Joining an Incubator - What an entrepreneur needs to know...
Thinking of joining an Incubator – what an entrepreneur should consider…
Recently, there has been a large increase in the development of incubators, maker spaces, corporate and private innovation centers, and creatively named spaces on university campuses. It has actually become confusing for small businesses starting out with business plans. These activities are mostly funded through sponsors and state / federal grants. These are not intended to support the public good or create jobs, but rather, to harvest technologies and creative concepts in many emerging sectors like – renewable energy, advanced robotics, biochemical advances, new drugs, wearable technologies, etc. Activities include networking, mentoring, and conducting advanced research in these industries starting with business plans and working toward pre-prototype activities. What is the intended result – for sponsors to advance the research activities and own the intellectual property for their own benefit and profits.
These facilities are often located in high priced real estate locations – like Boston and proximate to universities with the intent to contain the research. There is an abundance of brilliant minds and novel technological concepts emerging in cities like Boston. These can be ‘world changing technological advancements’, but to what? What is lost and not supported are entrepreneurs that no longer intend to be advanced researchers, but rather want to start and manage their own businesses. These locations are unaffordable to start-up businesses. They are also small footprints, primed for research. But not for product manufacturing and sales. This is where HUGE numbers of jobs are potentially generated.
State and federal governments fund these activities for the feel good reactions and visibility garnered from technological advancement and their purported ‘support for businesses’. But, the business being supported and funded is the facility itself and its operations, as well as the large sponsor companies - American and foreign. Little of the funding is actually passed through to the companies that are creating good jobs and generating taxable revenues. Viable opportunities exist now for companies to manufacture advanced products in America and create jobs in small businesses, but the technologies are mostly lost to the large businesses and their current product lines – through ‘sponsorships’ commitments.
What is really needed is a support mechanism – access to financial resources and functionally capable facilities, that offer support infrastructures that assist these businesses in advancing their time to market, manufacturing activities, and in locations accessible for transporting supply chain materials and finished goods at affordable prices. These areas would be a good use of grant funding to benefit multiple businesses with the same investment $$$ and lowered technology risk.
Bottom line for any business: does the entity operate under a sustainable business model where product revenues (excluding sponsor $$$) generated exceed operating costs – including capable full time employees to maintain the integrity of the operation - and become knowledgeable to support the tenant businesses? Our product at CI Works is the facility and our revenues are generated through rent. All businesses must meet these criteria to sustain success, so why shouldn’t the facilities that host them and become a part of their business model meet this same critical criteria as the ultimate measure of success.