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How incubators hurt startups  

Over the last couple of years, there have been a proliferation of incubators and other startup accelerator programs. I knew this was on the way when I noticed, two years ago, that three different people (none of whom had ever started a business) were pitching me their new idea which was: to create a startup incubator.

At that point, it was also obvious that a lot of those incubators would suck. I'm of the belief that to make an awesome incubator you need incredibly good mentors - Paul Graham level. Without experienced mentors who have not only been through it themselves, but also been around long enough to start to see patterns emerging across a wide range of startups, an incubator is not only less useful, but can be frankly dangerous to the startups that take part in it.

Kathryn Hough explains this in more detail with this article:

Incubator programs can hurt your startup. Since 2005, Y Combinator has funded 460 startups with only a handful of big wins. The rest have faded away, been acquired quickly without growing out of a feature company, or continue to hang on as zombie companies, which are not dying, but not really doing anything either. Who knows how many of these companies could grow into something bigger without the pressure of generating a return for early investors in just a few short years.

I would actually defend YCombinator here - I don't think it can actively have hurt the startups that went through it, and even with failed companies, the entrepreneurs that come through it get out with such a vastly enhanced personal network that the value is obvious. But most incubators are not YCombinator.

Some incubators have better access to mentors than others, even though every incubator touts your access to world class mentors as a selling point of their program. Take a look at the list of current mentors on the program's website, and try to identify businesspeople that you admire. Do you recognize at least 50 percent of the names? Are there mentors who have proven themselves in your industry? For example, if you are working on a streaming video startup and the program's mentors have zero track record in streaming video, they won't be able to give you critical advice. These folks might be good to know after you have launched your public beta as you start to look toward raising a Series A round, but they won't be helpful in the beginning stages.

The article unfairly focuses on the top tier incubators, like YC and TechStars. Those are probably not worth the bile, but the vast majority of incubators are not so well-heeled.

More from the library:
Dealing with micro-burn-out
Estimating your market size from non-technical sources
Hair of the dog