Startup Hatcheries.
Published:
22 December 1999 y., Wednesday
One of the greatest examples of Internet time is the speed at which new Net-oriented companies are being born. In this world, the incubator is catching on as a new, fast way of developing startups.
It can take less than two years to go from a handful of entrepreneurs with an idea for a Web site to a public company trading on the stock market. The typical path starts with raising six-figure sums from the wealthy individuals known as angel investors. Then the company is discovered by deep-pocket venture capital firms, which use their money and contacts to help propel the company forward.
But even this route isn_t always fast enough for the Internet. To expedite the process, investors are setting up facilities to house and develop multiple Internet startups - in effect creating companies from scratch. This process is called incubation, and it_s the hottest trend in private finance.
These startup hatcheries sometimes develop their own ideas into companies, but most often they take existing young companies under their wing. Unlike traditional venture capitalists, incubators provide the hands-on services required to start, grow and then release small companies. They often provide funding, office space, computers, administrative staff and advice; recommend law and accounting firms; and help recruit employees.
More than any other firm, Idealab put the concept on the map. The godfather of Internet greenhouses - it was founded in 1996 by Bill Gross - Idealab has birthed and launched such big Internet names as online toy retailer EToys and search engine GoTo.com. In recent months, imitators and competitors have been popping up faster than baby rabbits. Among the latest entrants to the field is Intend Change, which was spun off in June from Internet consultant USWeb/CKS. August saw the birth of two independent incubators, ECompanies and EHatchery. In November, Softbank Venture Capital, the heavyweight venture firm that was an early investor in Yahoo and E-Trade Group, launched Hotbank, an in-house incubator.
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