You should select location based on your incubator business model. The placement of the venue influences potential tenants deal flow. Based on the business model of the incubated companies, location could be part of the support. Centrally located incubator offering meeting rooms is perfect place to meet with clients and discuss new business with established companies from the region. According to Smilor and Gill (1986) the extent of access to potential external entrepreneurial networks is one of the key factors to business incubation success.

If your incubator supports specific industry, you should consider location in area with this industry expertise. For example, locate the incubator in the part of a city where are based other ICT companies. If you are research focused incubator and companies relate on top laboratory environment as a source of value, you can have a location somewhere further from the city centre. University run incubators are sometimes located near dorms or at the university itself.

In order to safe time of tenants, incubator should be easily accessible by public transportation and/or have access to parking slots.

Recommended locations

• • • City district with existing entrepreneurial or innovation eco-systems
    • University or dorm vicinity
    • Suburbs - suitable for high tech and research incubators

You should consider existing premises available to university as a first choice. These premises are appropriate to use, if they are well situated in the city (see location) and satisfy the requirements for effective space setup. If existing premises don't meet the requirements, choose office building that is better suitable.

Size of the incubator should be based on these expectations:

• What is the demand for incubation services of the university?
• What are our financial possibilities (setup + operational costs)?

Small incubator may not have enough opportunities to attract key advisors, mentors and investors. On the other hand, large incubator faces the risk of lack of tenants and is connected with higher capital expenditure as well as operational costs. The actual size depends on how many teams should be incubated and what is the average size of the team. The required space for one person in the basic co-working seating is considered to be 6 square meters. However, the whole incubator facility will be different. Beside the co-working area and restrooms, most incubators have entry area or reception, kitchen and other multifunctional offices. Thus, the required space for one tenant may vary, but average workspace is between 16 and 19 square meters per person. (GSA, 2012)

The very first room while entering the facility should be reception area. Restrooms, kitchen, visitor’s meeting room and classroom should be directly approachable from entry area. This is because receptionist wouldn´t let visitors to enter the co-working area and other offices without guidance.

Below is the list of most common rooms available in business incubators. Your decision on what type of rooms to use in your facility should be based on:

• • • Incubator's model
    • Financial possibilities
    • Expected number of tenants
    • Space possibilities

Laboratories depends on incubator´s model. In general, incubators without industry specialization don't provide laboratories.

• • • Internet – fast connection, available to everyone, provide also free access option for guests
    • Office printer
    • Beamers for presentations
    • Extension cords
    • Security system - security cameras
    • HDMI – VGA adapters for presentations
    • Video conferencing equipment
    • Spare notebooks with carry-on bags for guests and lectures
    • Spare projectors and remote controls
    • Mac adapters (Thunderbolt to HDMI, USB-C to HDMI)
    • PC mouse for notebooks
    • Camera for shooting during the events
    • Scientific equipment and materials - according to incubator's model

Reception desk usually provides this kind of services:

• • • Mails and e-mails - forwarding e-mails to tenants and staff
    • Voice calls – deals with calls from outside the incubator
    • Scheduling rooms - tenants usually have limited time of meeting rooms usage in order to not to use it as a private office
    • Organises meetings with guests
    • Keeps internal knowledge and customer relationship management system updated
    • Provides basic office equipment such as stapler, scissors, ruler etc.
    • Tenants usually have limited printing possibilities therefore reception desk or implemented card system have to track it

Incubator’s primary mission is to support new venture creation and basically all services it provides, except public events, are part of incubation or acceleration process. There is a basic distinction between them. For founders with ideas or in early stage there are incubation programs. The focus in those is to help them to build financially viable and freestanding companies. The second type of program, acceleration, is focused on more advanced companies that are seeking fast growth, it is also frequently accompanied by investment.

Acceleration as a generally for-profit service is very often provided by private companies that are called accelerators. Cohen and Hochberg (2014) describe accelerators as business entities that make investments in promising companies in exchange for equity as part of a fixed-term, cohort-based program that includes mentorship and educational components. Basic difference between incubation and acceleration is described in following table.

