Are startup incubators (YCombinator, CapitalFactory, TechStars) a good idea?
Most of us know by now about all the great programs and resources various startup accelerators or incubators offer. My question is, does it always makes sense to apply to one of these programs? is there a reason not to apply? and from the many options, does anyone have feedback based on personal experience?
These are the programs that I know about that are interesting to me:
- YCombinator (for all the networking and buzz it generates).
- CapitalFactory (because they are in Austin and it is run by great entrepreneurs from the area - I live in Austin, TX).
- Founder Institute (I love Adeo Ressi' energy and brutal honesty when offering feedback to startups).
- TechStars (they offer better food than YCombinator and an impressive list of mentors).
6 Answers
Do not apply if you have the following:
- You have an unlimited amount of money (or an already profitable, scalable and growing company)
- You are connected with several experienced angels and VCs
- You have an idea that is perfected and needs no iteration
Otherwise, in 99.9% of the cases you should apply and it will be well worth it.
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Got it and thanks for your comment. – Ricardo 14 years ago
I don't think it ALWAYS makes sense to use an incubator. It depends entirely on what your goals are. For instance, do you want to get VC finance eventually? Do you want to grow rapidly? Do you need access to resources or people you don't yet have? Do you want to run your business part-time while studying or working elsewhere?
The answers to these types of questions will tell you whether incubators would be useful in your particular situation.
If you are very clear about what you want to achieve, then you will more easily be able to make a decision about which of these incubators, if any, would help you meet your goals.
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I suppose if your goal is to run a "lifestyle" business it may not make as much sense. However, I do not see how an incubator negatively affects any of the situations you describe. Just because one is well-connected with VC's does not mean they need to take an investment. – Jeff Epstein 14 years ago
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Hi Jeff. I didn't mean to imply that an incubator would negatively affect a startup. In fact in some of these situations it would be positive. My point was that one can't make an assessment about whether it would be positive or not unless you are clear about where you are going and what your outcomes are. When you have clarity, the right decision becomes much more obvious. – Susan Jones 14 years ago
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Actually some of the Capital Factory companies look like they'll be turning into nice lifestyle businesses. It's true that some of the incubators are only after deals which are destined for VC funding and require similar levels of growth, but that's not always the case. – Jason 14 years ago
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Jason, I agree and generally believe that 99.9% of businesses would benefit from said incubators. I am struggling to determine when it does not align with the goals of a startup.. – Jeff Epstein 14 years ago
Hello fellow Austinite. I would also suggest Tech Ranch Austin as a good group to add to your list and would recommend them highly. I met with Kevin and Jonas and got wonderful feedback on my ideas. I ended up not following up on it, but a colleague is currently working with them (on Zehicle) and has nothing but good things to say about the community they have built.
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Yes, Tech Ranch Austin is a great resource as well, I have attended some of their meetings. Thanks for the suggestion!. – Ricardo 14 years ago
I strongly recommend that you watch this video from the Founder Conference. What better to find out than ask entrepreneurs who have been through various incubators to share their experience?
I think acceptance to one of these programs can provide great mentorship opportunities.
Don't do it for money. None of those is a good funding solution. If you need a quick access to $20K -- get a loan from a bank. The terms and rates are much better.
Thanks for speaking fondly of Tech Ranch Austin! We're always interested in engaging entrepreneurs, even at very early stages, with their ventures. We consider the door open to all entrepreneurs. In order to serve the community we provide education and tools designed to get you to CUSTOMERS quickly, we also have great mentorship from seasoned entrepreneurs, and our community is what you need to leverage when resources are strapped.
Come see us at Campfire, www.techranchaustin.com/campfire, every other Friday afternoon.
Coming up October 14 we're hosting the first Tech Ranch Venture Pitch where 10 companies we've been incubating from our Venture Forth program are going to pitch customers and investors. There are still a few seats left for entrepreneurs who would like to join us.
RSVP here: http://venturepitch.eventbrite.com Thanks guys, Talk to you soon.
-Austin Gunter
@austingunter
