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Startup incubation is a relatively new concept in India, but has been a success in the West for quite a while.

Incubators like Y Combinator, TechStars, AngelPad, Excelerate Labs, and 500 StartUps are dedicated to the labs model, encouraging and promoting entrepreneurs in various fields.

More popularly known as incubators or accelerators, these companies work on different models and help leverage the business potential of startups. From providing seed funding, infrastructure, manpower and even ideas, these companies are like mentors, guiding the new talent in the right direction.

Labs Bringing in Progressive Change

The labs model, with an increasing number of incubators, is bringing a progressive change for entrepreneurs. Seed funding and mentorship is the foundation of a successful lab and incubation provides both of these.

Incubators come with rich experience and knowledge about business growth, helping labs make wiser decisions when they work together. A lot of brainstorming in a positive direction is involved when entrepreneurial minds work together, yielding results-driven growth. In an industry where more than 50 startups start per day and most fail, sustainability is crucial to success, and incubators guide startups in this direction.

To get an idea of how helpful incubators are, you can look at TechStars. Based in Colorado since 2007, the company has incubated 114 companies in a labs program, out of which 98 are still active. And out of those 98, more than 75% have received funding by angel investors. This clearly shows for a progressive growth via incubators/accelerators and labs model.

(Read more about the top 10 incubators here.)

But there are problem areas that need to be handled carefully in incubator models. Some of those issues are:

– Equity

Equity stakes are different in incubators and accelerators. Incubators have a higher equity stake in labs as compared to accelerators. The latter incubates labs for a shorter period on lesser seed funding. Whereas, incubators put in high funding, and thus hold a higher stake in the labs incubated.

– Chaos

There are too many companies offering incubation to startups, especially in US and Europe, causing a chaotic blur. Initially there were just a few biggies, already masters in their field, incubating labs. However, now entrepreneurial mentorship has turned into a business proposition and authenticity is fading.

– Funding

The path of funding may not be clear when working in a labs model. Every lab in its incubation phase gets enough seed funding, but that exhausts quickly and another round of funding is required. The future of your startup either depends on your product’s success or angel investors.

– Division of Labor

Another important issue that kills innovation in the labs model is division of labor in client projects and in-house work. Startup incubatees are prone to feeling divided, where they don’t know whether to focus on projects from clients or their incubator’s internal projects.

Homework of an Incubatee

As a young company, you must do your homework before applying with any company for incubation.

– Beware of hoax startups

Perform your research well and don’t fall into a hoax trap just because of the initial funding offered.

– Written agreement

Have a written document of expected efforts, roles and rewards of your lab in an incubator and follow that throughout your association.

– Support networks

Countries acquainted with the labs model have organizations/support groups dedicated to the concept and have archives for research purposes. Consult them for any confusion.

In a competitive and shifting industry, incubators offer an inspiring environment to labs. Being new in the industry, labs might make some wrong turns, but they can put their best foot forward with right mentorship i.e. incubators. A robust support structure is assured when you are working with an established incubator.

Boost Workflow with Labs

Labs are a great way to boost workforce, ideation, employee motivation and a new work culture. The biggest of the companies are incubating labs because it always feels good to encourage and take forward like-minded people – result driven and passionate entrepreneurs.

Click Labs, based out of San Francisco with an office in Chandigarh, India, is one of the first companies to have adopted the labs model on Indian soil. The company has incubated three startups in the first batch: Gamifyd, Post My Greetings and VoteChat.

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