Start me up: The Idealog Guide to Incubators

Start me up: The Idealog Guide to Incubators
Launching a business isn’t for the faint-hearted. It can be an exhausting, exciting, lonely, expensive, rewarding rollercoaster ride and not everyone has the required combination of skills, resources and networks to take their business to the next level. That’s where business-growth organisations like incubators, accelerator programmes and angel investors can add significant value.

Launching a business isn’t for the faint-hearted. It can be an exhausting, exciting, lonely, expensive, rewarding rollercoaster ride, and not everyone exits from it with a smile on their face. Some entrepreneurs go it alone and are rewarded for their hard work and tenacity. But not everyone has the required combination of skills, resources and networks to take their business to the next level.

That’s where business-growth organisations like incubators, accelerator programmes and angel investors can add significant value. Their role is to help early-stage businesses maximise their capabilities so they can get off the ground, make their mark, and fuel New Zealand’s economic growth.

Preparing to hatch

Half a dozen or so business incubator programmes run nationwide from Auckland to Dunedin. Each has a slightly different offering and industry focus, but they all share a passion for helping entrepreneurs commercialise their ideas by providing access to the necessary tools, resources and networks.

At its most basic, incubators provide office space, equipment, high-speed internet and probably mentoring assistance. But the heart of a true business incubation programme comes with the services it provides: help with business basics and marketing; networking opportunities; presentation skills training; technology commercialisation advice and IP management.

“Incubators help start-ups fill gaps in their capability so they can achieve their growth plans,” says Nick Churchouse, head of customer engagement at Creative HQ. “That’s where it starts. You have a team of people with the potential to do something great and to execute on their ideas, and incubators use their teams, funding, and networks to give tailored advice and expertise to these early-stage, growth-focused start-ups.”

There are many places you can go to get business advice, says Churchouse, and this often makes the landscape more confusing. But incubators have significant experience with start-ups and can offer tailored advice for early-stage companies working on gaining market validation, securing their go-to-market plans, and pulling in first customers and revenues. Incubator programmes will push you faster and harder, while making sure each move is about building value in the company.

You should emerge with strong market traction, knowledge, strategy and an executive structure in place to operate independently. Incubator alumni are a supportive and friendly group of like-minded entrepreneurs that offer value beyond the incubator itself.

Turning up the heat

Some organisations run acceleration programmes, which are typically around two to three months in length. Accelerator programmes provide a super-fast incubation process suited to businesses that can be built very quickly, like certain ICT startups where you can drive hard for a short period of time,” says Norman Evans, group manager grants at Callaghan Innovation.

“You may come out the other end panting and decide to enter an incubator programme to add more depth to what you’re doing, or you may already be well past needing incubator support.”

Most accelerator programmes are targeted at specific industries and verticals. For example, Creative HQ’s Lighting Lab is designed for lightweight companies that are building digital products and can scale faster than other types of business. “Digital businesses needed to run faster and leaner, and get bigger results in a shorter time frame than, say, manufacturing, science, and food and beverage businesses,” says Churchouse.

Sharing the nest

Co-working environments like the BizDojo in Auckland and Wellington, Studio64 in Tauranga, and The Distiller in Auckland and Dunedin, are a great option for businesses that don’t want or need incubation or acceleration. Instead, they offer an inexpensive shared office and creative spaces where entrepreneurs can use the business facilities and collaborate with or enjoy the support of other entrepreneurs and creatives.

Incubation – yes or no?

Finding the right fit for your business

Committing to an incubation or acceleration programme is a lot like joining a fitness bootcamp. Sure, you can exercise on your own at the gym, but how hard you push it is up to you, and the results will reflect that. In a bootcamp environment, you’re answerable to others, taken out of your comfort zone, and expected to give your all. And so it is with early-stage business programmes.

You must be prepared to commit, put in the hard work and answer the tough questions. “Many people think they can do it themselves,” says Churchouse. “But there’s a big difference between growing organically and leveraging every resource you can when you have a great team around you that understands the journey because they’ve been there themselves, and want to see your business succeed.

“New Zealand’s an easy place to get help and connect with networks – but it’ll take you longer, you’ll make more mistakes and you won’t get there as fast as if you plug into these ready-made networks.”

Evans advises looking at the stage your business is at and the resources you already have. “Do you have a lot of expertise around you? Do you have money or do you need to raise funds? Do you have the right technical knowledge or will you need to bring in extra technical skills? Answering these questions will help you understand how much support you want,” he says.

