I think you're right that every successful company does require a dedicated (and great) entrepreneur, but I don't think that's the nail in the incubator coffin - just the incubator model you describe above in which a single serial entrepreneur looks to incubate his/her ideas and then transition to others once the idea takes flight.
If you consider the Entrepreneur-in-Residence model - that's essentially a one-person incubator. The EIR takes some form of salary and hunts/plays around/founds a startup which the VC has the option to invest in. Additionally, the EIR provides expertise to both the fund and other entrepreneurs in the portfolio companies.
Scale that up and I can imagine a very interesting model which is a Fund/Incubator consisting of a network of EIRs, who share risk and share upside. (i.e. guaranteed some sort of base salary, subsidized by giving up (sharing) equity in the startup. A model like this allows the network benefits but still requires each individual to be 100% dedicated to their startup.
Disclaimer - I'm in such a network so have a biased view of its potential
chris dixon
· 3 months ago
Yeah, I'm not saying there aren't other models that might work. Betaworks for one seems to be doing well. What you describe sounds interesting. If you feel comfortable sharing, I'd be curious to hear more about it. (What's it called?)
To me it seems that the golden nugget is connections...
Paul Graham has been able to bring in great investment opportunities for the startups he's incubated, and provided great advisory, thus his program Ycombo has been a success. David Cohen has also been able to bring in some great investors to his program, thus TechStars seems to be going successfully.
It's difficult to build a solid incubator because their are so many factors that you have to coordinate, amazing entrepreneurs, good filtering, knowledgeable/experienced advisers, and probably most importantly, sound investors for your "hatched" companies.
chris dixon
· 3 months ago
For sure, Y combinator and TechStars are the most interesting and successful model to emerge in years. But they don't seem to be incubating so much as selecting, (slightly) funding, and advising.
Ryan Graves
· 3 months ago
I've always heard of these being termed as 'incubators', if their not really incubating could you better define incubate?
chris dixon
· 3 months ago
I guess I'm using the word old school style a la Idealab. You have one super entrepreneur who has a bunch of ideas which he/she recruits junior people and helps them build it up. In those days they would also suppy office space, legal, accounting, financing, recruiting etc.
Ryan Graves
· 3 months ago
Gotcha- This make a lot of sense now, I think when people think of startup incubators now it's traditionally the Ycombo or TechStars model...
There a ton of people with interest in repeating this model.
Specifically, here in Chicago I know there is a lot of interesting in capturing the tech/entrepreneurial climate and helping to steer more attention towards the startups here.
Do you believe something like this can be fostered intentionally? For example, Boulder CO is creating a ton of attention with the TechStars program and some predominant Angel investors...
Great convo.
chris dixon
· 3 months ago
Yeah, i think you can foster it intentionally, but CO had the benefit of a well known VC (Brad Feld) and a bunch of tech veteran angel investments. There must be people like that in a city as big as Chicago... it's just probably a matter of rounding them up and getting them to act as a group.
Ryan Graves
· 3 months ago
I think it's important to get investors and big names to be visible. It's important to show people that their is opportunity that is accessible. Good VC blogs come from guys in the valley, NYC, Boston, and CO....where are they anywhere else?
I'm on a mission to get the Chicago VC to blog and be visible/accessible. Any words of advice or encouragement?
chris dixon
· 3 months ago
I think that's one of those situations where you just gotta meet people, pound the pavement, throw events - just try to get people excited about the idea.
Ryan Graves
· 3 months ago
And it doesn't happen quickly!
Thanks bud. BTW, you're doing a great job on the blog recently. Keep it up.
Cheers, Ryan
srevzin
· 3 months ago
I think you're right about the somewhat negative connotation the word Incubator has based on the traditional business incubation models. But it seems that the new "Accelerators" sprouting up over the last few years like TechStars, YCombinator, Launchbox, Dreamit Ventures and the like can still be called business incubators by definition. They still provide the basic resources: office space, mentorship and seed funding as many other incubators do but with the added value of a wide network of qualified advisors and of course the possibility to pitch to investors down the road.
erangalp
· 3 months ago
How about an alternative model? instead of a full-time dedicated and experienced entrepreneur working on a single startup, you can have that same entrepreneur (or group of entrepreneurs) nurturing and cultivating multiple startups part-time.
That's what we do at my firm, and we also do it in a unique way - instead of money, we bring the actual skills needed to take an idea that is web related and put it to practice. We work with selected promising entrepreneurs, that have the vision and passion and a small budget and take them from concept to launch and onwards. Instead of money we invest our time and experience. It's highly experimental, but it's working great thus far and we have several small ventures that we are very excited about.
Sachin Jade
· 3 months ago
As with everything in the start-up world, nothing is quite straight forward. I had founded a traditional incubator a.k.a thinktank and it did work for a while (~ 4 years) but you hit it on the nail - once the idea gets off the stage and out of the thinktank, it requires an equally competent entrepreneur to take it forward. Hence, we sort of moved to the todays incubator model where we work with the entrepreneurs idea and advise them and do the typical dance and song routine. But I would very much love to be a part of the old thinktank ecosystem and build companies accordingly... good point Chris.
