Amid Talk of Bubble, Xconomy Incubator Guide Grows to 121 Listings

9/6/12Follow @xconomy

After we put out the 2011 Xconomy Guide to Venture Incubators, my colleague Wade wrote a Friday column entitled “There Is an Incubator Bubble—And It Will Pop.” That particular guide listed 64 startup incubator programs, up from 34 in 2010, and 20 in our first guide in 2009. Wade concluded his column with the admonition: “So, don’t be surprised if Xconomy’s 2012 Venture Incubator Guide doesn’t have quite as many listings as this year’s.”

Well, the results are in, and the 2012 Xconomy Guide to Venture Incubators is 121 programs strong. (You can buy it here for $195.) That’s 61 more programs than last year’s guide, after you count the four we removed because they stopped operating in the meantime. (And the number that went defunct in the last year is less than the seven we removed from our guide between 2010 and 2011).

So if there’s an incubator bubble, it hasn’t popped just yet. Entrepreneurs looking for help building their businesses have more options to sort through than ever—which is why we conceived the guide three years ago.

But we didn’t want to just throw a doubled guide at you with no resources for navigating it and the increasingly complex startup ecosystem, so you’ll notice some handy icons at the top of each program listing (check out this sample for a preview). They indicate whether a program offers funding, whether it takes an equity stake, whether it is affiliated with a university, and what state or province it is located in. There’s also an index in the back that groups incubators by state and shows which ones have specific tech focuses—such as cleantech, mobile, and even civic and social innovation startups. (You can also visit this page to learn more about the 2012 incubator guide.)

We understand that each program is nuanced in exactly what it offers and where in a startup’s lifecycle it sees itself playing a role. So we’ve adopted a more holistic point of view, rather than hard set of criteria, when determining which programs to include in the publication. We also know there are plenty more organizations out there that call themselves incubators, and we’ve done our absolute best to comb through them and determine which ones truly play a part in supporting and growing fledgling companies.

The big idea is that these programs are more than co-working spaces or rental offices, and must be focused on fostering entrepreneurial skills and company growth. Often they provide investment or financial support in exchange for equity, but that’s not universal. Some of these programs may balk at being called an incubator instead of an accelerator, but for the sake of consistency, we’ve stuck with the term incubator.

The continued boom in the number of incubators means that there’s plenty of conversation and buzz around just how valuable these programs are to startups and the broader economy. Kathryn Hough of the technology news site Techli wrote a piece advising entrepreneurs to question not just which incubator they should apply to, but whether or not they should join an incubator at all. She argues that some incubators hurt startups, noting the loss of control and potential for being matched with the wrong mentors or no mentors at all.

And Jared Konczal, an analyst with the Ewing Marion Kauffman Foundation, recently pointed out in a guest post for Forbes that the returns and job creation that incubators are credited for largely hinge on Y Combinator, widely considered the incubator program that almost all similar and successive tech mentorship programs draw inspiration from. Once the Mountain View, CA-based operation is removed from the data, the value of the exits and the jobs generated drop significantly. There’s also a general lack of clarity and availability in the data on incubator company returns. In his column last year, Wade brought up the widely shared concern that there isn’t enough later stage investor interest to support the graduating startups, and that not enough of them will succeed to generate financial returns for those running the incubators.

Our intention in publishing this guide is not to take a position for or against the existence and growth of incubators, but to paint a picture of the landscape and how it has evolved. It’s a resource unmatched in its depth and scope, and is valuable for entrepreneurs, investors, universities, and those interested in the innovation scene. A proliferation of incubator programs typically reflects an increased interest in entrepreneurship. This year’s guide shows that interest extends to 31 states in the U.S., many of which haven’t been thought of as tech innovation hubs (see the state index).

We continue to see the growth of both the classic funding-in-exchange-for-equity models, and government- and university-sponsored programs for supporting startups. And many of the new programs added in this year’s guide focus on a specific technology area or a specific entrepreneur demographic, showing that there’s a move toward offering more specialized, targeted support. The cleantech incubator Greenstart is taking an even narrower focus, with smaller class sizes and dedicated resources for company design, the program recently told Wade.

Whatever stage you’re at in building your business, we hope the 2012 Xconomy Guide to Venture Incubators will help you figure how to best navigate the terrain.

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