Great Ideas for your Small Business: Move Your Business to an Incubator
if you think incubators are just for chicks, think again. Incubators offer entrepreneurs orchestrated business support, including mentoring, financing programs, and a mix of compatible neighbors.
There are about 900 business incubators in forty-eight states, according to Dinah Adkins, executive director of the National Business Incubation Association, in Athens, Ohio.
Ron Scovil, cofounder of Mixx Entertainment, moved into an incubator on the University of Southern California cam- pus in 1997. “We hope to become a full-fledged film production company,” said Scovil, who received start-up funds from Mitsui Venture and Nippon Venture in Japan.
Egg Company 2, or EC2 as it is known at USC, has meet- ing spaces, offices, and an array of expensive, high-tech equipment, including AVID video editing systems. Scovil and his employees take advantage of the equipment, increasing their ability to grow. “The most vital things about the incubator are the consultations and the meetings,” said Scovil. “You save money on professional services. The people here are like angels with a lot of contacts.” Scovil admits that “the screening process to land a spot at EC2 was pretty intense.
We found out about this incubator from a friend who was one of the people who set up the high-tech equipment,” he said. “We were trying to figure out our vision, and it just meshed with what Egg was doing.” While many incubators are hatched on college campuses, some are privately funded ventures. Foundation Capital in Menlo Park, California, for instance, invested $1 million on idealab!, a Pasadena incubator for Internet companies. ideal- ab! attracted the funding in part because it was founded by Bill Gross, a veteran software entrepreneur.
Researching an incubator
BEFORE YOU MOVE into an incubator, use this checklist to collect important information. Be sure to visit the incubator a few times to speak with current tenants. Ask them to speak candidly and call them back if the director or staff person refuses to let you speak with them privately.
Don’t move in until you get thorough answers to the following questions:
- How long has the incubator been in operation?
- What kinds of businesses have occupied space in the incubator?
- How long do most businesses stay?
- What are some of the incubator’s success stories?
- What specific services and support does the incubator offer tenants?
- Does the incubator intend to take equity in the businesses it houses?
- What financial resources are available to tenants? Access to loans? Introductions to private investors?
- Are there any hidden fees or charges?
- How long do you have to stay? Can you move out sooner if your business grows too fast or fails to grow?