incubator characteristics

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Although every business incubator is different, all share some common characteristics.

	Most make use of an existing building (few are newly built) which has been renovated to accommodate multiple tenants as well as varying types of industry.
	These tenants are offered below-market rent and flexible lease arrangements, including the opportunity to expand within the incubator.
	In general, the incubator provides shared services such as telephone answering, access to a fax machine and copier, the use of a conference room or library, and the on-site management consulting/business assistance of the incubator manager. Additionally, the incubator manager can serve as a liaison to contacts within the local community and assist tenants with networking for financing or technology.
	Perhaps most important but least discussed is the psychological or moral support that is fostered in an incubator. Often alone and unsure of themselves, entrepreneurs feel reduced anxiety and greater self-confidence when surrounded by other business owners experiencing similar struggles with starting a new venture.

Business owners interested in becoming tenants of the incubator go through a screening process for admission. The criteria for admission, however, tend to vary depending on the type of incubator, its age, and the demands of the manager.

Usually, the incubator requires a written business plan, evidence of adequate financing, and a commitment by the business owner to re-locate within the region upon graduation from the facility.

Additionally, the incubator management assesses the type of business seeking rental space, the reputation, integrity, and management ability of the business owner, and the future growth and employment potential of the business.

Some or all of these criteria may be relaxed when the facility is just beginning operations or when it is experiencing significant vacancy. Also, private for-profit incubators tend to have less stringent admissions requirements than non-profits operators.

Graduation policies for incubators tend to vary as well.

Non-profit/publicly-funded incubators usually have established limits on how long a tenant can stay in the incubator. Some managers set this limit at 4-5 years, while others leave it more open-ended. Typically, most tenants stay in the incubator for 2 or 3 years, by which time the business has failed, chosen to expand within the incubator (if possible), or grown sufficiently enough to be able to move out of the incubator.

For-profit facilities may not even have a graduation policy.

So what types of businesses inhabit these incubators? Again, this depends somewhat on the community in which the facility is operating.

Usually, the incubator has a mix of service-related businesses, light manufacturing firms, and high technology start-ups.

Nationally, 40 percent of all incubator tenants are service firms, 23 percent are involved in light manufacturing, 22 percent are high tech, 7 percent do research, and 8 percent are involved in other industries.

Most incubators have a mix of differing industries within the facility. However, some incubators cater to a specific niche industry that has particular expertise in that region.

High technology incubators can be found around Route 128 in Boston, in Silicon Valley in California, and more recently in Research Triangle Park, NC.

	R & D incubators tend to flourish near colleges and universities, effectively assisting professors and researchers bring new developments into production and into the market.
	Other incubators focus on assisting minority or women-owned businesses.
	In San Jose, CA and Portland, ME, several incubators have focused on helping environmentally-friendly companies.
	Some of the newest "niche" incubators involve serving international clients only. In New York City, the Turkish government has joined forces with the city of New York to form an incubator to support Turkish businesses expanding into the US market. Similarly, a San Francisco incubator works with South Korean companies hoping to prosper in the unfamiliar territory of the West Coast.