Source: http://timreview.ca/article/65
6

Business incubation is a business support process that enables successful development of start-up and fledgling companies by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by incubator management and offered both in the business incubator and through its network of contacts.  Main goal of incubation is to produce successful firms that will leave the program financially viable and freestanding. These incubator graduates have the potential to create jobs, revitalize neighbourhoods, commercialize new technologies, and strengthen local and national economies (National Business Incubation Association, 2007)

The most critical factors for successful business incubation are (Theodorakopoulos, Kakabadse, McGowan, 2014):

• on-site business expertise,
• access to financing and capitalisation,
• in-kind financial support,
• community support,
• entrepreneurial networks,
• entrepreneurial education,
• perception of success,
• selection process for tenants,
• ties with a university and a concise programme with clear policies,
• procedures and milestones.

The more extensively these factors feature in a business incubator, the greater the likelihood of success for the incubated firms.

The emphasis of the business acceleration is on rapid growth, and to sort out all organizational, operational, and strategic difficulties that might be facing the business. It can be understood as a holistic business advisory service, often bearing strong resemblance to traditional management consulting practices, but adjusted to fit small and medium sized organizations. (Sepulveda, 2012). On the other hand, business incubation nurtures the business throughout the start-up phase and provides all the necessary tools and advice for the business to stand on its own feet.

Typically, these two services are provided by different types of facilities. Business incubators and business accelerators. Both incubators and accelerators can be broadly characterized as groups of experienced businesspersons who provide nascent firms with advice, businesses services, financing on occasion, and often office space to help them develop and launch their businesses with greater success than if the start-ups had not received assistance (Isabelle, 2013).

Virtual incubation service is not bound by incubator's building or any other geographical constraint. This service is offered to non-resident incubatees that are not physically present in the incubators facility. Service doesn’t have to be necessarily based only on communication via ICT such as email and e-learning. In many cases, virtual incubatees have regular meetings in a physical space.

According to infoDev, virtual business incubation tools can be delivered in six ways:

• On-site – group meetings in a physical locations
• E-learning – online training materials and information
• One-on-one ICT exchange – emails, calls, online collaboration tools
• Online recruitment – recruiting incubatees and matching them with mentors, interns and other business persons to add value
• Virtual communities – online platforms where entrepreneurs collaborate
• Crowdsourcing and crowdfunding

Funding is closely related to programs. Access to financing and capitalization is considered to be very important for incubation success and many entrepreneurs give priority to incubator that offers funding. Thus, own venture fund or close relationship with business angels and venture capitalist may be competitive advantage during the process of recruiting new tenants.

Networks with early stage investors such as business angels and venture capitalists may reduce the search costs for tenant’s companies while looking for investment. Alongside providing necessary funds, venture capital investors can also play an important role in the professionalization of the venture.  (Bruneel, 2012). The most obvious way how incubators connect tenant companies with investors is on Demo days. It is not common that investors give money to company immediately but it helps them prepare for dealing with investors at later date and it is useful source of connections.

Partner bank can provide account tailored for startup companies as well as debt financing with more affordable conditions.

Not many university incubators have venture fund. Those that do usually provide micro funding in very early stage of the company.

Having personnel with experience in public sources, development programs, grants, startup support grants and EU funds is very valuable. Each country offers variety of public funding opportunities on governmental, state and municipal level. Think how you can establish cooperative relations with agencies responsible for funding distribution.

Training consists of formal organized workshops, seminars and access to complementary information. Training sessions covers a range of small business and entrepreneurship topics. Incubatee's education can be divided into three sections:

As a part of incubation process, many incubators organise lectures. Speakers are often experts in a particular field or successful entrepreneurs, so they can provide valuable knowledge for building business. Choosing the topics for lectures as well as guest speakers depends on incubator's model and network. Public lectures may help to promote the incubator and create awareness among entrepreneurial community.

Workshop is intensive educational program that focuses especially on techniques and skills in a certain field. It usually involves more hands on learning activities than lectures, however also allows discussion, interaction, presentation and debate on a given topic. Topics depend on incubator's model, but widely organised workshops are for example:

• How to write a business/financial/marketing plan
• How to run a lean start-up
• How to code in HTML5/CSS/...

