E-Incubators Paving The Way For Startups

In the United States, where as many as 80 percent of all new businesses fold within the first five years, many dot-com startups are finding that they need some form of assistance to survive.

The old days of “winging it” on the Web have given way to a serious scramble for money and guidance, and e-incubators are increasingly coming into play.

Business incubators, while not a new concept, are providing e-businesses with office space, equipment, coddling, and — most significantly — startup capital. Also, these incubators can significantly shorten the learning curve in what is proving to be treacherous terrain.

In return, the incubator receives a stake — sometimes as high as 50 percent — in the new venture.

Doing Good and Doing Well

Big names like Panasonic and Intel have developed their own incubators. Their mission is apparently to make a profit, since one hot new idea on the Web can generate instant millions (US$) and innovative new partnerships are not easy to find.

However, a host of non-profit incubators have emerged, focusing on assisting even non-technology-based businesses that are run by minorities and women. The for-profit incubator ventures most often seek out high-tech innovators as new partners, but their non-profit counterparts work to help creative entrepreneurs get started and create new jobs.

Both are serving a useful purpose in e-commerce, a movement that is heavy on innovation, but light on history and experience.

The Power of Collaboration

Still, much of what incubators have accomplished has to do with the bottom line. While profit has been an elusive prize for many online startups, incubators hope to reverse that trend and make money in the process.

Traditional incubators for brick-and-mortar businesses have focused on developing one business idea at a time, but incubators for online companies often take a more integrated approach. This collaboration relies on leveraging the collective experience and knowledge of the incubator’s management team.

Europe’s Vigorous Incubator Industry

Early on, while U.S. businesses were racing to get online, Europe was slower to join the stampede. However, Europe has now joined the fray, and venture capitalists throughout the continent are weighing in with their good intentions and vast resources. In fact, at least 25 new European incubators for Internet-based companies have evolved over the past six months, and more are planned.

One European venture capitalist, Pierre Morin of Global Retail Partners, says that the dollar figure available for online startups in Europe has swelled from about $500 million to $6 billion just this year.