Money For Starting A Business: Business Incubators

The most valuable service these incubators offer is mentoring and providing management assistance

, consulting, business and technical support services. Many have access to capital sources and investors usually look more favorably toward companies that have been accepted into an incubator. If you're looking for more than just money for starting your business, a business incubator may be the answer.

Most incubators focus on one technology, and as such, limit the companies they accept. The majority of incubators have admission standards and accept only those companies with the most potential in the area the incubator focuses upon. While most incubators are high-tech oriented there are incubators for just every type of business.

Companies complete an application and, if accepted, physically move to the incubator building and share office equipment, telephone, reception area and office staff for a monthly payment which can range from less than $100 to more than $500. The monthly fees just about cover the operating costs of the incubator and the equity kicker provides the opportunity for the incubator to recoup some of the mentoring and management services. Additionally a lot of incubators require an equity position in the companies they accept.

The goal of the incubator is to graduate businesses from the subsidized incubator environment to the business community as viable thriving companies, usually in two to three years. Those companies that aren't making the grade are asked to leave.

Private Business Incubators

Not nearly as prevalent as several years ago, Private Business Incubators are bank rolled by individuals, or a group of individuals. Occasionally, a venture capital fund will establish an incubator for those companies who are too early stage for their fund but show great promise. The services they offer are similar to non-profit incubators, including: office space, mentoring, access to capital, and other assistance to those companies who are accepted.

Companies have to go through an application process and be accepted by the board of directors, or selection committee of the business incubator.

Some private incubators require the entrepreneur to physically relocate their company to the incubator's offices, while others don't.

Private Incubator fees can include a monthly service fee for telephone, computer usage, office space, and administrative services, as well as fees for professional assistance. The Incubator takes an ownership position in each company it hosts.

An advantage of the incubator is that often member companies can take advantage of professionals, such as attorneys, accounting firms, marketing firms and others who are willing to either provide their services at a discount rate or, more likely, for an equity share.

by: Dee Power

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