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All about business incubators

Where we promote innovation and business growth

To start, two things are needed: a business idea and a good dose of eagerness. However, this is not enough to bring the initial approach to fruition; here is where tools such as business incubators come in, which back emerging business projects and help them to consolidate themselves.

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What are business incubators?

Businesses incubators are spaces that, as well as a physical location where to work and develop their business, offer newly created companies a whole ecosystem of support.

In them, the youngest SMEs and startups have facilities and services at a price much lower than the market value. They can be public or private.

Opting to be located in an incubator can offer very interesting advantages in terms of infrastructure (physical and technical) and the advice that entrepreneurs receive. The reduced cost, alongside the advice, mentoring, and training services provided in these spaces, makes it possible for the company to focus on other aspects of its development.

At the same time, business incubators also facilitate and streamline access to other high value-added services, such as networking. Their active role in strengthening these emerging companies means that projects developed in incubators have a 50% greater chance of success than those that do not opt for these services.

Young people in a coworking space together

Differences between business incubators and accelerators

Although in some contexts the two names are used indifferently, there are some differences that are worth noting.

  • Incubators welcome companies in their initial phase. They select certain ideas and promote them as their own projects to ensure their success. The majority are usually private.
  • Both accelerators and incubators support projects at a more advanced stage. Accelerators focus more on the mentoring process and offer initial financing in exchange for a small percentage of stake in the company as compensation for the money invested. 
  • Incubators, more than financing, also offer support in the shape of physical spaces where the activity is carried out, as well as advice, training, and services associated with the infrastructure.
Three people working together

Differences between business incubators and coworking spaces

There is a key difference between the spaces designed for coworking and business incubators (also for accelerators).

Despite both options offering a space for the development of business activity and infrastructures that support it, coworking spaces are shared offices for freelancers, decentralized companies, and sectors where a permanent physical central office isn’t required. In other words, they are aimed at all types of companies and projects, not just startups. Also, there's no limit to how long you can belong to a coworking space, which is something that differentiates accelerators and incubators.

How do business incubators work?

All business incubators tend to work in a similar way. For a certain period of time, they offer a space and a series of services to companies to develop and consolidate their activity at a reduced cost or even at no cost in some cases. 

The aim of these initiatives may vary. In the case of public incubators, it's more about boosting the employability and competitiveness of certain sectors or geographic areas, while in the case of private ones, business incubators are established according to corporate social responsibility (CSR) practices or to promote a business line, among others. Likewise, there are sectoral incubators in which priority is given to companies of a certain sector (technology, energy, cultural, social, or agriculture, among others). However, the advantages they offer entrepreneurs are usually similar.

Requirements to join a business incubator

 

Depending on the space and the institution that backs it, the requirements to join a business incubator may differ. However, they normally coincide in aspects such as the following:

  • Age of the company: It must be recently created or have been in existence for less than a specified period of time, or planning to start operations within a maximum period of time. 
  • Compliance with tax obligations: In the case of already existing companies, they must be up-to-date with payments to the Spanish Tax Authority and Spanish Social Security system.
  • Location of the registered office: It's usually encouraged that the company be located in the geographic area where the incubator is in order to boost the business network in that area.
  • Company plan: If the company still hasn't been formed, it's essential to present a plan that guarantees the economic and technical viability of the project.

The time that a company can remain in an incubator varies, although usually it's not more than five years.

Types of business incubators

There are several categories of business incubators: 

These four types are grouped into two models, depending on their profit motive. Generally, BICs and UBIs are non-profit, and the sole aim is to promote the development of the business network. CPIs and IPIs, on the other hand, are profit-oriented. 

  1. BICs (Business Innovation Centers): The majority of public business incubators are usually this type. They offer basic services to the companies they welcome (space to work, services related to the infrastructure, visibility, communication channels, and information on external financing opportunities, amongst others).
  2. UBIs (University Business Incubators): In this case, universities back the business initiatives of their students and graduates.
  3. CPIs (Corporate Private Incubators) are business incubators that belong to a corporation, although they work as independent business units. Their aim is to back new business initiatives until they are consolidated as companies. 
  4. IPIs (Independent Private Incubators) are incubators created by a sole person or a group of individuals who invest their own money in contributing to the promotion of new business initiatives and usually have a stake in their capital. 

What help is available for business incubators?

Young people sitting around a table in a coworking space

The backing of a business incubator can be very beneficial for startups and SMEs, as shown by their survival statistics after having participated in a business incubator. Among their advantages, it is worthwhile mentioning the following:

  • Being in a business incubator at the start of the activity represents a significant economic relief, as the infrastructure costs and services that they offer are much lower than those of general market. 
  • The fact that different companies are in the same incubator allows for the creation of synergies between them.
  • The spaces where incubators are found are places of reference within the business network of the area. 

They offer access to training, advisory services, financial or legal advice, and options for their national growth and even internationalization.

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At the Repsol Foundation, the Entrepreneurs Fund has been committing to entrepreneurship for more than ten years. This startup accelerator serves as an impetus for companies that provide technological solutions to meet the challenges of the energy transition. The backing ranges from financial aid to multidisciplinary mentoring teams as well as the possibility to conduct pilot testing at Repsol facilities. Five companies have recently joined the Entrepreneurs Fund. They were selected from more than 400 participating startups and stood out for their quality and innovation in terms of energy, low-carbon emissions, sustainable mobility, and digitalization to optimize and control the processes of the energy sector. 

Repsol also has an ideaAction proof-of-concept platform that works with startups that develop technologies focused on decarbonization or the circular economy. It offers them the possibility to test their products or technologies, either at the Repsol Technology Lab or at one of the company's industrial centers or facilities, with the aim of helping them to scale up and reach the market as soon as possible.