Business incubators shape the future of startups worldwide. First-time entrepreneurs and their teams benefit from the support of a business incubator. Companies receive access to developing technologies and practical advice. Young businesses grow under expert supervision and guidance. Small businesses from our incubator often establish partnerships among themselves. In short, startups succeed through facing challenges in a medium where innovation is curated by experts. Our UTEN team is a good example of a full-fledged professional support group. What do incubators get out of it? How do nonprofits survive?
Large NGO organizations sponsor most business incubators. They fall under the category of nonprofits. The project has clear, actionable goals and a specific time frame. These incubators may focus on solving social issues like doing environmental research. They are usually located near academic institutions. Our program falls under this category. The small firms developing in such a medium have volunteer mentors guided by expert consultants. Nonprofit incubators are self-sustainable for as long as they are sponsored to function (5 years on average). From that point, they either close or seek further funding options.
Commercial incubators have a financial interest in the startups they are investing in. In most cases, the sponsors get equity in exchange for their initial support. Another popular trend is for a corporation to create its incubator. Thus, they develop technologies that would accelerate their growth. A corporate incubator will directly profit from the success of the businesses they endorse. Their lifespan is typically longer, compared to nonprofits. However, few companies will venture into creating an incubator or accelerator. It requires effort and resources that may or may not return on their investment. The sustainability of these incubators depends on the enterprise sponsoring them. Statistically, we are speaking of a longer time frame than their non-profit counterparts.
After a year or two of successful activity, an incubator can be self-sustainable. We’ve learned that investing in high-quality professionals will pay off in the long run. Examples include professional business mentors, legal, accounting help. Additional subsidies at the initial stage will prolong the functioning of an incubator. Worldwide, most incubators depend on public or governmental funding to function. Some generate revenue through training courses and on-demand business consultancy services. For more content on Portuguese startups, read our news to see our latest wins, events and opportunities.