Startup app incubators have definitely cemented themselves as an important piece of mobile app culture. Some of the largest and most successful mobile app startups to date have spent time at incubators and accelerators, accessing seed capital and resources that propel their businesses to the next level. Entrepreneurs frequently ask us, “How do I fund my app idea?”; and joining an app incubator is often the route we recommend. During app incubation periods, entrepreneurs often have the support needed to finalize their app business plan and pitch deck, build their MVP, launch it to the public, bring in initial testers and users, and truly learn how to start an app idea the right way.
There are new startup incubators popping up all over the country (and world), even in some places that have extremely limited startup scenes. For many app startups, they could be a game changer – but will it give you the advantage you need to bring your app idea to a mass scale? In this post we want to examine incubators and give you the information needed to decide whether a particular app incubator is right for your startup.
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Is Your App Right For The Incubator?
Before you can decide whether a specific incubator is right for your app, you need to consider if your app is truly in a position where an incubator can help. Due to the resources that they provide to startups, incubators are extremely competitive, and the vast majority of applicants are rejected. Larger incubators may receive thousands of applications each semester and if your startup isn’t a head-turner, your application may not even be read.
Incubators are for startups, not for people who just have a ‘good idea’. If your idea isn’t far enough along in the startup process, incubators likely won’t be interested. Shaun Savage, founder of GoShare, experienced this firsthand. He told us, “When we first applied to the EvoNexus program all we had was an idea and we were flat out rejected. The idea was too broad and the rejection was harsh but it was a much needed lesson. We decided to refocus our business plan and team up with a former colleague of mine to develop a Minimal Viable Product. After about 6 months of product development we applied to EvoNexus with our MVP and GoShare was accepted into the program.”
The incubation period isn’t about building an idea into business; it’s about incubating a startup mobile app business to prepare it for proper market entry. Most incubators will require that you have a minimal viable product and some level of traction before being accepted. On a very rare occasion, smaller incubators (or those at universities) may accept startups at the idea level – but may still require them to have a business plan and pitch their business idea to see how much progress they have already made.
Does The Incubator Offer The Resources You Need?
One of the leading reasons that app businesses fail to establish and grow is lack of resources. First time app entrepreneurs mistakenly believe that capital is the only thing keeping them from their goals; but this couldn’t be further from the truth. There are many aspects that go into launching a business, especially an app business. From validation to launch, from marketing to retention – a founding team must be knowledgeable in several critical areas. The most beneficial aspect of attending an incubator is the exposure to mentorship from experienced entrepreneurs who are involved in the program.
Before you choose to apply to an incubator, consider what resources you currently lack that could really help your business. Some incubators offer app funding, some don’t. Some incubators offer a “Pitch Day” at the end where they bring in potential investors, while others only serve niche markets like medical technology or education technology. Don’t just jump into an incubator because it exists, but find an incubator that offers investment, mentorship, or industry exposure that your startup really needs. Seed capital is great, but mentorship from the right individual can be priceless. You can’t purchase experience, and when it comes to app startups, resources and connections are more valuable than gold.
Bo Lais, founder of Lula points out that mentorship was only one of the many resources that they were provided when they participated in the “Pitch Perfect Bootcamp”. When asked about these resources he said, “This particular startup accelerator didn’t invest (money) in our startup, but it was home to the Mid America Angels. We had the opportunity to pitch in front of many local and regional investors on three different occasions throughout the program. Additionally, the accelerator paid for some legal and graphic design services as we needed them. The accelerator assigned us each a mentor to help advise and guide us on difficult startup decisions. They provided legal and graphic design resources without any cost to us. We were able to take advantage of 12 months of free software and hosting from select companies that were only offered through the startup accelerator program.”
Aneela Idnani, cofounder of HabitAware was also provided with a host of resources when participating in HAX.co; one of the world’s leading hardware accelerator programs. Aneela told us, “The program is based in Shenzhen China, the hardware manufacturing capital of the world. Without their help, we would have made it to market much slower. Being right across the street from the electronics markets helped us rapidly move through the prototype stages. As part of the program, HAX not only provided funding, but also mentorship and expertise in marketing and manufacturing. Their team of graphic designers, electrical engineers, mechanical engineers and industrial designers filled the gaps and were an extension of our team.”
Will The Incubator Help You Progress Your Business?
The value of an app incubator isn’t just being involved with one. The key is to choose an incubator that will help you meet the specific goals of your business. In many cases, incubators will make you sign over a percentage of equity (usually around 10%) in exchange for their investment in your startup. If you’re going to be giving away a part of your company, it’s best to know what you’re getting in return for that equity. Make sure that the incubator you’re applying for aligns with your goals.
The EvoNexus program allowed GoShare to push their business forward. Shaun Savage said, “Being part of EvoNexus’s program has been instrumental to the launch of our business. One of the aspects that I enjoyed was our bi-weekly founder meetings. These round table meetings allowed a leader from each company to track their progress, discuss their highs and lows, and seek advice that may help solve their problems. Collaborating with like minded entrepreneurs at EvoNexus helped us learn how to improve our product, build our team, and build relationships with key members of the startup community.”
Pitch Perfect Bootcamp gave the Lula app access to the investors they were looking for. Bo Lais said, “The accelerator helped us tremendously with introductions to many investors that eventually led to helping us fund and close our seed round. We also had the opportunity to meet and hear from successful local entrepreneurs that could give us great advice based on their first-hand experience. The program educated us about the fundraising process and different types of term sheets we might see. In addition, we were introduced to many local publications that were interested in hearing and writing about our story.”
How Strong Is Your Startup Team?
Building a successful app is hard work, and it’s usually more work than a single founder can handle. It is important to establish a strong founding team that is strong but varied in skillsets. An engineer building an industry application for example, may not be strong in marketing and may need to partner with an experienced marketer to strengthen the core of their team. Write out the strengths of your startup’s founders and find out if there are any gap areas where your team may lack experience. Incubators look for strong business with strong teams – individuals that collectively have enough experience and knowledge to progress the business rapidly.
A Final Word On App Incubators
The last question you need to ask yourself is whether you are truly committed to joining an app incubator program. These programs are meant to be fast-paced and the intensity can be overwhelming for some people. Some incubators will require that you spend a certain amount of time on-site and a certain amount of time dedicated to working on your business off-site. This means that maintaining a regular job can be complicated or downright impossible.
If you are really ready to move forward and believe that an app incubator can help you reach your goals, start searching around for incubators in your area and those within your industry. Sometimes dedication may mean living in another city or state for a few months during the incubation period to be closer to the program that will help you most. Once you’ve decided on an incubator that suits your startup, find out the requirements for their application submission. Get your business plan and pitch deck in place, and start working on your pitching skills.
And of course, if you ever need assistance, contact us! We’ve worked with dozens of app businesses to secure positions in startup incubators, and we’d love to help you too.