What is a business incubator?

Like business accelerators, business incubators are designed to help start-up and early-stage businesses grow and thrive.

And as with accelerators, there are lots of business incubator programmes in the UK.

They specialise in different sectors and areas of focus up and down the country.

What is a business incubator?

Business incubators provide start-ups and early-stage businesses with the support and resources those young companies find difficult to access.

Their support might involve access to networks, investors and mentors, or co-working space alongside other businesses and experienced professionals.

What type of support do business incubators typically provide?

• Co-working space: Physical incubators - as opposed to virtual ones - often provide a space for businesses to work alongside and learn from each other.
• Networking opportunities: You can share ideas with other SMEs and entrepreneurs within the incubator, while also gaining access to the incubator's networks.
• Potential investors: Incubators typically make seed funding available, alongside exposure to investors.
• Workshops: Access to experienced mentors and advisers means there are great opportunities for learning.
• Reduced rates: Incubators sometimes provide access to products and professional services - accountants or lawyers, for example - at a discounted rate.

Support varies between incubators, so make sure you understand what they offer and that they provide the type of support you need.

What do business incubators ask for in return?

Business incubators don't accept every business that applies to join their programmes.

This is mainly because they seek a return on their investment.

Consequently, they will typically take an equity stake in your business in exchange for providing its services.

Likewise, equity investment may not be something you're interested in.

Perhaps you don't want to dilute your share in the business.

Or, maybe you prefer other types of funding (such as debt finance).

It all depends on you, your business and your approach to growth.

If you have access to similar benefits via your own network, you can take advantage of them without selling a stake in your business.

What kind of organisations run business incubators?

• Universities and academic organisations
• Non-profit organisations
• Commercial organisations
• Venture capital firms

Where can I find a business incubator programme?

The Government has collated a report that explores the landscape of business incubators and accelerators in the UK.

You can view that report here.

Don't think a business incubator is right for you?

Use our Finance Options tool to find out which type of finance suits your business.