If you’re working on a big vision, rather than a side project, you’ll probably need some help. Incubators are like bootcamps for startups. They’re designed to help new businesses survive and thrive through access to an experienced network of entrepreneurs and investors.
The cost to launch a startup has decreased dramatically while the availability of early-stage financing has risen. As part of the latter, a crop of incubators, led by Silicon Valley’s Y-Combinator (YC), have opened to provide structure and help during a startup’s crucial early stages.
The format and benefits differ by incubator. YC is the hacker’s incubator. They offer a huge network of alumni and connections, an initial investment (less than $20,000 for 2-10% of your company), an automatic offer of $150,000 from Start Fund upon graduation, and the opportunity to present in Silicon Valley’s most famous Demo Day. Another incubator, 500 Startups, focuses on design, data, and distribution. They provide anything from a small investment with little involvement to an entire accelerator program.
Most incubators offer a combination of:
- Advice on product, marketing, financing, and hiring.
- Connections to mentors, fellow entrepreneurs, business development opportunities, and investors.
- Back-end support (legal, accounting) to let entrepreneurs focus on their core business.
- Money! Through their own small investments and a Demo Day for potential investors at the end of the program.
- Networking opportunities. Think of an incubator’s network as a highly-targeted version of your university’s alumni program.
Which Incubator Should You Apply To?
Just because YC has become synonymous with incubators, doesn’t mean it’s the best choice for you. If you need hands-on help, YC isn’t the place to find it.
Startmate offered lots of attention and hands-on help with “25 mentors/partners and 8 companies, so the ratio was about 3 partners per company.” Sullivan believes that joining Startmate was “one of the best decisions we ever made because it helped us build a materially better business.”
With “6 mentors/partners to 85 companies,” YC didn’t offer as much individual attention. “YC is very hands off… The value of YC,” says Sullivan, “is its contacts.”
As Sullivan found out, not all incubators are in Northern California. TechStars has created a great network of incubators in other tech-focused cities including Boston, Boulder, New York, Seattle, and San Antonio. Smaller local markets often have their own incubators, like Austin’s Capital Factory and Pittsburgh’s Alpha Lab. Internationally, incubators like Starup Chile, are attracting talent from around the world to create the next Silicon Valley.
How Do You Apply? What Do You Need to Know?
If you want to join a “program” (think of it as grad school for entrepreneurs), you’ll need to time your application with a class. Check out TechStars’ schedule for an example.
Next, you’ll need to apply and prepare for an interview (if you get one). You’ll find links to general advice on this process at the end of this post. Travel startups will need to be ready to address the challenges of their specific market.
Everyone knows that online travel is still broken, despite the best efforts of new startups. Just having a better or more user-friendly product isn’t enough.
Tom Howard, co-founder of Adioso, says that the real challenges for travel startups are “the difficulty/cost in obtaining inventory and the old-fashioned infrastructure and business practices.” He advises travel startups to “be able to demonstrate that they understand these challenges very well and have ingenious ways of overcoming them.”
How to Apply to Y-Combinator by Paul Graham, Founder of Y-Combinator
How do I apply to 500 Startups? Quora thread
How to Get Into Startup Chile by Jennifer Turliuk
Do you have a travel startup? Gone through an incubator or just thinking about it? Please share your thoughts and advice in the comments.
Photo by Paul Miller