What is a start-up incubator?
A start-up incubator supports early-stage, high-growth businesses and ideas. A traditional start-up incubator operates on a tenancy model, providing free or subsidised office space, access to advisors, mentors, networks and other support. This support usually includes investment rather than grant-funding, with the investor taking a percentage share of your start-up.
The majority of incubators focus on finding and supporting tech solutions for a specific topic (eg, education, environment, health and so on). Since the launch of Y-Combinator's accelerator model, many incubators also now offer a programme of advice, training and support.
In the UK, we’ve seen a rise of “social incubators”, which help social enterprises grow and scale. These aren’t like a traditional incubator, as described above, but vary between social-enterprise programmes, such as Social Incubator East, and socially minded co-working spaces, such as Impact Hub. Below is a list of incubators.
In 2005, a new incubation model called the “accelerator” emerged in the US with the launch of Y-Combinator. It provided a cohort-based programme of advice and support aimed at accelerating a business to market in a short period of time, typically offering seed investment in exchange for equity in the new venture.
Twice a year, Y-C invests a small amount of money (US$120K) in a large number of start-ups, which move to Silicon Valley for three months. The Y-C partners work closely with each company to get them into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the start-ups present their business plans to a carefully selected audience of investors. Y-C does not specifically look at social start-ups – the following incubators are more focused towards social change.
This is an incubator for tech start-ups that are focused on social change. The programme is a partnership between social-enterprise funder Unltd and Telefónica. Based in London, the programme offers an eight-month support programme with up to £40k funding, plus access to support to raise further investment.
Impact Hub is a place for entrepreneurs from different sectors and industries to gather and foster collaboration. It offers inspiring workspaces, incubation programmes for start-ups, coaching and entrepreneurial-leadership training and workshops. From London and Amsterdam to Johannesburg, Singapore and San Francisco, the network comprises more than 70 hubs across the world, and includes more than 10,000 members.
Cleantech Open is a nonprofit organisation that runs an accelerator for “clean-tech” start-ups. It provides infrastructure and processes to develop and motivate entrepreneurs and early-stage companies that are creating clean and environmentally sustainable technologies. The business offers support, education, resources and mentoring services to entrepreneurs to help them gain access to potential customers and funding sources, high-profile events, and press and publicity.
This start-up accelerator takes no equity and is, therefore, not solely motivated to choose ideas with the most lucrative returns. For this reason, there’s a good selection of purpose-driven start-ups selected in this acceleration programme. Mass Challenge has programmes running in the US, Mexico, Switzerland, the UK and Israel.
This incubator runs an energy challenge that looks at next-generation energy and digital products and services – the winning start-up wins a prize of €250,000. It’s an eight-month programme that takes each company through an intensive business-development process worth more than €100,000. The programme is designed to help transform and mature start-ups.
This incubator offers a programme for early-stage start-ups that are using technology to tackle problems in health, education, sustainability, and democracy and social justice. It selects teams of between two and four people to be part of the programme and invests £15,000 in each of these in exchange for 6% equity. It also offers a three-month programme of support and advice to help build, test and launch each start-ups.
Further reading
This report from Nesta goes through the five models of support for early-stage ventures. These are:
co-working spaces;
social-venture academies;
impact angel networks;
impact accelerators;
and social-venture prizes and competitions.
