Years after the dotcom boom and bust, startups are once again getting a benevolent boost from business incubators and accelerators.
These breeding grounds for innovation and creativityreduce the risk of small businessfailures by offering everything from facilities and funding and to much-needed mentoring and marketing.
While incubators work with entrepreneurs in the very early phases of development and may not have any time limits, accelerators work with later-stage companies that may have patent-worthy technology and often require a quicker turnaround.
Some incubators are non-profit government programs; others may be backed by chambers of commerce or academic-related associations. Accelerators, on the other hand, are backed by angel investors or venture capital firms looking for a small equity stake.
One of the world’s leading startup accelerators, TechStars, founded by David Cohen, not only provides seed funding from more than 75 venture capital firms and angel investors, but also offers mentoring from top entrepreneurs. Started in 2006 in Boulder, Colo., the concept became so popular it spawned locations in Boston, New York City, and Seattle.
In 2005 alone, the National Business Incubation Association estimates that North American incubators assisted more than 27,000 start-up companies that provided full-time employment for more than 100,000 workers and generated annual revenue of more than $17 billion.