“Once you know what you’re missing, you can fill in the gaps by finding the right programme to engage with.”

​Massey University's e-centre.

What you can expect

• Access to people with expertise and experience in building and growing young businesses. You’ll get strategic advice, time with mentors, access to investment and capital-raising networks. You will also find market contacts and help recruiting talent and building your board of directors.

• Energy and enthusiasm from a team that wants to see you succeed.

• A way to amplify and fill gaps in your capabilities.

• The credibility of partnering with a known and respected business programme – something potential customers or investors will value.

• The community support, comradery and exchange of learning that comes from working alongside other startups experiencing similar challenges. What you need to deliver

• An incubator won’t take responsibility for building your business – that’s up to you. • It shouldn’t be too comfortable. If it is, you’re probably not being pushed hard enough.

• Honesty about your strengths and weaknesses, where you’re at, what you’ve achieved and what you still need to do.

• The willingness to listen to advice, have your thinking tested, and answer some hard questions – even if your entire business model is being challenged. Finding the right fit for you Most incubators will be happy to refer you to startups they’ve engaged with, says Norman Evans, so take that opportunity to learn about their experiences.

“If you’re talking to another startup, ask them what the incubator staff were like to work with,” says Evans. “Could they establish a rapport and develop a good working relationship? With an unhealthy relationship it’s very hard to get traction, no matter how good the business is.

“They say that when shareholders get together in a business it’s like a marriage. An incubator becomes very much like a shareholder in its behaviour, so you really have to go through the whole dating process.”

Who’s who in incubation

Incubators New Zealand – is the umbrella group for Kiwi incubators. Here are six of the major ones.

The Icehouse, Auckland

Startup incubator and business growth centre The Icehouse has worked with more than 300 New Zealand startups. Since 2006, Icehouse alumni have created over 880 jobs, generated more than $425m in revenue and raised over $170m in funding. The Icehouse Startup Investment Committee selects 25 high-growth startups a year for the Incubation Programme and possible funding. The Icehouse team works with the founders to validate and develop their businesses.

BCC, Palmerston North

Founder incubator and accelerator BCC is a specialist business development organisation for startups in agriculture, agri-tech and agri-food. It also offers accelerator programmes for startups with growth ambitions looking to gain traction and market validation. BCC’s workshops, events and competitions bring expertise and network connections to several hundred emerging entrepreneurs annually, while MIG Angels helps companies secure seed-stage and startup investment.

Powerhouse Ventures Technology incubator network (Auckland, Wellington, Christchurch and Dunedin)

Powerhouse pioneered investor-led incubation and uses a university partnership model for commercialisation of intellectual property through company startup. It invests in and creates new companies with global ambitions. Powerhouse provides capital, support, facilities and know-how. It also offers coaching to entrepreneurs and boards, and access to low-cost accounting, IP strategy, legal counsel and recruitment services.

ecentre, Albany

Founder-focused incubator.

The ecentre helps people with great ideas create successful and global companies by providing access to a broad innovation ecosystem of investors, mentors, government experts and academics. It focusses on finding support to complement an entrepreneur’s capabilities, while minimising the risks and costs of developing a business opportunity. It has specialist expertise in cloud computing, and its technology wing, Venture Science Labs, provides subject-matter experts and funding to link science and business. The Sprint programme coaches entrepreneurs in opportunities to build a global business.

Creative HQ, Wellington

Founder incubator and accelerator, angel investment

Creative HQ has been supporting ventures seeking high growth and global success since 2003. Its incubator programme helps entrepreneurs turn their ideas into commercial reality through access to resources, knowledge, capabilities, finance and contacts. Creative HQ has significant capital-raising experience and connects early-stage companies with high net-worth investors. It runs the digital startup accelerator Lightning Lab, a three-month seed investment mentor-driven programme, the exclusive NZ member on the Global Accelerator Network (GAN).

SODA Inc

Hamilton  Founder-focused incubator and Waikato's hub for entrepreneurs SODA offers programmes proven to help high-growth startups reduce risk, get funded and grow to success in international markets. Thanks to unique partnerships with the likes of ASB, Net Value, Gallagher and Waikato Tainui, SODA provides its client startups with highly practical guidance across areas including digital technology, agritec, specialised manufacturing and the Maori economy. SODA high-growth start-ups benefit from a pathway of growth programmes and access to unprecedented business, mentor and investor networks.