Ignoring This Trend Could Ruin Startup Incubators

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For a while I have expressed concern about the future of startup business incubators that are not only in Tampa Bay but everywhere. Tampa Bay Innovation Center president Tonya Elmore noted in the Tampa Bay Times last year that every “city council member in every town wants an incubator now that startups like Facebook glamorized entrepreneurship”.

The article estimates at least nine incubators in the Tampa Bay market, a dozen in Orlando that are managed by the University of Central Florida, and nearly 130 in New York City. As suggested by Elmore’s statement, the incubators in the Tampa Bay market are almost entirely funded by city, county, state or federal funds – none of which come with guarantees (or plans) for future long-term funding.

This poses challenges and opportunities for our market that our economic development leaders and incubator community should take a look at. Unlike many government funded programs that are allowed to persist for years or decades after they have lost relevance these startup incubators are setup to fend for themselves and compete to become the best resources for the community. That said our public policy makers and economic development leaders should work with them to see what the next public steps should be.

For-Profit Incubators

Wired just covered a relatively new trend that seems to be flying under the radar. The Next Big Thing You Missed: Tech Superstars Build ‘Startup Factories’ details what is in essence a wave of for-profit incubators that are funded entirely by private investment. Dubbed “startup factories” or “startup studios” this incubator formula has already produced a number of winners such as Twitter, Digg, and the popular game Dots.

With tech giants like PayPal co-founder Max Levchin and Twitter co-founder Ev Williams among others investing in the business model there certainly is momentum building. Tampa Bay’s economic development community would be wise to jump into those conversations and make sure we are an attractive area to look at.

While the entrepreneurial hacker culture of a competitive startup wrapped up into a “startup factory” would disrupt the non-profit incubator model it could also provide for exciting innovations and rewards for the communities that seize the opportunity they present. Ignoring the trend would be detrimental.

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