What is an incubator?

As the term suggests, an incubator helps a "start-up" business grow.

Incubators offer new businesses several services and facilities to accelerate growth and help ensure success.

This usually includes mentoring, office space and help with accessing business networks.

Business Incubators New Zealand puts the rate of success for businesses started in an incubator environment as 87 per cent.

This compares with a 20 per cent success rate for those going it alone.

The incubators concept started in the United States in the 1960s.

What does it cost to be part of an incubator?

Incubators can be set up as businesses or as non-profit organisations.

Corporations and educational organisations that have an interest in fostering business-sector growth often sponsor incubators.

"Start-up" businesses pay a nominal rate for using the facility. This rate normally increases during the stay in an incubator. This creates an incentive to enter new premises as the business outgrows the incubator.

How long will my business need incubation?

Incubators help "start-up" businesses to set their own goals and path. This means a company will make its own decisions about the length of time that it will stay in an incubator.

Most incubators recommend a minimum stay of between 12 and 18 months to work through the initial issues that all businesses have. Generally 24-36 months is the maximum stay.

There are also incubators that have business on a long-term basis.

Aren't incubators only for technology companies?

Many incubators specialise in core business areas. Some are not at all technology based, such as Auckland's Fashion Incubator.

There is a wide range of businesses in New Zealand incubators. For example The Innovation Greenhouse in Wellington has 22 businesses of varying nature.

These range from a photography business, an instrument manufacturer and a software company, to several consultancy businesses.

How do I get my business idea into an incubator?

There are now several incubators in New Zealand. Each has criteria for accepting new businesses.

As an example, The Icehouse in Auckland uses the following system.

Phase One: The candidate fills in a two-page drop sheet. This includes details about the company, its product or service and the target market.

Phase Two: If phase one is successful the candidate completes an executive summary of up to 10 pages. This summary is a more detailed outline of the business.

Phase Three: The team at The Icehouse meets with the candidate to help to refine the proposition. The candidate then presents his or her business idea to The Icehouse and finally to the board of directors who make the final decision.

This process takes up to eight weeks.

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