A business incubator is a company or organization that helps new businesses and start-up companies to develop.
Start-up companies lack various resources, experience and networks. Incubators provide services that help them to get through the initial hurdles in starting up their businesses.
These hurdles include legal, financial, space, management training, accounting, computer services and other prerequisites for running a business.
Among the common incubator services are; networking activities, marketing assistance and market Research, internet access, accounting/financial management, access to loans and guarantee programs, access to angel investors or venture capital, business training programs, advisory boards and mentors, technology commercialization assistance, help with regulatory compliance, intellectual property management etc.
Although most incubators offer their clients office spaces and shared administrative services, the heart of a true business incubation program involves the services that it provides to start-up companies; most start-ups do not reside within the incubator facility.
Affiliate-clients may be home-based businesses or early-stage companies that have their own premises, but can benefit from incubator services.
Virtual clients may be too distant from an incubation facility to participate on site, and so receive counselling and other assistances electronically.
The amount of time a company spends in an incubation program can vary, widely depending on factors such as; the type of business and the entrepreneurs’ level of business expertise.
Many incubation programs set graduation requirements by development benchmarks such as company revenues or staffing levels, rather than time.
Business incubators are a catalyst tool for either regional or national economic development, as business incubation has long become a means of meeting various economic and socio-economic policy needs that include job creation, technology commercialization, diversification of local economies, building and acceleration growth of local industry clusters, fostering communities’ entrepreneurial climate, business creation and retention.
Incubators are mainly established and ran by academic institutions, non-profit development corporations, for-profit property development ventures, venture capital firms and a combination of the above.
In Africa, there are non-profit development corporations that collaborate with academic institutions, to offer support in form of consulting, training, mentoring, prototype creating and other supports for entrepreneurs and start-ups.
EYE Africa Program’s network of incubators is an example of a non-profit development corporation and academic institution-run incubator for Agribusiness in Africa.
Business incubation activities started in developed countries, but incubation environments are now being implemented in developing countries, raising interest for financial support from organizations such as UNIDO and the World Bank.
In many countries, especially Africa, incubation programs are funded by regional or national governments, as part of an overall economic development strategy.
However, in developed countries, incubation programs are independent, community-based and resource projects.