Incubation

After learning more and more about the upside of incubators, I firmly believe in their value of contributions. A recent report highlighted the proliferation of incubators growing at record rates. Makes sense because of the value potential of the enterprises that will benefit from such support and sustainable models.

So many entrepreneurs, like myself, dream of creating and building businesses to solve problems, create jobs, earn profits, and realize our dreams. Often times, we need support, advisers, capital, guidance, experience, and wisdom to move us forward. No one can do it alone. The smartest and most talented need these things to advance ideas. One cannot live by ambition alone!

Some weaknesses are leaving an important segment of entrepreneurs with no help. It is also affecting the success rate of startups as many don’t raise enough money at the right time which is a major cause for failure. 
 Incubators are shifting toward more involvement in the start in becoming a cofounder and cofunder. Cofounders work with entrepreneurs on developing the software side of the startup (mobile, web). As cofunders, we cofund the startup and get larger equity in it. The entrepreneurs are not left alone and the incubator is ready to support the startup and finance it over a period of one to two years until it starts to generate income.
 Incubators provide idea validation, feasibility study, market analysis, product development, help in sales/marketing, mentorship and financial help until the startup is cashflow positive.

Most accelerators/incubators go to fresh graduates in Technology, give them some money (in exchange for equity) and put them under one roof for 3–6 months to build their startup (MVP). While this approach is producing some of the top class companies worldwide but still it has several problems:

  • 1) Fresh graduate students are technology oriented and they don’t have real life experience so they tend to build technologies rather than products. This is always a challenge.
  • 2) Inexperienced founders are not suitable to build ready-to-be-used products for enterprises or targeted audience. They haven’t worked in an enterprise and don’t understand how difficult it is to reach a product where different managers in the enterprise agree on. They are nevertheless good at building mass-user products like twitter, instagram and such. Those founders will most likely fail when we are talking about a small market where the needs have to be studied carefully and products have to be specifically crafted.
  • 3) Most of the ideas that these founders have are things that can be used by general public and there are always fewer startups that are addressing enterprises needs in an industry.
  • 4) The left out segment: There are lot of senior non-technical entrepreneur who have an experience in an industry and who can easily spot an idea or a need (as an example a financial expert in a bank . Those are generally left out from incubators because most incubators require that the founding team has technical experience. It’s also difficult for those senior entrepreneurs to find a technical cofounders. It is not sufficient nowadays to have only one technical cofounder because of the sheer number of platforms that should be covered (web, android, iphone. .etc) and the different skills needed to write a professional service. So the senior non-technical entrepreneurs have the following options:
  • 1. Wait until s/he finds the technical cofounders
  • 2. Invest some of his/her own money to recruit a team: This option has lot of challenges especially for someone who doesn’t have technical abilities to help assess the team and how they can work together. There is another big challenge with the keeping the team employed even after finishing the MVP. Most lean development methodologies will need time to get feedback from customers and this is an extra cost for the entrepreneur.
  • 3. Outsource the development: Everybody knows and understand the challenges involved with this option. The outsourcing company might deliver but later they might be dissolved or busier with other things. It will be difficult to hand the code to another team to continue development on it.

Lean methodology requires many different iterations that need to be done quick and if you are just a client for an outsourcing company then things will be difficult.