Facilities, equipment, infrastructure.
As an incubator it is absolutely crucial to have one point of contact. The incubator needs to have a presence. An audience, potential customers, i.e. start-up teams need to be able to find it and they need to be able to contact the incubator.
Such a presence, a one point of contact, can be achieved by establishing a physical location, a digital presence or ideally both. Game Hub Denmark1Game Hub Denmark: https://gamehubdenmark.com/ includes Game Hub Denmark buildings and the Game Hub Denmark network. In total, Game Hub Denmark is active in three cities with its three locations in Aalborg, Grenaa and Viborg. They are all tied together by the Game Hub Denmark online brand.
But such a presence could also be an incubation network. This could have a purely digital presence with e.g. occasional physical meetups. Such a network could be focused around a discord server and have active advisors and people running the services. Incubatee companies could be located wherever but would be tied to the incubator.
Investing into a Physical Incubator
Depending on the model of the incubator, providing the equipment and facilities might be a key investment effort. This might determine the question of offering workspace for free or at least at a break-even rent.
The workspace offer is often the decisive factor in choosing an incubation model: with the umbrella model, the umbrella organisation (uni or tech park) is likely to provide or pre-finance workplaces. Usually, this takes place on a short-term basis for the free workplace, often followed by an offer for affordable office rooms after the incubation e.g., for the advanced phase of an incubation or acceleration phase or for a limited time after the incubation to allow for a transition to normal office rent.
Umbrella Model vs Co-Working Space
The workspace issue certainly favours the development of an umbrella model. On the other hand co-working space can apply various renting options, most of which are a variation of the formula: the established companies’ rent (e.g. percentage rent) is calculated as to cover the free or cheaper workplaces of the younger companies and the common spaces.
The co-working space model relies on the attraction for established companies of being close to “innovative” young companies. However, you’ll need to provide attractive space for the profitable companies for this formula to work. This implies: an interesting location, high bandwidth for heavy traffic, conference rooms, state-of-the art technological equipment and infrastructure (e.g. VR Lab, Audio-Studio, big presentation screens, motion capture service, event space). For the start-ups to benefit from the peer-to-peer or senior experts, you will also need social spaces and break-out facilities to foster mutual engagement and exchange.
Workspace considerations necessitate that you either find a sponsor (e.g. the umbrella organisation), or apply for public funding if feasible, or pre-finance it and rent out the space. In any case, the workspace is an early building block and decisive factor in the business planning of the incubator from the start, even if you plan on growing gradually to find capital for a more sophisticated workspace over time.