What Is A Business Incubator

Updated on 21/02/2023

A business incubator is an organisation dedicated to accelerating the development and progress of early-stage and startup businesses. They're frequently a decent way to get funding from angel capitalists, local governments, sustainable growth coalitions, and other sources.

However, not all company incubators are created equal, so if you have a unique business concept, look for the incubator that best fits your business model.

See our Business Incubator programme here

What is A Business Incubator

You know you need capital to grow your business, but have a limited amount of time and energy -- you want to make sure to choose the funding option that gives you access to the best connections and opportunities but aren’t sure where to start.

Most startups dream of being accepted into a world-class mentorship program and the chance to pitch big-name investors.

Business incubators are specially designed programs to help young startups innovate and grow. They usually provide workspaces, mentorship, education and access to investors for startups or sole entrepreneurs. These resources allow companies and ideas to take shape while operating at a lower cost during the early stages of business incubation. Incubators require an application process to join and usually require a commitment for a specific amount of time.

How Do They Work

Many of them have access to finance or connections to alternative funding streams. There's access to accountants and attorneys, as well as invaluable coaching and networking opportunities by the incubator's employees and other entrepreneurs.

To sign up for a business incubator, you will need to apply and get accepted into an incubator program. Each business incubator, much like accelerators and pre-accelerators, has a unique application process. However, it's often less competitive than startup accelerators. The application process is usually comprised of a few steps:

  • Apply: Fill out an application form and answer questions about yourself or your business. Some incubators look for a business plan and a discussion of their previous business activities.
  • Interview: Typically, interviews are short and designed so the interviewer can learn about your experience quickly. They are usually a brief video call.
  • Receive a decision: The notification time frame can vary. Generally, it is pretty short, taking just a few weeks for an incubator to make an acceptance decision. If you're interested in financial aid, you can apply after getting accepted.

If you're interested in participating in an incubation programme, be prepared to apply for a complete business plan. A selection committee will go at the plan and see whether you follow the admissions requirements. Incubators closely screen prospective entrepreneurs because they have little room, infrastructure, and funds, and they want to make sure they're nurturing the best.

Benefits of Business Incubators

For a growing startup, there are many advantages of using a company incubator. Here's what you'll get if you apply:

  • Saves Cost. A co-working space is normally available at a reduced cost in an incubator. These services help you to save money on running costs while growing your business.
  • Funding Opportunities. An incubator will put you in touch with venture capitalists who might be interested in funding your ideas. Acceptance into a credible curriculum will attract investors while still demonstrating your abilities and motivation.
  • Network With Other Startups. Although incubators aren't usually structured around cohorts, you will share office space with a group of like-minded entrepreneurs. Coworking environments have many advantages for startups. They enable you to save money by using shared services such as utilities. You'll also be in a great spot to network and collaborate with other businesses.
  • Improve Focus. Incubators have a structured atmosphere in which you can focus on your job. You should develop healthy work habits,, get, get your company off the ground, or have regular workshops or planned work time.

Although there are many advantages of using a business incubator, there are a few drawbacks to remember. Have the following in mind when you apply for programmes:

  • Time Commitment. Incubators move at a slower speed than accelerators and pre-accelerators, which deliver organised, time-bound systems. They're ideal for businesses that need more time to develop.
  • Rigorous Application Process. Incubators differ in terms of their selectivity. The services with a better image attract more candidates and are thus more difficult to get into. At the most prestigious universities, the selection process can be lengthy.
  • Rigid Schedule. Incubators will relieve some of the pressures of running a company for some businesses. Education, seminars, and social events are often required as part of programmes. While this education can be distracting to others, it can be extremely beneficial to those who want it.

Key Factors of A Good Business Incubator

Well-Established Network

It should have a well-established network comprising of mentors, investors, and other relevant resources that can offer support to the businesses.

Educational Opportunities

It should provide educational opportunities and resources that entrepreneurs can use to develop their business skills and gain knowledge on best practices.

Access To Resources

It should have access to resources such as office space, technology, and other relevant infrastructure that can help entrepreneurs get their businesses off the ground.

Accelerators vs. Incubators

Incubators are less structured than accelerators and aren't normally intended to accelerate development. Incubators, on the other hand, nurture and guide entrepreneurs over a longer period of time, usually a year.

Incubators vary from accelerators in that they usually meet a less linear timeline and can be customised to a company's specific needs. These programmes are similar to residencies, but they provide instructional programming and mentoring. As a result, the business incubation process can vary based on the needs of the organisation. In general, you should remain in an incubator for as long as you want.

Business IncubatorsAccelerators
Early-stage founders often focused on a sector and are still recruiting their founding teamTechnology focused (Apps, Bots, Cloud based softwares
Competitive application process from the local communityExtremely competitive when it comes to selection, usually 1-3% applications are accepted
The average duration is about 2 yearsCohort based - 3-6 months
Offers office space, admin support, access to partners for general business servicesRapid validation of ideas with mentoring, support and guidance from the startup ecosystem
Incubators generally take equity in the early stage, amount varies widely on the model and majoritySome portion of equity taken depending on the business accelerator
Business Incubator vs. Accelerators

Below is a diagrammatic summary of the differences between the both and areas where the both overlap and offer similarities.

If your business isn't yet ready for an acceleration programme, an incubator might be the solution. Incubators help startups solve technical and design issues when building the product, learn how to run lean, and build a successful team.

Incubators can also assist startups who have no prior experience running a venture-backed enterprise or are facing regulatory or organisational challenges relating to the business structure.

Who Are Business Incubators Looking For?

The majority of incubators are searching for successful pieces and startups that will scale up with time. Although several venture incubators concentrate on assisting you in developing a business model, some require applicants to submit a fully developed business plan.

Any incubators are affiliated with specific businesses or educational initiatives. They search for business ideas and growing businesses that share the same industry in these situations. A hospital-funded incubator, for example, would search for businesses in the medical or pharmacy industries. Software production and technical services are two popular incubator industries. Other services are looking for a broad audience.


Both incubators and accelerators seek out promising businesses, but incubators are more forgiving. A strong MVP and business plan aren't always needed, but a brilliant idea is.

The same can be said about a company's prospects for expansion. Since incubators are longer-term agreements with further space for learning and development when the initiative progresses, they are more accommodating to firms that haven't yet proven themselves.


What is a Business Incubator

Key Factors of Business Incubators

Accelerator vs. Incubators

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Written by Pinky

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