For entrepreneurs, the startup stage can be treacherous and exhausting. Business incubators are there to help with the growing pains. These firms help with seed money, provide office spaces, supplies, and technology, offer professional services (such as marketing and accounting) and connect company founders with mentors, clients and venture capital firms. (See: Grow Your Business With Business Incubators)
According to Forbes, more than 300 business incubators are now operating in the United States. Most are attached to the universities, some operate as public-private partnerships and the rest are in the private sector. Our roundup zooms in on eight of the most interesting and effective firms.
The Top Business Incubators
- Advanced Technology Development Center (ATDC), Georgia Institute of Technology: Established in 1981 in Atlanta, GA, the ATDC has raised $2 billion in capital funds and helped to establish nearly 170 companies. Along with coaching, networking, mentoring and nurturing the ATDC helps companies take advantage of federal funding programs like the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR).
- Houston Technology Center (HTC): Established in 1997 in Houston, HTC is the largest incubator in Texas, with operations spread across multiple sectors of energy, information technology, life-sciences, aerospace and nanotechnology. It has nurtured more than 300 companies and raised more than $2.5 billion dollars in funding. HTC's success stories include Hydro Green Energy, which generates hydroelectricity from naturally flowing water, and NanoRidge Materials, which manufactures high-grade carbon tubes.
- Massachusetts Biomedical Initiatives (MBI): Established in 1985, MBI is a private firm that launches biomedical companies. Its three Worcester-based facilities provide biotech equipment, laboratories, office support and business development assistance. Thanks to MBI's efforts, more than 50 companies—notable, GenToros and ZATA Pharms—have raised a total of $600 million.
- MGE Innovation Center: Launched in 1989 in Madison, Wisconsin, the MGE Innovation Center has turned 70-plus startups into flourishing businesses. With its 27 shared offices and 34 labs, the firm houses more than 130 companies. Past success stories include Madison Endodontic Associates which specialize in endodontic therapy, and the Exact Sciences Corp. (EXAS) a leading company in the field of cancer detection and treatment.
- Research Park, University of Illinois: Established in 1999 in Urbana-Champaign, the Research Park has got big names like Caterpillar (CAT), Yahoo! (YHOO), Sony, and Abbott Laboratories (ABT) establishing their simulation centers, research facilities, and data-centers in the Research Park incubation center. The guidance and mentoring from Research Park, along with the above mentioned setup, has allowed these companies to raise funds for their new research ventures. They conduct their R&D activities under the guidance of Research Park incubation center. They also benefited from having a direct connect with the university faculty, and from hiring talented pool of graduates. As of today, it has 40 companies working from this campus which employ around 500 students as interns.
- The IceHouse: Launched in Aukland, New Zealand in 2001, The Icehouse is a not-for-profit incubator firm that looks well beyond the start-up stage and works with established businesses that are looking to expand their brands. To date, it has worked with more than 5,000 business owners from New Zealand and across the globe, and successfully assisted them in establishing and/or expanding their businesses.
- The Technology Innovation Center (TIC): TIC was launched in Evanston, Illinois in 1986. Since then, it has helped more than 300 technology companies establish themselves and earned accolades from Forbes, Coopers, and Lybrand. With TIC's assistance, the Illinois Superconductor Corporation, which began as a government-sponsored research program, turned itself into a successful commercial venture. Other well-known clients include Peapod, Inc. which envisioned e-commerce, way back in 1989, with TIC's help, and Leapfrog Online, which offers online marketing services to Fortune 500 clients.
- Y-Combinator (YC): Based in Mountain View, California, Y-Combinator was launced by Paul Graham in 2005. Since then, it has nurtured Reddit, Airbnb, Loopt, Clustrix, Coinbase, Dropbox, Disqus, and 800 other companies. YC gives startups seed money, brings them to its Silicon Valley facility for three months, works with them intensively as they set up operations and helps to facilitate their first pitches to venture funds.
The Bottom Line
Timely assistance and wise outside counsel (or the lack of these things) can make or break any starting concern, and incubator firms can serve as one-stop shops for coaching, mentoring, networking, structural support and the formulation of business plans. Competition for their support can be fierce—with several hurdles to clear the entrance and more to come along the way. But venture capitalists are automatically drawn to companies that partner with well-established incubators. The best ones allow startups to write their own ticket.