Trending: Incubators

culled from:wobi.com

What even is an incubator? Surely you’ve heard a success story of a company launched to success thanks to the help of an incubator. But what are they and what do they really do?

The concept of the incubator was established in the U.S. in the ‘50s by Joseph Mancuso. Mancuso’s family bought Massey-Ferguson, the largest industry in Batavia, New York that closed down in 1956.  They planned to take on the issue of mass unemployment left by the company’s closure, beginning the business in the same building. In this flourishing space coexisted everything from wine shops to chicken companies: and that is where the name incubator came from, from the concept that an idea could be incubated until it converts into a profitable business.

From training to scientific and technical advising, to funding to commercial contact and marketing, the incubators of today not only offer the possibility to put a project on the right path, but in many cases thanks to their agreements with international organizations and exposition they have become a door to make your business known.

And their support for startups could be the difference between keeping a business afloat or not, especially when taking into account the information from the European Commission and that of the National Small Business Administration (NBIA), that predicts that more than 80% of ventures fail during their first year, and half of the survivors end up disappearing just five years after. But when a startup is helped by an incubator, the success/fail rates become inverted: more than 80% continue in the market after their third year of life.

The old incubator model required that the project literally be installed within the incubator space. But thanks to the Internet and dotcom businesses, the model has become digital, and advising can be done in much more ample ways: with workshops, training programs, presentations with potential investors, access to funding, etc.

But what does the incubator get in exchange? Well, not all have the same objectives. Some look for collaboration within the startup, for future earnings, or even incorporating the new company’s products within a list to investors. According to the NBIA, they explain that the goals of an incubator can be very wide-ranging, such as providing employment in order to increase the wealth of a city with a receding economy, or transferring technology from universities and large corporations.

Here are some of the incubators with large influence in different parts of the world:

Endeavor

A non-profit that assists entrepreneurs with high-impact projects in varying industries in emerging regions of the world such as Latin America, Africa, and the Middle East. Through different consulting services, strategies, and connections, Endeavor aims for their entrepreneurs to convert into multi-faceted change agents. In 2011 they supported 148 companies that created jobs for 17,000 people.

In 2012, 13 of Endeavor’s companies qualified for the Inc. 500 list that ranks the 500 companies with the fastest growth rates in the U.S. over the past three years. In order to qualify, the companies had to grow at an average rate of over 100% each year for three consecutive years. Within the list of “incubated” companies of Endeavor, the first Argentine company Globant and the Mexican Café Punta del Cielomade the list. See the impact report of Endeavor in 2012 here.

Y Combinator

Considered one of the most prestigious programs for starting digital entrepreneurs in the U.S., in 2005 Y Combinator developed a new model for funding startups. The method consists in moving projects to Silicon Valley for three months, where they intensely work to best shape the company in question, refining their presentation for potential investors. One of their renowned startups? Dropbox.

Founder Institute

A global network of startups and mentors for technological ventures, their objective is to globalize the Silicon Valley model. They incubate 1,000 companies a year in 75 cities all over the world. Among their graduating startups are the Germany-based social commerce shopping system used on Facebook, Ondango, and the French website that buys and sells cars online, Autoreduc.

Wayra

An accelerator of innovative technology ideas or projects for Grupo Telefónica, Wayra develops startups in Spain and Latin America. They offer advising and financing, and afterwards sell these products under the Telefónica name. They have 11 academies or functioning centers and have supported 140 new companies whose products were used by Telefónica’s 300 million clients. With over US$ 393 million in capital available, each startup can receive between US$ 30,000 and 70,000 to start with, with options of new injections. They form part of a list of the Spanish social entrepreneur network Impok.

Youth Business International

Created through financing from the Prince of Wales, who is the current president of the foundation, the organization supports entrepreneurs between the ages of 18 and 35. They offer capital, training, mentoring, and access to various commercial options for continued development and expansion. They give an Entrepreneur of the Year award which consists of $US 5,000. So far, they have supported over 100,000 youth and 70% of these businesses are still successful. The organization has invested US$ 162 million annually. One of the incubated ventures, Karton Chernozemie, a Russian initiative that collects, separates, and recycles waste from homes, and whose creator Igor Zaboev was considered an Environmental Entrepreneur of the Year in 2012.

Are you in search of the incubator who will drive your project? We leave you with some tips from entrepreneurs on the search.