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Start-up Incubators Can Do Harm - #1

A checklist that is designed to provide an assessment of what an incubator contract offers

When I recently wrote a story on start-up incubators, it resulted in quite a bit of discussion and a deluge of emails from readers who have had negative experiences with incubators. The common thread in most of their stories involved a single issue. Some entrepreneurs explained that they were signing contracts with their incubator or accelerator that required them to hand over large amounts of money and to give up significant stake in their company in order to get a place in the program and to have a website developed. Almost everyone who told me about these kinds of contracts were unhappy with the results they got, and some were unhappy with themselves for getting into contracts that kept them bound to terms that were not good for them. Many of them told me that they were required by their contracts to pay $100,000 or more. In response to these stories, I developed a basic checklist that is designed to provide an assessment of what an incubator contract offers. This checklist will help you to identify a potentially exploitative deal. Allow me to start, first of all, with an explanation of how to differentiate between a start-up accelerator and an incubator. They are not the same thing, even though the two terms are often used as if they're synonymous. An incubator is defined by the US National Business Incubator Association as a "business support process" that has as its goal the development of small businesses, and it reaches that goal by providing resources and services to the company. There is usually no limit on the amount of time that a business is allowed to be part of the program, and most business leave the incubator within six months to four years. An incubator tends to prefer a business that is already established but needs up to four years to develop. Incubators often charge the business a fee each month, and they rarely require a financial stake in the business. A start-up accelerator also has as its goal the successful development of a new business, but an accelerator usually makes a financial investment in its member companies. Accelerators usually aim for a short time frame, typically three or four months, before the company delivers a "pitch" or "demo day." Both incubators and accelerators provide a company with office facilities, mentoring and networking opportunities, and access to venture capital connections.

About Greg Twemlow:-

Greg Twemlow is a business consultant with more than 25 years experience working internationally and developing an extensive, valuable business network. His skill set combines technical expertise with business savvy and creativity, making him the ideal consultant in challenging situations in which delays or cost overruns are simply out of the question. He has helped the brightest people and the best companies in a broad range of industries to be successful as they dealt with complex, high-value initiatives. Whether you have a greenfield project or one that has lost momentum, Greg Twemlow will take charge and allow you to put your energy into running your business. Greg Twemlow provides wisdom and experience to your project, regardless of whether it's a brand new endeavor, an existing company in need of revitalization, or project that requires an exit strategy. Advising, consulting, strategizing, devising, implementing, managing, mentoring--these are the things that Greg Twemlow does every day.

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