Evaluating the Tech Start-up Incubators

marksbirch:

It seems as if a new incubator programs is starting up on a daily basis. In New York City alone, the following programs are kicking off their Spring / Summer programs:

I am sure there are more that I am not even aware (if there are others PLEASE LET ME KNOW). What is telling is that the trend further demonstrates the strength of the NYC start-up technology community. The incubators are only now starting to realize the void that has existed in NYC for programs to help early stage start-ups. In fact over the past year, incubators have sprouted up all over NYC across all sorts of industries from clean tech to fashion to food to health care.

I wholeheartedly believe that a quality program can be a significant factor in guiding the success of entrepreneurs. By fostering mentorship, facilitating important connections and passing on core skills, they provide a foundation that helps reduce the uncertainty and risk associated in the early stages. One entrepreneur confided in me that it helped him avoid the “rookie” mistakes and get focused on what was truly important.

For all the good that these programs provide, they are not for everyone. You have to have something more tangible and substantial than a mere idea to get any value from the program. If you have been around the block as an experienced entrepreneur or your current start-up is gaining significant traction, many of these programs would not be of much value and would be more time consuming than value-add. Lastly, joining an incubator does come at a cost as most require 6% of your founder’s equity, full-time commitment and provide little to no stipend. Therefore, you need to be prepared to take the start-up plunge.

If you are a start-up founder ready to take that plunge and contemplating whether a particular program is worthwhile for you, here are some things to consider:

Industry Focus – Some programs are more horizontal focused, meaning they do not hew to a particular industry specialization. TechStars while focused on Internet technology, does not lean one way or the other to a particular niche or market focus. On the other hand, the FinTech program is pretty clearly geared towards financial technologies.

Success Rate – The value of a program is ultimately in the results. While most incubators are still relatively new, you can still look at more near-term milestones. Ask how many companies got funded after the program, what types of investors are involved, what types of companies participated and how fast did graduating companies grow.

Program Focus – Does a program have a particular philosophy and methodology in how they help their companies? For example, TechStars is all about the mentorship. Some are more hands on in molding the business and concept, while others act more as a lifetime business network like Astia.

Timing and Commitment – How much a commitment is required and when does the program start? Sometimes a program may not work with your schedule and timeline, so make sure that the schedule works, particularly if you will be working a full-time job while participating in the program. For example, Founders Institute is pretty flexible regarding the schedule to allow for people still working full-time.

Location - Pretty obvious, but the program should be in a location that is convenient for you and the team. If you are a lone founder however and / or have the flexibility to move easily, jumping to a new town might be the wise choice. For example, my friend Sam Rosen of SpeakerGram left NYC to join 500Startups in San Francisco.

Filling in the Gaps – As an early stage start-up, you will have a lot of areas where you could use help. A program that provides a lot of mentoring and development of core entrepreneurial skills could help to get you and your team up to speed faster.

Stage of Development – Most incubators are clearly geared to early stage ventures, but many are actually agnostic to how much progress you have achieved. You can simply apply with mock-ups and a vision or have a full-scale business that has even gotten some amount of early stage funding.

Social Proof – This is all about getting references about the program and digging to get the inside scoop. Do not simply rely upon the stories on the website, the noise on Twitter and the few people that the programs invite to speak at presentations. Do your own research and get the positives and negatives of the program from people that graduated from the program or are in the program currently.

However, no program can guarantee success as it is all in the hands of the start-up founders to use the tools made available to them. If you choose wisely though and get into the program, use the opportunity and the resources afforded by the program to set your start-up on fire!

marksbirch