You’re a student with a creative mind and a brilliant business plan. You believe in it, and others do too. The endless research and sleepless nights have prepared you for the Dragons’ Den. Well, not the CBC show we were all thinking of, but rather something called an incubator—a different yet resourceful approach to kick-starting your business.
A business incubator is a specially designed program that provides office space, services, and support resources for start-up businesses. To simplify, it can be compared to the literal definition of an incubator: an enclosed apparatus providing a controlled environment for the care of premature babies. Understand the concept now? Business incubators provide nurture and care for early-stage businesses through office space and close mentorship over a period a time, depending on the program. Essentially, an incubator’s role is to improve the chances of a business’s success past its start-up stage.
As interested as all of you idea-booming entrepreneurs might be right now, it is important to remember that business incubators aren’t drop-in classes. Hopefuls need to go through a competitive application process where their ideas are carefully measured and judged before consideration for acceptance. Some business incubators request a small entrance fee for access to their services, particularly office space, while others take a small percentage of equity from start-ups.
TechStars, a business incubator notorious for its extremely competitive admittance rate, is one of the most prestigious incubators in the world. With its acceptance rate of less than one per cent, only 14 savvy business start-ups will make the cut out of nearly 1,500 hopefuls. Ultimately, the cut will hurt, but the goal of all incubators is to guide only the best-of-the-best young businesses and increase the likelihood of it staying in the market.
So young entrepreneurs, do you think you’re ready now? As of today, there are well over 100 business incubators in Canada, which have fortes in a number of industries from technology to fashion. Before you commence your search for the perfect incubator, you must take the proper steps to ensuring your application isn’t overlooked. Here are four helpful tips to check off your list:
First thing’s first, a plan is a strict requirement. This doesn’t mean an idea scribbled on a piece of lined paper with your most important points highlighted in fluorescent yellow; it must be a thought-out and researched plan that covers all areas of your proposed business, in detail of course.
INcubes, a Toronto-based technology accelerator, has a rigorous three-step application process, which includes an initial application and customized questionnaire wherein hopefuls have the chance to pitch their business ideas. An advisory board then examines it until a new cohort of entrepreneurs is formed. CEO and founder Ben Zlotnick explains the importance of experience and an innovative plan.
“We want to make sure that they work as a team, and if they’re in a very specific sector, that they have experience coming from that area,” says Zlotnick. “Rather than being like ‘oh this is a great idea and I would love to do it,’ if they really have no backup from that, then why are they the right person to do that?”
Jay El-Kaake, CEO and co-founder of Sweet Tooth, a business-to-business software company, explains the importance of creating an idea that’s not only likable, but something the public would actually use.
“If people are actually using what you’re saying will get used,” says El-Kaake, “then you’ve taken a leap now ahead of millions of other people who have ideas and very smart brains.”
Sweet Tooth had its big business push when they were a part of an incubation program at the Acceleration Centre in Waterloo, Ontario. Just a short year after their acceptance to the program, Sweet Tooth, whose purpose is to develop loyalty programs for e-commerce businesses, raised $2.3 million in financing—not a bad start for a group of 20-somethings from Waterloo.
“The idea is the least important,” says El-Kaake when describing the most crucial factors young entrepreneurs must review before considering an incubation program. As contrary as that sounds, it’s really what goes on behind the scenes that can make or break your idea.
“You have to have a strong team. It’s usually comprised of an engineer, a leader, and design,” he says. “It allows the product to move forward, because you can’t market it or sell it until the product is actually built.”
A solid team will be the foundation where that brilliant idea of yours can flourish. It isn’t always about teaming up with your closest friends, although those who have had friendships in the past were proven to have a slight advantage over business partners who have not. Instead, it’s important to build the team around those with a common positive goal and an overall strong team dynamic.
Secondly, El-Kaake questions: “If you put anyone who is creative in a room, they’ll come up with a million ideas, but are they ideas that people are willing to use?”
He then proposed the idea of a floating chair. (Genius, right?) It sounds a lot like a product everyone will craze over at its launch, but will likely amount to nothing in the end. Try to avoid any chance of your product or service becoming a fad by ensuring it remains marketable.
“Are they ideas that people are willing to pay for?” El-Kaake asks last. “If they’re willing to pay for it, then you’re solving a problem in the world.”
Revenue is key to the success of any business, but can only accumulate if it’s a good enough service to make people buy into it. The 24-year-old Sweet Tooth co-founder adds that incubators are keen on supporting businesses that could potentially solve real world problems; thus came the elimination of the floating chair.
Negative Nancies are not permitted in business incubators.
Ultimately, your start-up’s goal is to learn how to make it in the real world. With that, a constant positive attitude is required. Before clicking the submit button on your screen and waiting for the callback from the incubator, you have to realize the crossroads that may come with the experience.
“One of the important things, from hearing from the start-up businesses, is a lot of them say ‘I’ve developed this great game, now how do I get this to market?’” says Alice Lee, project manager for the Digital Media and Gaming Incubator at Toronto’s George Brown College.
Lee observed this as one of the biggest struggles teams come across while at the incubator. “They’re so focused on finessing the product that they don’t always know how to take it after they’ve developed it,” she continues.
While this continues to be a pressing issue for some start-up businesses, Lee says part of the role of the incubator is to help them along the way. What’s needed in return is an open-minded entrepreneur.
INcubes CEO Ben Zlotnick refers back to the team dynamic and asks start-up businesses to re-evaluate their colleagues. He says bumps and bruises will happen during the process, but to always ensure a solid group of people are working behind you.
“If they are the right people on the team then you now have the ability not only to create lots of potential for yourself, but you are now able to create jobs within this community and within this economy,” says Zlotnick.
Sure, you have an education in web development with the highest GPA in your graduating class, but sadly a career won’t always be waiting for you after you’ve shaken the Dean’s hand and walked off stage. Daniel Saks, CEO and co-founder of AppDirect, says his company looks for extra-curricular activities when recruiting for their incubator program.
“One of the key things for students, especially early on, is to show that outside of school there are a lot of things that are motivating you,” says Saks.
That can mean anything from joining a sports club to volunteering in an engineering group to a enrolling in a developer’s class. The Ontario-born entrepreneur strongly recommends that students pile on their activities outside of academics to stand out from other applicants.
When the time comes to send that revised business idea, Saks suggests students think about long-term potential when selecting an incubator program. There are a countless number of incubators across the country, so Saks advises to find a place with more stability, one that is thoroughly trained and venture-funded.
“One of the concerns I have for students going into an incubator right away is that if it fails, you’re in a tougher spot to be recruiting for jobs in the future,” says Saks.
Once the final review of these four steps is complete, you’re ready for that big-kid push into an incubator program.
University of British Columbia: UBC’s Seed Accelerator Fund is a venture fund that provides start-up capital to its students, faculty, and recent alumni for their early-stage businesses.
McMaster University: With a $1-million donation made by the founder of Dofasco Inc., the Don Pether Incubation Centre provides support to students and recent graduates for their start-up tech businesses.
Ryerson University: The Digital Media Zone, based on the Ryerson campus in Toronto, Ontario, has successfully hatched 31 business ventures as of 2012.
Source: www.itbusiness.ca
Do you have a business idea that's incubator-ready?
Read about how student entrepreneurs started their business. Also check out howKanika Gupta, or Ryerson's DMZ, can help you solidify your ideas.
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