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General Question:

Given that incubators are focused on early-stage companies, how far along should a startup be before it applies for consideration by an incubator? How strong must the team (and concept, plan, etc.) be in order for an incubator to consider a startup without a functioning product or sales/traction?

Our Situation:

We currently have a kick-ass SaaS idea, a strong business plan, well-designed website comps, detailed tech specs, and compelling survey results from our target consumers. (Let's just assume all of this is true, even though you're naturally wondering if this assessment is objective.) We have a team of three -- two multi-talented business people, and one engineer -- all with graduate degrees from fancy schools. We each have varying amounts/types of experience working for different types of tech companies, but we haven't started any ourselves. (We realize that our educational credentials could actually be a deterrent if we don't have relevant street cred.)

Should we...

A. Build our beta site and get some customers BEFORE we apply to an incubator?

B. Apply NOW to an incubator, with only what I've listed above?

We know that the strength of the team and traction are the biggest considerations for investors, but we're wondering if we already have what it takes to approach an incubator. Why are we considering this, you ask? If we get accepted into incubator now, and make good use of the funding and services offered, we could have a kick-ass beta product out to the world in two to three months, we'd have the cash to market it properly, and we'd have automatic access to a pool of investors for growth. If we do it on our own, it would probably take six months or more to launch the product, and it would be completely bootstrapped (i.e., it would take even longer to reach the public and get sales).

What do you think? Are there any other issues or alternatives we should consider? Are we ready for an incubator or should we wait?

Thank you in advance for your advice!

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1  
Question: how much of your own time and money have you spent so far? – David Dec 18 '11 at 19:59
Well, just about two months. We haven't needed to spend any of our own money yet since we can handle the research, planning, design, and development on our own. We're willing to spend our own money when necessary, but incubator funding would eclipse our own financial resources, and the other resources (mentorship, legal advice, etc.) would be fairly significant, too. – caligirl Dec 18 '11 at 20:45
I'm interested to hear what direction your team finally took. Please come back and let us know. – Joe A Dec 31 '11 at 18:59
Hey @JoeA, we decided to go ahead and apply. After learning a lot more about incubators, we realized that most don't expect companies to be very far along in the process and many take teams with just an idea if the team members look like they have the chops and the potential (with or without startup experience). So we took a chance and submitted our stuff. We're also hoping that if they reject us, they'll at least provide us with some useful feedback that will make us stronger candidates for other incubators or direct appeals to angels. – caligirl Jan 2 '12 at 7:41
I'm curious to hear how this story ended up :) Were you guys accepted? – Salmon May 17 '12 at 16:35

2 Answers

up vote 3 down vote

First, incubators vary a lot. That applies to how they select teams, what they're offering and what they take in return. So look at each one that interests you, and as, if and when you apply, show you understand and value their proposition.

Second, talent, energy, commitment and teamwork are high up in the list of what pretty much every general incubator (as opposed to, for instance, patent-led incubators) will be looking for. The idea, where you've got it to, and what you've achieved with it, are to some extent proxies for those critical attributes. Your pitch needs to demonstrate potential and achievement. But startups are a bit like pears - the time from 'nearly ripe' to 'mush' is less than you think. So yes, show you're working hard and focusing on moving forward. And no, don't divert all your energy into program applications. And no, don't get so focused on specific details you have to show that you miss the moment.

Finally, don't make incubation your goal. I've known people who have succeeded that way, by being so cussedly determined that they go again and again. But that's the edge case, and far more teams go off the rails because they lose connection with the real job of identifying and solving real problems for real users.

Good luck! Sounds like you're working hard and thinking too, so I'll be watching with interest!

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I liked what you said: Don't make incubation your goal :) – user8226 Apr 12 at 0:42
up vote 0 down vote

What have you got to lose by applying? If you are accepted, more power to you. If not, then you should build the kick ass beta version without the accelerator.

Don't expect the $15K you get from the accelerator to be relevant. It's all about the connections and the focus you get there.

Either way, I would read about the lean start-up methodology, and start testing your assumptions as soon as possible.

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Thanks @RonGa. I guess I'm assuming that if we apply now and are rejected that it will hurt our chances in the future. So I'm trying to figure out if we even have a chance now, or if we should wait and apply down the road. (It's a pretty sweet deal, so we don't want to blow our chances by applying too soon.) Incidentally, the incubator we're looking at provides a good deal more than $15k, but I agree that the non-financial resources will be much more significant than the cash. – caligirl Dec 18 '11 at 21:00
I haven't applied to an incubator, but from what I saw, they are looking for a team rather then an idea (since ideas change, but the team is what is important). If that is true, it doesn't matter when you apply. There is a good chance its not true, but there is no way to know. You might as well send them an email, telling them that you are considering applying, and you want to know if its too early or not. They shouldn't penalize you for asking, and if they do, you probably don't want to work with them anyway :) – RonGa Dec 19 '11 at 20:28
You lose 1) money, 2) time, 3) focus And if (and only if) you're accepted - you get all the benefits – Salmon May 17 '12 at 16:33

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