All about startup incubators
The creation and development of a company requires the activation of multiple resources; energy, time, money, network … and one of the reliable ways to avoid exhaustion is to use an incubator. Channel allowing to concentrate these resources and to organize them in order to optimize the management of the development of the projects, the incubator is a structure which allows to concentrate its forces at best by proposing a personalized accompaniment for a project.
But then how does an incubator work? And how do you prepare for an incubation? ?
Startup incubator, for whom and for what?
Incubator, accelerator or business incubator?
When we talk about incubation, it is important to first differentiate between the different existing structures. The two main forms are incubators and accelarators.
During the creation phase, the incubator allows to go from an idea to an economically exploitable concept. This is a time when the main task is to define a viable and stable business model.
The gas pedal, on the other hand, works with a startup in its commercialization phase, when it is necessary to move up a gear. The gas pedal helps startups boost their growth and accelerate their development.
At this stage, the question is no longer to think about the product/service, but to find a way to bring it to market and/or to access its first round of funding. It is generally aimed at projects that require a large amount of capital to get off the ground. Some institutions are hybrid and offer an incubation period followed by an acceleration program.
A third form also exists for companies that have already been launched: incubators. Although they do not necessarily have the levers to rapidly boost the activity, incubators will nevertheless greatly facilitate the start-up of projects by guaranteeing numerous resources at often advantageous prices.
Startups can then access premises, financial aid, meeting rooms, various logistical means as well as the incubator’s internal and external network. In order to make the most of the entrepreneurial experience, it is crucial to take a step back from the project in order to evaluate its level of maturity and thus choose the ideal support establishment.
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What is the role of the startup incubator?
Incubators are more and more numerous in France, their role in the life of the startup will depend on the investment of the partners and the project holders but they generally propose a similar formula including :
- An accommodation including offices and most often additional spaces such as meeting rooms. This allows project leaders to benefit from an adequate work environment, but also to fight against isolation, unfortunately recurrent among a large number of project leaders.
- Personalized and collective support. The incubator follows the project and helps structure its development, in particular by establishing follow-up objectives. It will also provide skills via coaching and training sessions to meet specific entrepreneurial needs. Never forget that incubation is, above all, a human adventure where people listen to a team, their questions, their doubts and their pride.
- A network and the provision of resources. The incubator, already integrated into an ecosystem and a community, provides the new company with a whole network to which it would not necessarily have access on its own. This can mean getting in touch with lawyers, accountants and marketing experts, as well as integration into a first test market.
How to integrate an incubator ?
What type of incubator ?
Different types of incubators?
There is no single type of incubator, so before you can join one, it is necessary to find out which format best suits your project.
- Public incubators known as “Allègre” incubators: To join a public incubator, it is necessary to propose an innovative project that highlights the skills and results of the laboratories of public research and higher education institutions. In Paris, for example, it is possible to find Agoranov or Incuballiance, two incubators supported by public research.
- Local authority incubators : These establishments will be attached to a region, a territory, a metropolis, etc. They will host projects whose action has a positive impact on the economic, cultural and/or social dynamism of the territory.
- Private incubators : Initiated by private entities such as companies, investors and others, private incubators are often attached to companies or schools.
- Incubators attached to the grandes écoles : These structures are aimed at students, and sometimes former students, to help them create their project.
- Incubators of large companies : These incubators are often developed by large industrial groups in a logic of open innovation. It is a way for them to boost their activities in order to adapt more quickly and easily to market variations. By offering their own incubator, they will encourage the emergence of an intrapreneurial dynamic, but also attract new talent.
What is the cost of an incubator ?
Integrating an incubator is generally not free and is necessary, before taking the first step, it is important to study the financial expectations of the target institution. Two main models exist:
- Charging for services and hosting
With this pricing format, incubators choose to charge for the services provided to incubated projects. Accommodation, support, training, network, all the services offered are often committed under a fixed price that the young company will have to pay according to the terms set up by the incubator.
