The Internet start-up is one of the riskiest business ventures there is. Profits could be years — sometimes many years — away, technology pitfalls abound and operating capital can dry up in a nanosecond.
Add in the normal hazards of operating any business, and you have an extremely difficult road to success. Business incubators have been created to help alleviate some of these problems, but one company has taken the idea one step further: Take all the companies, including the ones which have already achieved success, and set them up to work together.
“I-Group is an Internet incubator that aggregates the portfolio companies with others to do things like provide access to potential customers, marketing partnerships and services,” says Jennifer Chrisler, director of operations for the Boston-based I-Group.
The incubator has a 25,000-square-foot facility to house the start-ups that need space. The incubator staff guides companies through the start-up pitfalls and provides something called “mentor capital.”
“This is a one-on-one relationship with someone who has been successful in building a billion dollar business,” says Chrisler. “This person walks with them as they walk, and helps them avoid mistakes they might make on their own.”
The incubator is a partnership between Softbank and the Intercontinental Group. Softbank has clients such as Yahoo and Buy.com in its portfolio. As a result, a company in the incubator that has products or services that might appeal to either of these huge Internet success stories has an inside track to getting the appointments with the right people.
The facility is located near Harvard and MIT, so there is no shortage of brainpower. There’s also enough technology support in-house that ideas can be implemented in days instead of months — a critical factor in being successful on the Internet.
Many of the normal day-to-day operations are handled by an outsourcing firm, which takes care of human resource issues, payroll and even recruiting. Furniture and phones are provided, giving business leaders more time to focus on the core concept.
With such a backing of expertise and money, getting into the program isn’t easy.
“We are selective and want the deals that are the next hot thing,” says Chrisler. “We often look for that first-mover advantage.”
The organization sees about 800 potential companies every quarter. The capacity of the incubator is about 10 to 12 companies, with participants “graduating” after six to 12 months.
“One of the hardest things when you start up is finding people to solve problems so you don’t make mistakes,” says Chrisler. “Here, we have access to people who have been there and done it, and with 130 portfolio companies, someone has seen the problem or been there before.”
Todd Shryock ([email protected]) is SBN’s special reports editor.