What is an Incubator?

The primary goal of a business incubator is to produce successful businesses that are financially viable and able to operate independently.

Many entrepreneurs don't have the space or desire to start a business out of their home, yet find renting space and setting up essential support functions is overwhelming financially and energy draining just at a time when their financial resources and energy are most needed for development of the business itself. As business incubator can be the perfect solution for such a person.

Business incubators are designed specifically to help start-up firms. The Hamden Economic Development Corporation is planning to provide:

  • Flexible space and leases, many times at very low rates

  • Free use of fax and copy machine access, libraries and meeting rooms

  • Fee-based business support services, such as telephone answering, bookkeeping, secretarial

  • Mentoring and Domain Expert Service

  • Business and technical assistance either on site or through a community referral system

  • Assistance in obtaining funding

  • Network with other entrepreneurs

  • Common utilities

  • Group rates for health, life and other insurance plans

The first identifiable business incubator was launched in Batavia, New York in 1959. More followed on a limited scale until 1984 when the U.S. Small Business Administration (SBA) began strongly promoting incubator development. At that time there were 20 incubators in operation. Over the next few years that number rose rapidly. The National Business Incubation Association, a private membership organization of incubator developers and managers was launched in 1985 by industry leaders. From an initial membership of 40, it has grown to almost 800 members today.

According to the International Business Innovation Association (INBIA) Survey of Business Incubators, by 1997 the number of business incubators had expanded to 550 in the United States alone. New incubators have been opening at the rate of about one a week since 1986. It is estimated that there are more than 8,000 startup firms housed in incubators and another 4,500 entrepreneurial ventures currently operating on their own were originally launched through incubators, including a number of the Inc. 500. Over 80% of the firms that were started through an incubator are still in operation.

Business incubation is on the rise on a global scale. The United Nations Industrial Development Organization (UNIDO) actively monitors and promotes the development of business incubators worldwide. They estimate that there are at 500 incubators in developing and transition countries with an annual growth rate for new incubators being about 20% annually.

There are a wide variety of reasons for operating an incubator. There may be a need for job creation in the community, promotion of economic self-sufficiency for a selected population group, diversification of the local economy, local ecosystem development, transfer of technology from universities and corporations, or sharing venture experiences with new companies by successful entrepreneurs and investors. There is no question that whatever the motivation behind the incubator, it is an economic boon for the community, providing jobs and expanded business base.