A New Era for Tech Incubators
If you thought tech incubators were a thing of the past, think again. In multiple cities around the world, new incubators are cropping up while longstanding ones are churning away and even expanding. Some have long lists of successful companies they’ve nurtured over the years. Others are around as a result of economic stimulus efforts and/or to capitalize on recent Web 2.0 trends. And some focus on specific criteria, such as startups run by college students or select areas of technology, while others have broader interests. But no matter what differentiates them from each other, these incubators have one common goal: to foster the growth of early-stage startups. Along with offering office or desk space, incubator owners mentor startup founders and introduce them to key networks of executives, provide some funding, and potentially help them raise additional funds, among other benefits. Sometimes this is in exchange for a small stake in the company.
Following Your Startup Dreams
Entrepreneurs in today’s economic environment are faced with a particularly frustrating set of circumstances: infrastructure, device, and software technologies are now available to inspire a world of new products and services, yet funding for startups wanting to exploit these capabilities is tighter than ever. What does it take to get a new business off the ground in this downturn? What does it take to make a dream come true? The IPO market that traditionally helps motivate investment in new companies is dormant and the mergers and acquisitions market has slowed down considerably.
Technology Innovation Goes Global
Previously, startups had little chance of being funded if they weren't located in California's Silicon Valley, home to a robust venture capital community and birthplace of countless technology innovations. Likewise, technologists had to be physically located there to have any hope of keeping their fingers on the pulse of the latest cutting-edge developments.
Back then, venture capitalists wouldn't bother investigating companies that weren't on the East Coast or within a two-hour drive of the Silicon Valley, recalls Mark Jensen, national managing partner of Deloitte's Venture Capital Services. The rest of the country was referred to as "the flyover states."
Now, however, Silicon Valley-based venture capitalists routinely travel the world in search of promising investments. And entrepreneurs can pursue innovation from any distant outpost and still remain connected with the innovation mainstream.
When Will the IPO Market Return?
Not since the 1970s has the market for initial public offerings been so dismal. By Thomson Reuters and the National Venture Capital Assn.’s estimation, there was just one venture-backed IPO during the third quarter, and only six so far this year—the worst showing since 1977.
That doesn’t mean there aren’t promising startups poised to go public. According to IPO expert Renaissance Capital, the global pipeline is ready to burst. Some 190 companies have IPO filings with the US Securities & Exchange Commission, and a substantial number have filed in other countries as well.
Startups: Not Just for Kids
Many of today's biggest technology companies were founded by kids barely out of high school. Bill Gates learned programming at 13 and left Harvard University as a junior to start Microsoft, a company that now has 78,000 employees worldwide and $50 billion in annual revenue. Apple founder Steve Jobs, whose company produces $24 billion in annual sales—and a slew of culture-changing consumer electronics devices—dropped out of Portland's Reed College after only one semester.
Larry Page and Sergey Brin left Stanford University's computer science program after coming up with the idea for Google, and have been too busy running their $16.6 billion search firm to get around to finishing their PhDs.