Coworking + Incubators: How Coworking Spaces Enhance Business Incubation
Did you know your favorite start-up probably began in a coworking space?
October 11, 2024
Blog
Table of Contents
- What is a business incubator?
- What are incubator coworking spaces?
- Business incubators vs. incubator coworking spaces
- Who do incubator coworking spaces serve?
- What are the benefits of coworking space incubators?
- The coworking space and business incubator business model
- What to know for aspiring incubator coworking space operators
At the 2024 Coworking Canada Unconference, one thing we heard over and over again was that coworking spaces often serve as economic development hubs in their communities, especially for those in rural areas.
It makes sense then why so many coworking spaces offer business incubator programs and services — the two concepts really do go hand-in-hand.
We sat down with Optix client Gayle Whitlock from CENTERFUSE, a collaborative coworking space offering business incubation services in Virginia, to explore the intersection of coworking and business incubation.
But first, let’s start with the basics.
What is a business incubator?
A business incubator is a program or service designed to provide early stage start-ups with the resources they need in order to grow their business successfully.
Services and amenities offered in a business incubator include:
- Mentorship and education
- Experienced management teams
- Financial capital
- Access to investors
- Office space
Business incubators have been around since as early as the 1950’s, but have become increasingly popular over the last twenty years as entrepreneurship rises in popularity.
"Ventures often fail at the earliest stages because of a few common obstacles that are preventable when founders have access to the right guidance and expertise.”
Automate your business incubator coworking space with Optix
What are incubator coworking spaces?
Coworking + incubator spaces, also known as incubator coworking spaces, are coworking spaces that offer resources and services to support early stage start-ups and founders.
While a traditional coworking space might offer desks, meeting rooms, and private offices, an incubator coworking space will offer all of those things along with services and amenities you would find in a business incubator program.
For example at CENTERFUSE, Gayle and the team offer their coworking space and business incubation program members:
- A thriving community of like-minded entrepreneurs
- Weekly networking programs and coworking events
- Monthly hosted lunch and learns
- Free on-site counseling
Typically, not every member of the coworking space needs to be in the business incubation program. However, those in the business incubation program are likely looking for a place to work. This is how the two models work synergistically.
"At CENTERFUSE, you’ll find coworking memberships that are the perfect solution for many types of businesses and the self-employed including entrepreneurs, consultants, freelancers, start-ups, satellite workers, contractors and independent professionals."
Business incubators vs. incubator coworking spaces
Business incubators and incubator coworking spaces both aim to provide early stage start-ups access to essential resources and services. There are however some key differences between the two businesses.
- Business model: Business incubator programs will often take equity from their participants, whereas coworking spaces charge a membership fee.
- Target audience: Incubator coworking spaces serve a variety of members including freelancers and remote workers. Business incubators are targeted towards founders only.
- Purpose: Business incubator programs are incubators first, with access to office space second. Incubator coworking spaces are coworking spaces first, with access to incubator services second.
The advantage of choosing an incubator coworking space over a traditional business incubator? Accessibility. They are often less selective, less expensive, and require less of a commitment in terms of time or money in order to reap the rewards.
The table below summarizes some of the key differences between business incubators and coworking spaces offering business incubation services.
| Business Incubator | Incubator coworking space |
| Typically give up equity in their company to join | Pay a monthly fee |
| Everyone who uses the office space is in the incubator program | Non-program members are able to use the coworking space, expanding the network of professionals potentially working in the space |
| Provides a number of services, one of which is access to office space | Provides office space, as well as other services if needed |
| Usually for a set amount of time with a determined schedule | Does not have to have a start or end date (services are on-demand) |
Who do incubator coworking spaces serve?
Incubator coworking spaces are perfect for entrepreneurs in the early stages of their business journey. Maybe they’ve built a prototype and gotten a few customers. Or maybe all they have is an idea.
Either way, they’re looking to execute on a vision, and they’re certainly looking for some guidance and support along the way.
Characteristics of those looking for incubator coworking spaces include:
- New to the world of entrepreneurship
- Looking for resources at a low cost
- Interested in a like-minded community of entrepreneurs
- Not interested in giving up equity in their business
Those who are further along in their business journey or those who are ready to take the large steps necessary to develop their business ideas may benefit more from a formal business incubator program.
