In Sunday’s Boston Globe, Michael B. Farrell reported on the growing number of incubators in the area, including TechStars, Rock Health, and DogPatch Labs. One of the biggest, MassChallenge, has its award ceremony next month where it will showcase 26 finalists whittled down from more than 1,200 applicants.
The growth of incubators isn’t surprising given that Cambridge is the home of the grand-daddy of startup accelerators (Y Combinator, which has since left for the warmer, if not sunnier, Bay Area). But is it a good thing for entrepreneurs? Not everyone is sold on the idea.
Farrell spoke with Steven Gold, a business professor at Babson College, who told him that incubators were a great deal for investors.
“It’s cheap. There’s nothing to lose,” he said, while warning that it might be a one-way bargain. “For most commercial accelerators, I have seen no data that shows any reason for the typical young person to ever affiliate with one of them.”
I’ve reached out to talk a bit more with Gold about his thoughts on why accelerators are so attractive to first-time entrepeneurs, and what makes them a bad deal, but I’m not surprised about the sour outlook.
A few years ago, I went through the accelerator startup wringer myself, and a lot of them were run by people with little to no actual startup experience. In one, three 20-somethings working on their MBAs listen to our pitch, via Skype, from a porch, wearing T-shirts and flip-flops.
We ended up deciding an incubator wasn’t for us, and looking back at where we applied, many of them have since ceased operating or have merged with another program.
But while I’ve been impressed by the experience and focus of Boston’s accelerators and incubators, the memory of those flip-flop bedecked funders haunts me. Even if there’s not an incubator saturation point, there’s a very marked curve in incubator quality (just like with startups themselves), and more and more, I’ve talked to founders who casually mention that they’re currently in not one but two incubators, sometimes at the same time.
As Walt Frick pointed out on Twitter, though, the varying intensities of these two different programs makes this doable for some. The fact that MassChallenge doesn’t take equity doesn’t hurt either.
But perhaps the best indicator of whether there’s too much or not enough is ultimately performance in the market. As Scott Kirsner reported today, UberSense just raised a $1.1 million round from Google Ventures, Atlas, and others, meaning at least someone must be happy with the results.