3 Problems with Traditional Incubators and Accelerators
…and how we’re trying to solve them
Incubators are meant to help early-stage entrepreneurs develop and strengthen their business and provide them with mentorship with the goal of helping them succeed. Accelerators are meant to accelerate the development of entrepreneurs and connect them to funding. While both incubators and accelerators have good intentions with their goals, in the end they end up excluding those entrepreneurs who most need their help. This happens because of a variety of factors which we will explore.
Location
One great detractor of incubators and accelerators is that they are usually found in large cities. 54.4% of the incubators in Europe reside in an urban environment and 45 % of incubators in the US. In the United Kingdom two-thirds of the incubators that exist are centered in London. That means that incubation services are only available to 6.36% of the population in the United Kingdom. The consolidation of incubators and accelerators also varies by countries with certain countries having a greater volume of incubators than others.
Equity/Fees
Accelerators and incubation programs tend to be expensive or require entrepreneurs to give up equity. While the fee for incubators can vary greatly, in the United States they tend to charge between a few hundred to a few thousand dollars a month, and 66.7% of all incubators require clients to pay a contribution towards or to pay the entire cost of a particular service. Accelerators on the other hand tend to take an average of 6% of equity from the start-ups they choose to accept.
Low Acceptance Rate
The top accelerators and incubators also tend to have very low acceptance rates. Accelerators fluctuate between 1 and 5 percent acceptance rates, and incubators also have low acceptance rates. There are about 9,000 incubators world-wide with about 280 million early-stage entrepreneurs attempting to launch a business in the last year. With a mean of 20 tenants per incubator there are not many spaces available to accommodate all of these entrepreneurs.
While we only outline three major problems that face entrepreneurs wishing to be incubated or accelerated there are many more problems that need to be addressed. This includes the fact that most of these incubators require a certain level of business knowledge such as a fully formed business plan and expensive prototypes, which leaves a tendency of exclusion towards lower socio-economic entrepreneurs. The current structure of incubators and accelerators excludes a large percentage of the entrepreneurial population because of their limited locations, equity requirements and low acceptance rate.
At Bridge for Billions we offer an online platform that allows entrepreneurs to incubate their business from anywhere. This helps remove the barrier that exists for people who live in more remote areas of the world. At Bridge we don’t believe that it is fair to ask for nascent entrepreneurs to give up their equity so early in the process. We only ask for an affordable one time fee that covers the development of your visual business plan along with the one-to-one mentorship that are unique to Bridge for Billions. At Bridge we try to resolve the current problems with incubators and we try to democratize access to business mentoring.
Bridge for Billions tries to craft a solution to this problem by making our three-month incubation program affordable and online. We provide entrepreneurs with the business tools to create a solid business plans and the mentoring necessary to improve upon their ideas. To learn more about how we can help you, check us out on at bridgeforbillions.org, Facebook, and Twitter!
Sources
Centre for Strategy & Evaluation Services, Benchmarking of Business Incubators, http://www.cses.co.uk/upl/File/Benchmarking-Business-Incubators-main-report-Part-2.pdf
http://www.nytimes.com/2011/01/27/business/smallbusiness/27sbiz.html?_r=0
Global Entrepreneurship Monitor: 2014 Global Report
