Some have ulterior motives. Some have money problems. Here’s what to watch out for:
You have an idea, but you aren’t sure how to get started. Join an incubator, you think. Imagine the upsides: Incubators are often an open, inspiring environment filled with like-minded people working on innovative ideas and approaches. The constant potential for a cross-pollination of ideas is extremely attractive and enriching. What’s more, being in an incubator can mean that you’re constantly learning from others’ ideas–and mistakes.
But nothing is perfect; not all incubators are created equal. They don’t always have the best management, and they can have ulterior motives. So if you’re deciding whether to join an incubator, or if you are already a part of one, there are a few things to consider.
When money is involved, things get messy.
Most incubators have an institutional framework. That means that someone owns the incubator, and there’s money involved. Those who invest in incubators are likely to have their eye on the company’s future potential. That means that often they will expect to be rewarded with equity stakes if they’re first to access a company. As a participant, the burden is on you to be cognizant of those expectations.
It’s also important to understand where the money comes from. If the money comes from a particular fund, are you willing to have the people involved be late-stage investors? Whether or not you make it to the next stage of growth, there will be consequences. Know exactly what you’re getting into, and be comfortable with all possible outcomes. Read it HERE