Startup incubators are cropping up all over the world, from Tel Aviv to Guatemala City. Recent estimates put the total number at around 7000, with more than 430 incubators located right here in Australia.
The startup community is hungry for the kind of support an incubator can provide – most commonly in the form of resources, mentorship and relationship building. Earlier this year more than 330 entrepreneurs from 120 companies applied for a spot within Stone and Chalk, Sydney’s fintech hub, so there is certainly no shortage of demand.
Despite this and the seemingly supportive nature of incubators, they aren’t without their critics. For the most part, concerns about incubators seem to stem from misconceptions in the market.
These misconceptions are potentially damaging for the startup community and there are five in particular that should be addressed:
Your IP is at risk
I hear this a lot and it’s an interesting one. I can see how this would be a problem if two rivals were seated side-by-side in an open plan co-working space, but an incubator is different. Direct competitors are rarely accepted by the same incubator and in the case they were, those businesses would not be seated within earshot.
All that aside, an incubator is a supportive and collaborative space rather than a competitive one. Residents of Stone and Chalk regularly celebrate the success of their neighbours and often workshop ways to overcome common challenges together.
An incubator won’t make you more successful
This is akin to saying a university education won’t make you more successful. An individual can be a success without an education and a great idea can flourish outside of an incubator but that’s not to say additional education or support aren’t helpful.
Would companies like Airbnb or Dropbox be as successful without Y-Combinator? No one can say for sure, but I have no doubt both businesses gained something of value during the time spent there.
Entrepreneurs are prone to highs and lows
Getting a business off the ground is a challenge, highs and lows will always be part of the process. However, a recent study by the United Nations University found entrepreneurs are actually far more satisfied than those in regular employment.
At the end of the day, entrepreneurs are just normal people, albeit passionate ones, who can hold it together through good and bad times.
You’re busy but don’t get things done
Incubators will facilitate events, bring in guest speakers and offer to arrange meetings with potential investors but that doesn’t mean residents have to say yes to everything.
An entrepreneur shouldn’t be afraid to identify the opportunities that are right for their business and learn to say no to everything else. In fact, saying no to an opportunity often means saying yes to yourself and your business.
It’s loud and there is no privacy
The word collaboration does tend to carry connotations of loud and impassioned debates but for the most part collaborations are happening in a quiet and considerate manner. An incubator is communal and productive rather than loud and unruly.
And as for the lack of privacy, residents weigh that concern up against the benefits of an open floor plan. In my experience information sharing and the opportunity to get to know your neighbours are valuable enough to warrant the need to take a personal call away from your desk.
Lachlan Heussler is managing director, Spotcap Australia