Logo BusinessBecause - The business school voice
mobile search icon

Start-Ups Come To Life In Business School Incubators

Accelerators may give you the best chance of start-up success. Business school incubators provide the perfect place to raise funding, network and develop ideas.

Tue Jul 15 2014

Ben Mallett is being spoilt. “They are going all out for us,” says Ben, who made it onto Microsoft’s London-based venture accelerator earlier this year. “We have access to their rolodex, which is exceptionally useful.”

“It’s an exceptional program,” says Ben, whose mobile app business came second in his business school’s annual entrepreneurship competition, bagging him £2,000.

Since graduating from an Imperial College Business School MSc program, he and co-founders Philip Linnemann, Alvaro Sabido and Si Dhanak have worked with Microsoft’s technology incubator to get contacts and entrepreneurial mentors, and develop ideas. The founders, who are all former Imperial Master’s students, plan to expand and roll out the app for android users.

“It’s great to be in such an exciting atmosphere,” says Ben. Caribu is a mobile app that allows families to read a bedtime story together – wherever they are. The app integrates picture books into a simple, child-friendly video calling platform.

Microsoft’s accelerator has 11 other start-ups based in Whitechapel, East London. He adds: “The start-up scene is so vibrant and there is opportunity to grow year on year.” The team plan to join another incubator, The Bakery, all being well.

Ben is just one of a legion of upstarters hungry to feast on the learning opportunities and cost savings promised at incubator spaces. Many entrepreneurs, motivated by unsustainable rent prices, are instead turning to accelerators in capital cities.   

Many of these spaces are located in business schools. “Being based in an incubator allows entrepreneurs to share their problems and contacts with those around them,” says Bernard Garrette, associate dean of the HEC Paris MBA. The French business school operates an incubator, L'incubateur HEC.

Students benefit from the experience of past HEC start-up ventures, and of an alumni network of more than 50,000 students. The leading French business school also tries to put MBAs in contact with executives and journalists, and organizes weekly events with experts on various topics, depending on demand.

HEC Paris has just inaugurated an eLab for MBA students and entrepreneurs to connect in a collaborate environment. So far the school has only had an incubator for digital-based companies. HEC Paris also runs a co-working space on campus, and students are able to book meeting rooms in Paris on demand.

The school selects 12 start-ups twice a year for a one-year incubation program. Over the past six years they have fostered more than 130 companies, 80% of which are still running and turning a profit today, says Michael.

As well as collaboration, some of the biggest benefits of incubators are financial. Jesse Rogers, director of the Creative Destruction Lab, Rotman School of Management’s incubator, says: “MBA’s financial benefits come from the potential upside of joining or founding an early stage company that has the potential to grow quickly.” But he adds that this benefit is not equally distributed among students.

The Canadian-based business school has put 20 ventures and 26 MBA students through the lab so far, and Jesse expects 36 MBA students and roughly 18 new ventures to join the incubator’s third cohort in September.

“Our approach is not to provide funding but [to] help founders build ventures that will have the best chance of long-term success,” says Jesse. “Funding is a by-product of that success.”

The networks at incubators, however, provide access to potential investors. He adds: “In the networks around incubators you find angel funders, advisors, potential employees and co-founders.”

Networking is a big benefit of Cass Business School’s incubator, The Hangout. “They often come here and have decided that they want to start something, but have no idea how,” says Parveen Dhanda, who helps run helps run the day-to-day operations at the London-based centre.

“After using The Hangout, when it comes towards the end of MBA program they will have developed more relationships, and [will] have a better idea of how they want to take their ideas forward.”

Hot-desking costs £100 per desk each month at The Hangout, but is free for all City students and alumni who have graduated within two years. Last year, about 35 City students and alumni were using the incubator and she expects that number to swell. Around 10 of those students are MBAs.

“There are a lot of facilities you can use out there for free,” says Parveen. “The Hangout provides an opportunity for students who have decided on a business idea to work in an environment with similar start-ups.”

But you should not rely solely on a business school or incubator network. Bernard from HEC Paris says: “They must go outside of the network provided for them to meet with people and inventors in different spheres, as interaction between two distinct parties is what often results in true innovation.”

Instead, HEC Paris’ entrepreneurs are put in contact with scientists, experts, inventors and innovators. “We find their technical and scientific training to be the perfect complement to the business education we provide,” says Michael.

However, an incubator is not essential for entrepreneurial success. Professor Michel Safars, co-chair of HEC Paris’ MBA entrepreneurship specialization, suggests that standalone business school incubators can be seen as limiting – students may lack the technological and scientific edge that aids innovation.

Others say the start-up journey begins only once MBAs leave school, “as the years spent in the incubator are years spent training and learning the basics of business, and the theory behind starting your own company,” Michael adds.

Jesse, whose accelerator produced eight successful ventures and generated over $65 million in equity value in its first year, says incubators are not essential.

But he adds: “I think it is an extremely valuable environment for students to take advantage of while at school.”