"We have some great stories of CENTERFUSE making magic! We are impacting the lives of entrepreneurs, their employees, and their families as the founders realize their small business dreams.”
What are the benefits of coworking space incubators?
Just like business incubators, incubator coworking spaces benefit their members by providing them with the resources and community they need to succeed — resources and community they otherwise wouldn’t have access to.
In turn, coworking space incubators can:
- Improve the chance of business success
- Enable growth at a faster rate
- Build a community that serves one another
At CENTERFUSE, it’s not uncommon to witness an entrepreneur take their business from the kitchen table to an office. This is enabled by the support they’re able to access in a condensed environment.
“We have witnessed someone starting out on the kitchen table – moving to CENTERFUSE and in short order expanding into a new larger office or even buying a building. CENTERFUSE provides the foundation that enables and supports this magic – it’s our member’s energy and drive that makes it real."
The coworking space and business incubator business model
Incubator coworking spaces borrow from the coworking business model of selling space and community. Being a niche coworking space, they offer additional services and amenities that are offered as add-ons or included in their membership plans.
Here are some of the most popular membership models we’re seeing from incubator coworking spaces in the market.
- All inclusive membership fee (ie. paying $700/month for a dedicated desk in a coworking space that also offers lunch and learns, networking events, mentorship services, etc.)
- Charging for the physical space and charging for incubator services as needed (ie. paying $300/month for a dedicated desk and paying $50 for a one hour mentoring session)
- Charging for the physical space and charging for an incubator program (ie. paying $300/month for a dedicated desk and paying $1,200 for a 16 week incubator program)
In the first example, the incubator services are embedded into the membership plan for everyone. The advantage here is you’re able to charge more for a membership because of the additional services you’re offering. It’s also a point of differentiation in the market.
In the other two examples, the incubator services are available to members at an additional fee. With this model, you’re able to attract more members at a lower price point, and potentially increase your customer lifetime value (CLV) through the charging of additional services.
What to know for aspiring incubator coworking space operators
If you’re a coworking space operator looking to provide incubator services, here are a few things to keep in mind.
1. You will have unexpected challenges
It’s impossible to predict what challenges you’ll face. There will be things that are out of your control, like a global pandemic. What matters is not the challenge itself, but how you respond to it.
For Gayle, the pandemic was the biggest challenge they’ve faced at CENTERFUSE by far. However, being open to change and willing to pivot helped them reach new levels of growth, despite the less than ideal external circumstances.
“As the pandemic hit, programs had been really taking off and we had solid, steady, growth patterns in place. We were able to continue to offer most of our programming. Of course, all programs went to a virtual platform – but this served to keep everyone engaged and CENTERFUSE top of mind – which made our re-opening easier and smoother.”
2. You may be overextended
Another side effect of the global pandemic? There are more people starting their own business now than ever before. This could mean the demand of your services may be greater than the supply — a good problem to face, but a problem nonetheless.
Be mindful of this and plan accordingly. On the flip side, ensure there is a market for your services before opening your space.
3. You will need a community to support you
You’re stronger, together. Having a strong community to support you in your mission of serving start-ups will not only benefit you and your business, but your members as well.
Gayle has leaned heavily on the support of the City of Manassas and the community around them. This is a common theme we heard from our conversations at the Coworking Canada Unconference, too. The more support you have from local government and community, the better.
“We would not be here without the support of the City of Manassas and the community. You can’t do it alone and having a community of support really makes a difference. We host no cost community oriented board meetings and host several networking groups to encourage a vibrant workspace.”
4. Leverage technology to help you run your business
Technology can be the missing piece of the puzzle when you think about how to run your business efficiently. With the right tech stack in place, you can automate your business, engage your members, and grow your community.
Optix serves a number of business incubator coworking space operators, including Gayle at CENTERFUSE. Our technology is designed to help operators run their businesses more efficiently with the help of the right technology systems.
To learn more about how Optix can support your business incubator coworking space, connect with a member of our team today.
Getting started with a coworking incubator space
Incubator services fit in perfectly with coworking spaces — the trick is finding a way to make them work with the community that you’re trying to create.
Get clear about your goals and who you serve. Find the right-fit business model. And watch your coworking business grow to new heights.
Special thanks to our Gayle for helping us write this piece, we couldn’t have done it without you!
