Incubators are established and their services are provided with the aim to facilitate the start-up phase of an entrepreneur, to support dynamic development of incubated companies, and to help them to overcome initial problems connected with starting-up. Thus an entrepreneur can not only take advantage of rent conditions (premises at discounted rates) but he can also gain an additional support and special services so that the risk of bancrupcy of his company within the first three years of its existence could be maximally reduced and the growth of incubated companies could be started-up dynamically.
The main mission of an incubator, regardless of its type or specialisation, is to provide a new start-up with necessary assistance from the very beginnings of his business activities, including the draft of the business plan up to the establishement of an independently operating company and its launch into commercial environment.
As foreign businessmen pointed out, one of many advantages of an incubator is that start-ups are placed among entrepreneurs of similar attitude. Joel Wiggins, an Assistant to the Director of Technological incubator in Austin (USA) says, "With the highest probablity, one of the greatest advantages of the incubator is to be a part of a business community". In spite of the fact that incubated companies are heterogenous, some topics and issues always address all entrepreneurs.
On the other hand, foreign critics stress that the most common weakness of incubators is that they require regular contributions from the public funds. However, there are some incubators that try out various models how to gain private funds to cover their operational costs. Others help entrepreneurs to get in touch with business angels and venture capitalists or search for project funds among different support programmes and funds, e.g. that of the EU.
Incubated entrepreneurs take advantage not only of discounted rent for office or production premises. Furthermore, they are able to use information and administrative services, special services, professional counselling, accounting services, legal help or translation and interpretation services and many others depending on the individual incubator′s capacity. High-standard and unlimited access to Internet is a must. Moreover, incubated companies can participate in different development projects, support programmes, grants and are regularly informed about business environment not only at the regional level. Ambitious entrepreneurs appreciate the access to international partners or the chance of being involved in international projects.
The establishement of business incubators is a tool to overcome the lack of resources and knowledge of starting entrepreneurs. Mr Jozef Bardík from the counselling company SAFE - Consult, s.r.o. reckons that incubators are a kind of business environment deformation since only selected entrepreneurs have access to more favourable conditions. In spite of that they are considered an important aspect in the development of SMEs in the post-transitive countries. Thanks to the low rent, business clusters are created that provide their members with added value through the network. The concentration of entrepreneurs from different fields at one place creates the potential of synergic effects out of existing know-how and projects. Efficient as it appears, the establishement of incubators at universities creates the synergic effect of concentration of different know-how and skills that can be expoited into much greater extent. However, from the point of incubators at municipal level, where there is no connection with academic ground, the potential is naturally much smaller, their main disadvantage being lost and the threat of being turned into common comercial rents becoming very real. (Source: Bardík, J.: Specifics of advisory services to SMEs in the post-transitive countries. In: Textbook from the international conference Support of starting entrepreneurs via advisory centres and incubators. Bratislava: PRC, 2007.)
Information and counselling
Since incubators are usually partners of advisory institutions in the field of entrepreneurship and regional development, and many co-operate with National Agency for Development of Small and Medium Enerprises, regional development agencies, regional and local professional organisations, and regional and local representatives of government, they forward information and contacts necessary for business development. In such a way, incubated entrepreneurs gain an easier access to information and counselling on current changes and strategies in business environment, on existing and planned support and development programmes.
Some incubators organise educational and training programmes for potential, starting and existing entrepreneurs directly or act as intermediaries and partners of such kind of training institutions. Many trainings, seminars as well as conferences take place in the premises of incubators. Their aim is to build up and develop necessary business and managerial skills of tenants, course and event participants and provide them with a platform for their mutual exchange of experience. What cannot be omitted is also the aspect of initiation of the future co-operation among businesses.
Access to capital
Incubators provide information on existing financial support programmes for entrepreneurs and the process of the application submission. They spread awarness on institutions supporting entrepreneurship in the form of specific financial programmes such as micro-loans, loans, venture capital funds or non-returnable financial contributions. Entrepreneurs welcome also information on possibilities to get financial contribution from the EU funds (the Structural Funds) as well as on financial products of commercial banks designed for small entrepreneurs.
Support of innovations
Technological incubators are partners of institutions operating in research and development, of universities and of different agencies supporting implementation and transfer of innovations. They provide contacts and information on programmes, events and activities aimed at the creation of knowledge-based economy and information society. Advanced technological incubators are active in the search for innovative companies. At the same time, they are able to give advice on the issues concerning the protection of intelectual property since the portfolio of patents, trade-marks and designs is an important tool of competitiveness.
Types of incubated companies
Entrepreneurs of any field or specialisation are welcome in incubators. Incubators distinguish between two types of companies that are allowed to enter the incubator - incubated enterprises and that of commercial character.
Under the term "an incubated enterprise" is understood a company which has been in operation for less than 3 years when joining an incubator, which has fulfilled the conditions of entry and which will continue in its business activivites. Such a kind of a company will be supported in the form of a discounted rent and various services. The incubation time is usually 3 years, in some cases up to 4 or 5 years. After this period, the company is either transformed into a commercial enterprise or leaves the incubator. Occasionally, its application for the extention of the incubation time can be re-considered.
When a company does not meet some of the basic incubation criteria, it can join an incubator as a commercial company. It can also be a company which has successfully completed its incubation and has been transformed into a commercial entity. The selection of such tenants is based on the submitted application, in some cases in the form of a public competition. The commercial rent per m2 is set by an individual incubator and is published on the rent list of the premises.