So, your business has had some initial success. You’ve put together an excellent team and you feel like you’re onto something with your business model. You’ve probably even been able to raise equity. What’s next?
If you’re in a good starting place and looking to expand, it might be time to consider some business incubators. These programs offer mentors who can give you the right advice at the right time, classes that can change the way you understand how your company can operate in the world, and funding in exchange for equity in your startup. They require a longer commitment than an accelerator: generally, you need to relocate to the coworking space they provide. The resources these programs can make available to you have the power to take your startup to the next level.
On the other hand, many incubator programs are more selective than Harvard. Before you go through all of the work of putting together an application for one, you want to make sure it’s the right fit for you. Asking yourself the following six questions will help you know what the key factors are in choosing a business incubator program, and whether or not it will work for you.
1. Who Are the Program’s Alums?
The first thing to consider when choosing an incubator program is which other companies got their start there. One of the big resources that participating can offer is improving your network, so it’s important to explore whether or not you’ll be in good company, or rather, company that makes sense for your business.
Looking at a program’s track record is about more than just seeing whether or not they’ve cranked out several successful companies. Anyone can figure that out, and an incubator with such obvious success is going to be highly competitive. Instead, you want to look at fit. Are these alums doing similar things to what you hope to do? Is your business philosophy compatible with what they’re doing?
Obviously, it really helps to actually talk to someone. You can make a lot of assumptions without realizing, and getting a chance to pick someone’s brain can be really helpful not just for asking questions, but for discovering what questions you’re not asking. Alums of a program will naturally have an investment in getting the right people to go there and boost its status, so talking to someone is probably the most helpful single thing you can do to figure out if a particular incubator is right for you.
2. Who Are the Incubator’s Mentors?
The other major resource an incubator offers is mentorship. Getting the right advice at the right time can make all the difference, but choosing a mentor is harder than it seems. It’s tempting to want to listen to anyone and everyone who has more experience than you, but it’s not always the most helpful way to run a business.
Before you apply to a business incubator, ask yourself if the mentors that this program offers are really right for your business. What kind of access do you get to them? Are mentoring sessions actually one-on-one, or is it more of a group chat kind of scenario? There’s a huge difference between participation and actual, meaningful mentorship, so make sure that you’re getting what you’ve signed up for.
3. Is the Culture a Fit?
When you enter an incubator program, it’s important to remember that it’s not just your company that will be a part of the program—you’ll also have to deal with the other mentees that are accepted. If you’ve chosen your program well, you’ll have a great opportunity to commiserate and network, but if it’s not such a great fit you may end up feeling like you’re an alien from another planet.
Before you apply to any program, you need to be sure the culture will be a good fit. Some companies are looking for something more casual, but for other teams, a more professional environment is best. Before you apply, you want to have a good idea of what the vibe is like and how your company might fit into that picture.
4. Can You Handle the Coursework?
This is pretty self-explanatory, but before you commit to an incubator, you need to make sure that you can handle the commitments that you’re signing up for. Running your business is hard enough, so really ask yourself if you can handle the classes and other coursework that a particular program demands. If you’re not going to be able to commit to something wholeheartedly, then why apply for it?
5. Does the Incubator’s Offer Make Sense?
Beyond all the things a business incubator can provide your company, it’s important to take into account what you’re giving up in return. Most programs offer you funding in exchange for equity, but it’s important to consider whether or not giving up that equity is truly worth your while.
Yes, capital is incredibly useful in the short term to help you expand your business and make things happen. However, the money you get right now may pale in comparison to how much that equity you gave up is worth in the long run. While you’re weighing other factors, don’t undervalue what you’re actually paying to be a part of an incubator program.
6. Does the Location Work?
Because it’s a longer-term commitment, most incubators require you to move your business to wherever they are to participate in the program. Moving your business can be an expensive and time-consuming endeavor. Before you commit, you need to make sure that you’re ready to make the change. Is there space for a business like yours in your new location? Will you want to stay? Is your mission a good fit with the culture of a particular city?
What You Can Do Right Now
Getting into an incubator program can be a big boost for your startup, but you need to make sure you’re applying to the programs that will help you grow the way you want to. Before you put yourself out there, make sure the incubator is a good fit, and that the particulars make sense for your business.
Try to talk to anyone that you can who has been involved in the program, either as a mentor or a mentee.
Make sure the culture and responsibilities are a fit for where your startup is right now.
Consider whether you really want to pay the long term cost of participating, both in terms of equity you give up and any type of location change that may be required.