1. Stake it to make it
If the incubator doesn’t have a stake in the companies, they are just selling real estate. That’s a fine model, and it is innovative as a real estate strategy- just not all that innovative as an incubator.
Innovative business incubators have a stake in the companies they incubate. They live or die, in the long term, based on their incubated companies’ successes. The stake can come in equity, royalty debt, convertible debt, or some combination. Usually the rent is lower and the selection process is tougher for these incubators. The key is that the incubator’s life depends on your success; not just on collecting rent!
Image: http://tech.co
