Y Combinator

For entrepreneurs, are incubators worth the trouble?

April 20, 2012: 12:43 PM ET

While many entrepreneurs vie for admission to prestigious incubators like Y Combinator, some are opting out, at least for now. Here's why.

By Elaine Pofeldt

FORTUNE -- When Poornima Vijayashanker started Bizeebee, a Silicon Valley site that helps yoga studios and other membership-based businesses expand, in 2010, several incubators approached her about joining. She'd been the second engineer hired at Mint.com.

But Vijayashanker took a pass. She'd noticed that many incubators focus heavily on technology development but didn't teach the business skills she wanted to master. "I was talking to people who had graduated from these business incubators, and the vast majority were still asking business questions," she recalls. "They were talking about 'How do we market? How do we find customers?'" As she did her research, she found that entrepreneurs in a variety of fields who'd built a company outside of the incubator scene "had the most knowledge and experience," she said.

Since she launched six-employee Bizeebee, it has grown to serve about 500 customers and has attracted a small amount of angel funding.

Staying independent has freed her to experiment with her business model in a way that would be difficult in the traditional incubator environment, where resident startups are expected to focus on building a product and finding a market for it rapidly. "I really wanted that six months to a year to explore and try out a few ideas," she says.

MORE: Why new college grads should aim high

With the startup scene thriving, so are business incubators, offering everything from office space to professional business advice. The National Business Incubation Association estimates that there are more than 1,000 incubators in the U.S., compared to 12 in 1980. Some incubators are highly specialized, catering to startups beyond the tech scene in industries like baking.

With many entrepreneurs clamoring to apply, I've been curious about incubators myself, as a co-founder of 200kfreelancer.com, a site aimed at helping independent professionals build their businesses. While many entrepreneurs vie for admission to the more competitive ones like Y Combinator as a calling card that can open doors to venture capital funding, some are opting out, at least for now. More

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