Incubator's website can provide online training materials and information. This can expand the outreach of an incubator and has the benefit that incubatees can learn at their own pace, wherever and whenever it is convenient. Information made available through the internet needs to be up to date.

If possible, staff should record lectures and workshops and later provide these materials either to incubatees only or make it public. Sharing these materials can help incubator build awareness and recruit new clients. Best way how to do it is create YouTube channel and share these videos on other social media channels.

Video tutorials: Some incubators produce video tutorials for tenants explaining how to set up certain technical equipment, how to work with internal system and others. This may be a good way to safe time while explaining not that important features of the incubator's facility.

MOOC: It is costly to develop own e-learning training modules and materials. Thus, cooperation with existing online learning tools is recommended. Following are some sources of MOOC (Massive Open Online Courses):

• EdX.org - Without earning a certificate it's usually free. Recommended are entrepreneurial courses by MIT Sloan School of Business
• Coursera.com
• Detailed list of MOOCs can be found here: https://www.mooc-list.com/

Internal “Wikipedia” (Knowledge management): Best way how to create, share and manage information of the incubator is to implement internal knowledge management system. It's important for making decisions, building business and cultivate company culture. You can find many solutions on the market, widely use and free is MediaWiki.org

The purpose of organizing public events is to boost incubator's brand awareness, attract potential clients and build entrepreneurial community. Larger incubators host public event usually every month, university related incubators without proper space host them at the university but less often.

• Networking events – connecting experienced entrepreneurs, mentors, start-ups
• Fuck-up nights
• Hackathon - gathering where programmers collaboratively code in an extreme manner over a short period of time. Hackathon usually lasts few days but generally no longer than a week. This event is recommended mainly for tech incubators.
• Open House – designed to attract and select new potential members
• Competitions – 3DayStartup - international competition enhancing entrepreneurial spirit in students. Goal is to develop start-up idea in 3 days and present it to committee. This happens during the weekend so it doesn't affect the run of the incubator. http://3daystartup.org/ 
• Business case studies
• Corporate events – they can be additional source of funding
• Corporate partner assign a problem. Incubator can create a team of students that will bring out-of-the-box ideas. This event may be also organised as a competition. Example: Bank wants to develop new financial product for young customers. Incubator finds students and organise one day competition to bring the innovative ideas.
• Incubator may establish corporate-sponsored incubation to help tackle company's specific research problems or to help develop new technology.
• Demoday - Showcase of the most successful teams from the incubator. This event is tailored to partners, mentors, start-up community and public. Main goal is brand building, promotion and establishing of new partnership. Tenants gain the possibility to present their business to investors. This event is also great networking opportunity.
• Introduction to local startup scene - monthly organised paid event that introduce visitors local entrepreneurship environment. It is tailored for people who would like to work in a start-up or co-found one. Event is usually followed by networking with incubatees and other people connected with incubator.

Mentoring is a professional long-term relationship between two individuals in which more experienced person helps to guide less experienced person. Mentoring relationships are valued as a powerful means to personal development in a business environment. It provides development opportunities for both partners and there is no reporting relationship between mentor and the mentee.

Building mentor's network is a challenging process, while selecting new mentors keep in mind that this relationship is based on trust, so choose trustworthy and honest persons. Next consider someone who is committed to the development of others, who is willing to share personal experience and has enough time to devote to the mentee.

Selection of a certain mentor from incubator's network should be left on the mentee with his goal in mind and specific developmental requirements.

Navigating in large network of mentors can be difficult, so some incubators offer mentor office hours that tenants can sign up when they need.

In recognized incubators with worldwide impact is very common that mentors pay for the privilege to have this position. However most of the mentorship programmes are based on incubator representative's ability to create relationships with people willing to help new entrepreneurs in development. Sometimes the most valuable advice comes from those who are just couple of months ahead rather than years. Since tenant companies experience similar problems they can help each other out and this peer mentoring is business incubator's huge value added.

