Financing is always the most complicated part of setting up any organisation. Finding the best ways to cover the budget is what this blog on 5 ways to finance your incubator/accelerator will cover. The reality will probably be somewhere in the middle or a combination of all 5.
1. Investors
Investors are always happy to invest in the teams trained and mentored by an accelerator, but rarely into the accelerator itself. They are used to the 2% a year deal they usually get from funds. Since the accelerator tickets are very small, the small percentage does not even start to cover the budget.
2. Corporates
Corporates are also private investors with some differentiators. For them, usually, funding an accelerator / incubator is also a branding exercise or they get to discover innovation around their own product / service range. This means their motivation is a bit more than just returns making them perfect candidates for partners. At the same time this also means that the accelerator has to fit very perfectly into the sector/space the corporate is interested in. And perhaps also give up a number of freedoms, like selecting teams, etc.
3. Governments
Governments, be it local, regional or state level, are interested in developing a geographical region. This also includes the start-up scene in that region. Which is making them great candidates for financing incubators and accelerators. Usually they do not restrict in terms of sector and also do not want to be included in most of the operational issues. The only potential restriction is the location or origin of the teams might need to be the region they are governing.
4. Universities
Most universities have their own in-house incubators. At the same time many of them are also looking for ways to connect their students with the real world, including the start-up scene. Offering a university an opportunity to add value to their students might result in a nice partnership. This arrangement can include budget for events, training sessions or mentoring.
5. Grants
Grants may sound like free money, but in fact they usually require co-financing and rigorous reporting for an extensive period. If admin is your strong side, grants may just be perfect for you. Often they require partners and activities that are not directly connected to what you are trying to achieve, but with some imagination it is possible to make the grant activities complement your organisation.
The 6th option is charging the startups a fee for the experience of course. That is not a common route since it shifts the motivation of the teams. These were the main 5 ways to finance your incubator/accelerator being used today.
Give us feedback, how do you finance your start-up support organisation?
