Venture Capitalist at Theory

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2 minute read / Sep 26, 2012 /

Should founders join incubators?

Yesterday, I spoke at Columbia Business School. We had a conversation about the role of incubators and accelerators (or the moniker of your choice) within the startup ecosystem.

Given the volume of first time entrepreneurs and the broad growth of interest in entrepreneurship, I think these programs are invaluable. To entrepreneurs, these programs offer up to seven value propositions, listed in order of importance, as I see it.

  1. Education - Examples include General Assembly runs a substantial education program and YCombinator operates Startup School and First Growth’s Venture Network
  2. Startup-in-a-box - TechStars offers legal help to incorporate a company, PR and marketing support for launch, banking partners, business development contacts, developer tools discounts all with the goal of eliminating as much friction as possible and helping founders focus on product/market fit discovery and execution.
  3. Networking - Within each program, founders develop relationships with like-minded entrepreneurs and most programs offer guest speakers typically luminaries and previously successful founders to speak about their startup experiences. 500Startups, among others, offers mentor networks.
  4. Fund raising assistance (aka Demo Day) - These events are designed to build auction pressure in financings by generating simultaneous investor interest.
  5. Ramen funds - Most programs offer between $10k to $150k in ramen money. It’s just enough to get someone started.
  6. Office space - Only a few incubators offer office space and many of them at a fee. General Assembly in New York and Founder’s Den in San Francisco are two great examples.
  7. Brand - Every graduate of an accelerator program can use the the brand of the program as proof of credibility.

These incubators/accelerators are the graduate schools for entrepreneurship and have a very important role in the ecosystem. They may not be right for every company, but these incubators build the hubs of successful entrepreneurship communities. And I hope they continue to thrive.

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