David Semeria
· 3 months ago
To the extent that your notion of incubator implies an entrepreneur vicariously implementing his/her own ideas, I agree. However, I feel there is definitely a gap in the market where the definition of incubator is much closer to that of an enabler.
Everyone knows that sending a pitch to an angel/VC without an introduction is a waste of time. Everyone knows what you're really supposed to do is find someone who knows someone who knows the angel/VC. But realistically, depending on where you're based, and what you were doing beforehand, this isn't always possible. It certainly isn't scalable.
Incubators IMO have definitely a role in getting unconnected founders (with good ideas/ip) into the loop. I see it as some sort of public service. Not everyone grew up in the valley. Not everyone worked in an industry brimming with useful contacts. But it doesn't mean they can't be successful. JK Rowling wrote Harry Potter in an Edinburgh coffee house. She was turned down by numerous publishers before some smart chap saw the potential in her work.
I believe there are lots of JK Rowlings out there. They just need an initial point of entry.
Joseph Turian
· 3 months ago
One problem is that scientists do not get enough exposure to the business world, and are also risk-averse. This limits the number of startups driven by scientific advances.
I have been thinking about a model for this. It's a combined science hostel meets incubator.
Felix Desroches
· 3 months ago
Great comments, though they do seem to focus mostly on the tech space, which has its own unique growth model. When I worked at Origo Inc. (www.origoinc.com) in the social entrepreneurship space, we started raising funding around the idea of a hybrid incubator with parallel non-profit and for-profit funding streams in the form of social venture funds. Businesses/ideas would start as non-profits, receive grant funding (relatively easy to do), and if they were destined to make millions, would eventually be "bought out" by the for-profit side and scaled. The concept died with the recession, but I think the premise that not all ideas are destined for IPOs is a good one.
You should check out Origo's ongoing work on collaborative entrepreneurship a-la Hub model (www.the-hub.net). I think it's time the incubator model had a thorough - collaborative - refresh.
All Comments
If you consider the Entrepreneur-in-Residence model - that's essentially a one-person incubator. The EIR takes some form of salary and hunts/plays around/founds a startup which the VC has the option to invest in. Additionally, the EIR provides expertise to both the fund and other entrepreneurs in the portfolio companies.
Scale that up and I can imagine a very interesting model which is a Fund/Incubator consisting of a network of EIRs, who share risk and share upside. (i.e. guaranteed some sort of base salary, subsidized by giving up (sharing) equity in the startup. A model like this allows the network benefits but still requires each individual to be 100% dedicated to their startup.
Disclaimer - I'm in such a network so have a biased view of its potential
Paul Graham has been able to bring in great investment opportunities for the startups he's incubated, and provided great advisory, thus his program Ycombo has been a success.
David Cohen has also been able to bring in some great investors to his program, thus TechStars seems to be going successfully.
It's difficult to build a solid incubator because their are so many factors that you have to coordinate, amazing entrepreneurs, good filtering, knowledgeable/experienced advisers, and probably most importantly, sound investors for your "hatched" companies.
incubating could you better define incubate?
incubators now it's traditionally the Ycombo or TechStars model...
There a ton of people with interest in repeating this model.
Specifically, here in Chicago I know there is a lot of interesting in
capturing the tech/entrepreneurial climate and helping to steer more
attention towards the startups here.
Do you believe something like this can be fostered intentionally? For
example, Boulder CO is creating a ton of attention with the TechStars
program and some predominant Angel investors...
Great convo.
important to show people that their is opportunity that is accessible. Good
VC blogs come from guys in the valley, NYC, Boston, and CO....where are they
anywhere else?
I'm on a mission to get the Chicago VC to blog and be visible/accessible.
Any words of advice or encouragement?
Thanks bud. BTW, you're doing a great job on the blog recently. Keep it up.
Cheers,
Ryan
That's what we do at my firm, and we also do it in a unique way - instead of money, we bring the actual skills needed to take an idea that is web related and put it to practice. We work with selected promising entrepreneurs, that have the vision and passion and a small budget and take them from concept to launch and onwards. Instead of money we invest our time and experience. It's highly experimental, but it's working great thus far and we have several small ventures that we are very excited about.
Everyone knows that sending a pitch to an angel/VC without an introduction is a waste of time. Everyone knows what you're really supposed to do is find someone who knows someone who knows the angel/VC. But realistically, depending on where you're based, and what you were doing beforehand, this isn't always possible. It certainly isn't scalable.
Incubators IMO have definitely a role in getting unconnected founders (with good ideas/ip) into the loop. I see it as some sort of public service. Not everyone grew up in the valley. Not everyone worked in an industry brimming with useful contacts. But it doesn't mean they can't be successful. JK Rowling wrote Harry Potter in an Edinburgh coffee house. She was turned down by numerous publishers before some smart chap saw the potential in her work.
I believe there are lots of JK Rowlings out there. They just need an initial point of entry.
I have been thinking about a model for this. It's a combined science hostel meets incubator.
You should check out Origo's ongoing work on collaborative entrepreneurship a-la Hub model (www.the-hub.net). I think it's time the incubator model had a thorough - collaborative - refresh.