While considering what type of advisory services provide, several options need to be explored. First, incubator must decide which services will be offered in house. This depends mainly on knowledge and skills of incubator management and staff. Quality of outside sources depends on informal alliances with service providers from public and private sector. Second, incubator needs to decide what type of services will be provided on at-cost and what type on cost-plus basis.

Some incubators offer consultancy for free, other require the incubatees to pay the coach's fee and reimburse it later. This may lead the incubatee to think twice when hiring a coach and hire him only when it is necessary. Another way to approach this problem is using voucher system. Tenants can either receive certain number of vouchers at the beginning of the program or earn them later through the process of incubation.

Provide your tenants with templates of contracts. This can save money and time of your tenants and become competitive advantage. Widely used business contracts that can be provided in-house are for example:

• Founders agreement
• Non-disclosure agreement
• Investment term sheet
• Employment agreements

Selection of new service providers should be based on incubatee's needs. Establish links with respected services. You can negotiate better deals for your tenants based on scale.

• HR - incubator may help tenants finding interns and employees across university students and graduates
• Sales - Incubator management and advisors can help tenants in developing sales strategies and understanding the sales process. If necessary, tenants may be linked to professional service providers who can further assist in developing and implementing effective sales strategies.
• Marketing
• International trade
• Government procurement projects
• Assistance with government grants and loans
• Advice about teambuilding
• Investors
• Finance and accounting –Assistance with budgeting, tax and reporting issues can be provided by appropriate incubator organizations. 
• Legal - law and consulting firms provide minimum level of pro bono advice hours and/or reduced rates for incubators clients. One of the partner attorneys may be present at the incubator each month on Review or Open House to meet with tenants and provide guidance and advice.
• Management
• IT
• Notary services
• R&D for high tech focus incubators

Quality, range, dependability and accessibility of these services are the value added features that play important role while attracting entrepreneurs to the incubator. Incubator should continuously collect feedback from incubatees whether the services are meeting their needs and which services should be added.

Passive recruitment usually doesn’t pay off. Best way how to approach possible incubatees is on courses that promote entrepreneurship and through business-focused student organizations. Furthermore, articles in university magazines, leaflets and other promotional publications. Effective way to present your services in person is on events such as Career days, where incubator can have a stand. Public lectures and talks with successful entrepreneurs is also very often used way to approach possible tenants on your university. Other sources of possible start-ups include:

• Referrals from entrepreneurs affiliated with incubator
• Finding them directly on the web (LinkedIn, Facebook)
• Sector specific conferences
• Entrepreneurial associations

1. 1. Application collections

Application should be available online on incubator's webpage. If your incubator targets international applicants consider also English version. Required information are usually:

• team members and their roles in the project,
• phone numbers and e-mails,
• history of the team – how well they know each other and what are they former achievements if any,
• name of the project,
• industry inclusion
• webpage if the project already has one,
• short pitch describing the project
• what kind of problem does the project solve,
• why did they choose your incubator and what do they expect from incubation process,
• lean canvas
• project stage

Accelerator selection committee then uses these submitted information to evaluate all applicants on the quality of idea, experience and knowledge.

1. 2. Selection process

In industry specified incubators it seems to be likely that tenants will be competitors. Therefore management has to make effort to secure constructive working climate and base selection decision on possible linkages between applicants and actual tenants. This will reduce the likelihood of conflict and help establish connections within incubator's community (Schwartz, 2008).

• Newly founded incubators can accept every registered project that has met the incubators requirements without another stage of selection process
• Monthly organized event called Open House. Applicants who have met the requirements are invited to pitch their projects to selection committee. The purpose of a pitch is to stimulate interest. Applicants should keep the 10/20/30 rule of PowerPoint. It means ten slides for twenty minutes using thirty-point font.

According to Kawasaki (2015) the structure of pitch should follow this sequence:

1. Title
2. Problem/opportunity 
3. Value proposition
4. Underlying magic
5. Business model
6. Go-To-Market plan
7. Competitive analysis
8. Management team
9. Financial projections and key metrics
10. Current status, accomplishments to date, timeline, and use of funds

Good people and good ideas may be let down by their ability to pitch well. Thus, do not base your decision only on presentation, but ask questions and try to evaluate properly.

