Spotlight

INCUBATING SUCCESS: Incubation Practices That Lead to Successful New Ventures

By Lawrence A. Molnar, Director, Center for Business Acceleration and Incubation Studies Associate Director, Institute for Research on Labor, Employment and the Economy University of Michigan

With the help of targeted business assistance, entrepreneurs are better prepared to turn business ideas into successful new ventures that have a greater-than-average chance of success. Since the first business incubator opened in Batavia, N.Y., in 1959, business incubation programs have helped new business owners access the resources and assistance they need to grow successful firms. For more than 50 years, these programs have played an important role in turning around struggling economies, creating jobs and encouraging innovation.

But how can business incubators best help start-up companies succeed? That’s what this study set out to examine. Funded by the U.S. Department of Commerce Economic Development Administration (EDA), Incubating Success is one of the first studies to use a rigorous methodology to ensure that the programs surveyed meet a minimum threshold of what an incubator is (and is not).

This study looks at how incubation programs operate and how their client companies perform, as measured by a number of outcomes. Specifically, Incubating Success examines the relationship between incubator best practices and the stability and success of the firms that have moved out of – or graduated from – the incubation program. The study also tests the level of impact each best practice has on the success of graduated firms

Using statistical analysis of data about established U.S. incubators, as well as a closer examination of the 49 top-performing programs, Incubating Success identified which program goals, management practices, services, operational structure, advisory board composition and other incubation activities contribute most to incubator client success as listed here