Some charge an entry fee, others an exit fee or even monthly fees, as in the form of rent. There is no fixed price for incubators, it will depend on the location, the establishments, their size and the services offered. However, it is possible to note that in general the monthly costs are often between 150€ and 500€. The important thing is to anchor the idea that the prices applied are well below those realized on the market, and that they are therefore preferential rates signalling a great opportunity for the project holders.
- Equity investment
Many incubation structures do not charge for their services, but rather take an equity stake. Therefore, in exchange for financing, hosting and support that the incubator will provide, it takes shares in the startup’s capital. It is following a negotiation between the organization and the entrepreneurs that will be fixed the share of the transferred capital. Usually, this varies between 3% and 10%, but this is not an absolute truth. It will depend on the incubator and the project.
- Choosing the right incubator
In order for the experience to be optimal, it is essential to choose the right incubator. For this, three criteria are crucial:
There are two aspects to consider when we talk about location: personal and professional. It is indeed important to find an incubator that, geographically, allows for personal and professional growth.
If the personal aspect is subjective, the market does not lie. The area where the incubator is located is often the first playground for startups, so it is important to pay attention to the territorial dynamics to ensure that the location and the project are appropriate.
In most cases, incubators have a specialization and will be able to meet the specific needs of a sector of activity. It is therefore crucial to find out about their specialization so that their resources can be properly matched with the project’s expectations.
3) The needs and expectations of the project
Two people are needed to build a support system. On one side, the incubator and on the other, the entrepreneur/project duo. Thus, as in any relationship, it is necessary to pay attention to the needs and expectations of each.
The company in creation must then reflect and formalize its own needs in order to ensure that the targeted incubator can meet them. And, following this logic, it is also necessary to apprehend the needs and expectations of the incubator in order to verify that the startup is able to meet them, in order to give itself the possibility to integrate the organization, but also to get the best out of the incubation.
What to do when an incubator meets these criteria?
The best thing to do is to contact the incubator in question. This allows you to verify that the image and information provided by the structure are true to reality. Meeting with former or current incubatees is also a good way to get feedback on how the facility works and to make sure that it matches the project.
- Preparing for the admission process
Once one or more incubators have been selected, the roles are reversed and it is up to the startup to prove that it is ideal for the incubation structure. The application phase generally consists of two steps: sending an application and presenting the project to a selection committee.
- The application file
There is no room for improvisation when applying to incubators. Generally, incubators make a call for applications, so the trick is to be vigilant about the application schedule of each organization. Often, the promotions of incubated companies are launched in January or September, but beware, this is not a general rule, it is necessary to follow precisely the periodic formulas of each incubator.
Each structure usually provides the application form via its website, so you just have to download it, fill it in and send it back. Incubators often indicate very clearly the information they wish to receive in order to evaluate the applications. Expectations vary from one incubator to another, but in most cases, a business plan with a presentation of the project, the team, forecasts, motivations as well as some administrative information will be requested.
Responding to a call for applications is a very time-consuming act that should not be taken lightly. It is a first step in the possible integration of an incubator, but also a first time to step back and understand the mechanisms of your project. First of all, you should make sure to note the application deadline in order to evaluate the time available to fill out your application and, of course, not miss your chance.
How to succeed in your application?
- Writing a good business plan
The business plan, must be able to present the strategic thinking attached to the project. It is not easy to produce a relevant business plan because it is necessary to be synthetic without being too short on details. When writing a business plan, the key is to keep in mind that this document should be a reference for both the people to whom it is sent and the project owner.
When we finish reading the business plan, we must be able to understand the strategy of the project and the environment and market in which it is integrated.
Information to be included in the business plan :
– An executive summary : summarized in two pages maximum, this summary must highlight the key elements of the project so that the reader understands from the beginning of his reading the ins and outs of the startup.
– A team presentation : if incubation is a strong entrepreneurial tool, it remains a human adventure based on individual-to-individual support. It is therefore essential to properly present the team by detailing their experience, skills, motivations, etc. It is important to keep in mind that in some cases, even if the jury detects major weaknesses, a “relevant” team or project leader can unlock the application.
