need to bring in enough revenue to cover lost investments, as well as the overhead costs of the incubator.
If your business fits under the model that an incubator is looking for, then you will have to work hard to find a better mentorship structure. You will have access to experts in every area of business development, from incorporation to the beginning of eventually selling your company.
If you don't want to sell or if you don't want to run a hyper-quick growth company, a startup accelerator may not be your cup of tea. Make sure you understand what you are doing before you dive into the world of incubators.