Before launching their business, entrepreneurs go through incubators to grow their startup. These institutions support projects, from their ideation phase to their maturity. Focus on the role of incubators, their operation and the services they offer.
Developments both digitally and legally have pushed more and more young graduates to embark on an entrepreneurial adventure and seize the opportunities that present themselves on the market. To have quality support and monitoring, idea leaders generally turn to incubators to push their thinking further and transform simple ideas into innovative projects.
HEC Paris, EDHEC… Business school students turn to their establishment’s incubators to get expert advice, be trained in pitching and take advantage of the resources available to them. The role of these incubators is to encourage students to follow this vocation and to support them in carrying out their projects. However, it is necessary to pass a selection and be selected.
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What is an incubator? Definition
An incubator is defined as a private or public organization that works to support entrepreneurs in their business creation. Its primary role is toassist idea bearers in their implementation of innovative projects. There are certain incubators intended for projects currently being deployed while others follow companies seeking growth and development.
Generally speaking, the incubator offers a physical work space and a large number of services essential for the proper functioning of startups (water, telephone, Internet, premises, etc.) in addition to financial, legal and accounting services. In certain cases, the incubator can connect entrepreneurs and investors.
The primary objective of the incubator is to support the emergence of new startups that are emerging. That said, it also helps to minimize their risk of failure. Incubated companies can benefit from more credibility with financial institutions and can therefore borrow more easily. A company that goes through the incubation process puts all the chances on its side and can thus hope to take off more quickly, much more than a startup that has followed a traditional path.
The different types of incubators
There are several families of incubators:
- “Allègre” public incubators. These institutions depend on the Ministry of Higher Education and Research. Their goal is to support, for two years, the winning project leaders of the national business creation assistance competition. innovative technologies.
- Private incubators. They generally take the form of an accelerator and can be launched by private actors (investors, associations, entrepreneurs, etc.). In certain cases, they have the possibility of benefiting from the support of public authorities.
- Incubators attached to the Grandes Écoles. They are present in business and engineering schools (HEC, NEOMA, CentraleSupélec, etc.). Their services are aimed at students and alumni of the school. Generally, their objective is to encourage students to embark on an adventure and develop their entrepreneurial spirit.
- Local authority incubators. They are dependent on a region and contribute to strengthening the attractiveness and economic development of the territory.
- Large business incubators: in the current context strongly impacted by new technologies, where companies must innovate to survive, large organizations are launching their own incubator which takes the form of a research and open innovation laboratory. The objective? Launch new competitive offers on the market and promote intrapreneurial culture within teams.
- Lare CEEI (European Business and Innovation Center). They are public interest organizations established at the local level. Their mission? Support innovative projects and promote the creation of wealth to develop a territory.
What is the role of an incubator?
The role of the incubator is to support idea holders and transform them into project leaders, maximizing their chances of success. Help from incubators takes three forms:
- Sharing and feedback between entrepreneurs. Supported projects can benefit from feedback from more experienced entrepreneurs. The aim of the incubator is above all to connect people who are going through the same entrepreneurial experience.
- Advice. Made up of specialists, incubators connect project leaders with partners specializing in their field. The incubates are therefore trained and obtain answers to their questions concerning entrepreneurship, market targeting or the development of an economic model.
- Access to material and technological resources. Incubators provide entrepreneurs with computer equipment, premises, and also meeting rooms. Prices remain affordable compared to those on the market.
Services offered by incubators
Incubators offer many services, but these may vary from one incubator to another. Generally, start-ups are entitled to personalized support from one or more incubation managers. They are thus trained in entrepreneurship and the development of a solid business plan. They also have the opportunity to interact with technical and business experts to answer all their questions relating to accounting, law and many other complex subjects. Project leaders also have access to a community of former incubates and can even interact with investors.
Depending on the incubators, start-ups can benefit from the following services:
- Getting in touch with alumni of the incubator
- Expert intervention on technical subjects
- Accommodation at a price below the market price
- Access to cutting-edge technologies and laboratory/fab lab equipment
- Contribution of capital against an equity investment
- Advice from a legal point of view (intellectual property, fundraising, etc.)
As mentioned previously, it remains difficult to give an exhaustive list of the services offered by all incubators, given that they vary from one structure to another.
How to join an incubator to grow your startup?
To join an incubator, you must first pass a pre-selection on file, defended before a committee. It is therefore important to prepare beforehand for this stage and to explain your project to a member of the jury. Thus, it is important to prepare a pitch and presentation of the idea. We must inspire the committee and prove to them that this is a real opportunity not to be missed.
For a project to be selected, the committee members base themselves on the following criteria:
- The journey of the project leader(s)
- The project activity sector
- Progress of the project: at what stage is the project?
- Does the project benefit from the support of other structures, such as banks or public subsidies?
To put all the chances on your side, it is recommended to choose your incubator carefully based on the services and specificities of the structure. Incubated projects are generally those which have been well prepared and which present strong development potential.
Pre-incubation, incubation… How incubators work
An incubator operates in several stages. First of all, pre-incubation. At this stage, the idea is analyzed and the viability of the project is studied. You must therefore prepare a clear and refined business plan in order to put all the chances on your side. The second stage begins six months later. This is the incubation phase itself. The project is launched and the application of the business plan can begin.
Throughout the incubation, the project can count on the necessary support from experts. You will also be trained throughout your stay in order to develop your activity and become independent afterwards. The time spent in the incubator can last between one and two years. This period may vary depending on the needs of each business.
Once the company reaches a level of maturity, it will need to spread its own wings. Post-incubation lasts between 6 months and a year, depending on the needs of each startup.
How much does an incubator cost?
Even if you are selected within an incubator, you must keep the financial aspect in mind. In certain cases, the incubator may request shares in the startup. This mainly depends on the status of the institution. The most important thing is still to have a return on investment. Prices for private incubators generally vary between 150 and 500 euros per month.
They can also vary depending on:
- Payment terms : some start-ups make the decision to bill at the start of the program, others monthly or annually. There are other incubators which choose to only charge companies which generate profits, based on criteria set in advance.
- Services offered: the premises, the technological tools made available, the presence of experts, access to a network of alumni…