Selection committee usually consists of managing director, incubation coordinator, incubation manager. Structure of the committee vary on incubator possibilities.

Criteria - selection criteria and exit policy should be aligned with incubator's objectives. Very important is team’s commitment. They need to be ready to work hard.

Other criteria may be as follows:

•  Potential for business growth and job creation.
• A need for the services of the incubator and a willingness to accept assistance when indicated.
• The ability of the business to diversify the local economy.
• The viability of the business and its potential for success.
• The business marketing opportunities and approach.
• The business management team.
• Resources available to the business.
• Availability of technologies needed by the business.
• The compatibility of the business with the incubator program and facility.
• Affiliation to HEI (student, alumni, academia)

Every single criteria may be divided into levels of accomplishment (e.g. on a scale from 0 to 5) and the sum may be compared to defined minimum required number.

Keep on mind that it is challenging to judge business in the very beginning of existence. For example business plans in pre-revenue and pre-customer phase are at best simply guesswork. Thus most decisions are based on "gut feeling" and quality of team rather than fundamental analysis. Also remember that quality is more important than quantity. Do not accept teams just because you need to fill the space, this may lead into negative incubator’s brand perception and later affect relationship with investors, mentors and other stakeholders.

• You can grant newly accepted incubatees one test month to validate their work ethic. They discuss a goal for the month with a representative of the incubator. The fulfilment of the goal is evaluated after the month period and acceptance to the program is granted.
• Incubator programs last for varying durations. In general, incubation period as long as it takes for a business to get on its feet, that can be sometimes for years. Incubators should enforce graduation within a 1-year period, after that period incubators often incrementally increase rental rates to induce tenant graduation. Some incubators increase rate every year or even more often, this depends on incubators model and possible high demand for incubation services at the university.
• Proactive monitoring of incubatees may enable interventions to close the business rather than prolonging the time of incubation. But this decision is always very challenging for founders.

Exit policy should encourage, not mandate, tenant graduation

Teams presents their progress on regular basis, usually every month on Review. This event enhances collaboration and team spirit across the teams.

• How teams accomplish goals and milestones
• How do they keep with financial plan
• Sales growth
• Employment growth.

Graduates will be included in the network of the incubator. New incubatees can be later linked with these graduates in the form of mentors. In order to stay in touch with them, informal gatherings may be organised. Successful graduates also promote the incubator and can help recruit new tenants.

Company can enter incubation program directly after successful finish of incubation process or in case that the company didn't participate in incubation, via online application form.

You can use wide variety of selection methods, starting from a simple three-staged process as in incubation program to a multi-staged process with stage dedicated for meeting the experts outside the incubator or Bootcamp stage. It is not very common to accept companies to acceleration on monthly basis. Rather than that incubators run acceleration program in rounds that usually last from 3 to 6 months and the application period typically focuses around specific dates between the rounds. Application can be submitted through online form with same structure as for incubation. After the initial shortlisting, applicants can be interviewed via Skype or invited to Open House or other type of selection day. Interview, accompanied by business presentation, can range from long interrogation to short informal chat depending on required information.

Example of three-stage selection process:

1. Online application
2. Shortlisting
3. Face to face interview

Example of four-stage selection process:

1. Online application
2. Incubator's core team review
3. Expert review
4. Face to face interview

Interviews may help to spot sings of chemistry between founders. If they complement each other and know what each person meant to be doing, it can be sign of good cooperation. On the other hand if they interrupt each other, then it can be sign of potential future problems.

Selection committee should be management and also experts from outside the incubator such as investors, strategic partners, alumni or mentors.

Selection criteria may follow the same criteria given in section about incubation. Other than that incubator may consider this characteristics:

• Team members highly focused on the opportunity and team
• Full-time founding team
• Founders ability to take on new ideas
• Ambition
• Team background and dynamics
• Sales growth trend
• Scalability

Exit Policies - acceleration program is usually time limited from 3 to 6 months and company leaves after that period. Without time boundaries, ultimate measure should be growth of sales.