Let’s talk about starting an incubator and accelerator. First, let’s find out about the type of entity that should be created. This will depend largely on the amount of personal risk the individual is willing to take. The incubator and accelerator will encourage the beginning businesses to go out and try their businesses. I am going to encourage each incubator and accelerator owner to initially focus on getting out and practicing the craft of incubation and acceleration. Success will require nothing more than this book and the will power to make it happen.
I will ask that one form of entity be removed from the list of choices entirely, a charity. My reasoning is because this goes against everything that will be taught to young businesses at the center. They will earn every dime they make. It is hard to teach capitalism and making a profit at an incubator and accelerator while not following the principles at the incubator and accelerator.
Secondly, being a charity in most states will force the entity to form a board of directors of typically 3 people. What if the people on the board have a different views and visions? The incubator and accelerator just gave up 66% of the voting rights. Control is diminished from the start. Now there is minimal say in the direction of the incubator and accelerator because two thirds of the vision belongs to someone else. Own the accelerator, own the businesses, and own the dream of operating this business incubator and accelerator. This cannot be done correctly when operated as a charity.
What I recommend is to act as a sole proprietorship. It is very easy to form and will allow an owner to practice their craft easily until they grow into a larger organization. The main downfall is that the owner will risk personal assets should the incubator and accelerator be sued. A corporation or LLC, on the other hand, would maintain a corporate shield. So consulting a tax and legal professional may be smart for someone who is uneasy about taking the sole proprietorship route.
I feel that as an accelerator and incubator begins, the best way to get started is to work on a singular vision. Build the center with the guide in this book and grow at appropriate times. All that is needed for now is a business license and a bank account. Then it is easy to proceed. The time to incorporate may come in the future. For now, focus on getting the incubation center up and running.