What is an incubator?
An incubator is a place where the incubation activities are carried out, and where the would‐be entrepreneurs and the existing SMEs find a suitable place, in terms of facilities and expertise, to address their needs and develop their business ideas, and transform them into sustainable realities.
Incubation is a process which tends to be activated whenever there is a need to support entrepreneurs in developing their own business. The concept of innovation is not yet being considered as innovation and entrepreneurship are two separate phenomena, albeit intertwined to a great extent. The same definitions of entrepreneur vary within a range where at one extreme an entrepreneur is “anyone who is self‐employed or in business”, and at the other an entrepreneur is “a person who pioneers change”.
The process, or parts of it, is put in place whenever there is a need of nurturing would‐be entrepreneurs to think over and further develop the business idea and transforming it into a viable and sustainable activity.
There are three stages of incubation:
Pre‐incubation relates to the overall activities needed to support the potential entrepreneur in developing his business idea, business model and business plan, to boost the chances to arrive to an effective start‐up creation. It usually implies a first assessment of the idea, training, and direct one to‐one assistance necessary to put the client in the conditions to write a fully complete business plan.
Incubation concerns the support given to the entrepreneur from the start‐up to the expansion phase. Typically this is a mid‐term process, lasting usually for the first three years of activity of the newly established company, which are the years in which it is safe to say whether the new venture is successful and has a good chance to develop into a fully mature company. The actions activated generally are access to finance, direct coaching and mentoring services, as well as hosting services and specific training. Therefore physical incubation, although a very important service, is a subset of the overall incubation process.
Post‐incubation, relates to the activities to be carried out when the company has reached the maturity phase, and therefore is ready to walk on its own feet. It is the time when, If it has been physically incubated, the company will leave the incubator. Various services might still be needed by the SME for example to increment its sales or improve its productive processes, such as internationalization services or innovation introduction through scouting and detection activities.
Incubators positioned as “post incubators” sometime rename themselves as “accelerators”.