– The project’s promise : this represents the heart of the project. It is about understanding what problem has been identified, what solution the project proposes to address it and how it is innovative and different from others. Once again, it is important to be synthetic; a promise should be defined in one or two sentences, never more.
– A financial plan : this involves putting forward financial objectives and budgeting, always giving timeframes. It is very important to have your business plan reviewed and to take the time to work on it, because this allows you to take a step back from the information provided. The temptation to oversell your project comes very quickly, but delivering more or less accurate information will never be seen in a positive light by a jury of experts. It is highly recommended to admit questions and flaws rather than to hide them.
- The selection committee
The selection committee intervenes once the application has been selected and validated. But who do we meet during these committees? In general, the incubator’s managers will be present, as well as juries with expertise in business creation (marketing, accounting, consulting, legal, etc.).
In the case of a specialized incubator, the jury members will also include professionals from the sector. During this meeting, the objective of the startup will be to convince of the relevance and feasibility of the project and this often in two steps:
1) The presentation of the project, the pitch
2) The interview, the question/answer game
How to make a successful pitch?
If the pitch exercise seems to be increasingly integrated in any recruitment process, it is not because of its ease of execution, but because of what it will bring out in the person. With a pitch, the objective is to orally present your idea or project in a short period of time. The pitch is not an improvisation exercise. Preparing it can be tedious and stressful, so here are a few tips for working on it :
• Taking care of the presentation
- The presentation : the pitch can be accompanied by a slide show and, in this case, it is important to remain concise. Giving too much information can confuse the jury, who may stop listening to the pitch.
- Body language : standing up straight, maintaining eye contact, reducing hesitation and speaking with your hands (without falling into caricature), helps to capture attention and thus helps to convince.
• Take care of the speech
- Tone : a good pitch is one where the speaker proves that he or she knows and believes in the project. To do this, it is necessary to adopt a calm and natural tone, and to understand the idea that coming without a note is a key factor of success.
- The speech : when preparing a pitch, it is important to understand to whom it is addressed. While convincing is crucial, the objective is not to persuade a client to buy, but to persuade a jury to accompany you. You must therefore avoid commercial speeches at all costs.
- Balance of speech : since the pitch is short, the first advice would probably be to let one person do it. However, if it is decided that several members of the team will speak, the most important thing is to balance the speaking time and to be relevant in sharing it. However, during the interview, always make sure that everyone is participating.
How to succeed in the interview?
Once the pitch is finished, the question and answer game with the jury can begin:
- Keep it short : like the pitch, the interview is also often short, so you have to know how to keep your answers short so as not to frustrate the jury, which would not get any feedback on their questioning.
- Keep an open mind: the selection committee is there to evaluate projects, but it is also there to gauge a team’s ability to be supported. Therefore, the key is to be open-minded and willing to listen, to show that criticism can be accepted.
- Make non-knowledge an ally : there is a good chance that the jury will ask a question for which the team does not have an answer. The point is not to panic and accept that you don’t know. An “I don’t know, I’ll find out” is not a mistake, as long as it is not used excessively.
What to do after the application ?
- What should I do if I am rejected by an incubator? If an application is rejected, the first thing to do is to ask for the reasons. A rejection is not an end in itself, it is a first form and stage of guidance.
Hearing the reasons why the project was not selected is the best way to consolidate it. Trying again to apply in an incubator is a solution, but there are also pre-incubation (like the program Lance Ton Idée by Vianeo which allows to build a solid file), competitions or various workshops allowing to grow the project.
- Accepted but the incubator is not suitable, what to do? When a project joins an incubator, it will normally sign a pact/contract with the structure determining the functioning of the incubation (fees, obligations, rights etc.)
This contract will indicate the terms of starting and stopping the support. It is therefore important to pay attention to this contract when entering an incubator in order to ensure the terms of exit in case of inconvenience.