What makes a good incubator? I can think of some qualitative things, like the type of people you surround yourself with, but I’m glad someone is crunching the numbers out there. Stockholm-based UBI Index has put out a new ranking of accelerators around the world, with Sweden’s Stiftelsen Chalmers Innovation making the list from the region. A the top list of University-associated incubators can be found in the infographic at the end of the article.
Digging into their methodology, UBI’s rankings come down to three main factors. The first factor is what kind of economic impact the incubator has on the local ecosystem. Second is the type of value given to client companies, like skill development and access to market and funding. Third is post-incubation performance, such as survival rate, jobs created, acquisitions, and other variables.
To build these rankings they worked with an in-house team and pulled some of their methodology from local names like Paolo Borella, Director of AppCampus.
It’s tough to compare incubators across sectors, geography, and young versus old incubators, but the team feels like they’ve normalized the results in their algorithms. Rather than just relying on self-reported data, the team did plenty of traveling to these incubators to find out what works. More information can be found on their methodology page.
“With more and more startups looking towards Incubators to help them get on their feet, it is very important for the young companies to see what they are getting,” says UBI Index co-founder Dhruv Bhatli. “An important piece of our analysis is looking at the monetary side of the equation, such as sales revenue levels by particular incubator clients and access to funds, which are important for new ventures,” adds co-founder Joel Eriksson Enquist.
An interesting trend is that the ‘top entrepreneurship universities’ you normally think of, like Stanford, UC Berkley, Colombia, and others are not found in the top ten. One hypothesis Bhatli has is that these universities, who have huge deal-flow and resources might not consider incubation and helping build companies to be their priority – or perhaps a cynic could say these top institutions are better at pumping out employees for Fortune 500 companies than fostering companies coming out of their institutions.
How should an entrepreneur evaluate a potential incubator?
While UBI Index’s ranking is targeted more for incubator managers to see where they could find room for improvement, there are still plenty of takeaways entrepreneurs can use to start thinking about where to get resources for their business.
Like what you see in fine print of any investment advertisement – past performance isn’t indicative of future success. But at the same time, you should be digging into what success stories and failures have come out of the incubator, especially for sectors like Clean Tech or Life Sciences, which can be a long haul together before your product makes it onto the market.
Additionally Bhatli suggests a few specific questions to ask potential incubators to get you thinking:
First, what types of competence development services are provided? Are they adapted for an individual startup, or are they they same services every company is lumped together into?
Second, what kind of access to market is provided? Say you’re interested in a sector-specific incubator. What kind of networks into potential customers and acquirers do they have? How active are they with their network?
Third, what kind of access to funding does the incubator provide? Is there any direct money, or if not, what kind of network with investors does the incubator have?
Have you been through an incubator? What questions would you ask before going into one?
As mentioned above, here’s the list of the top 10 university-associated incubators.