A Product Incubator – Is There One Like This?

Here is a scenario.

  • A couple of founders come up with an idea and do some initial research. They have a good feel for the market and confident that they can build a business. They have a set of hypotheses.
  • Founders have some money – just enough to bootstrap a first version of their product (a minimum viable product).
  • They don’t have a tech team yet. They are looking for a tech co-founder. It is kind of chicken and egg situation. Without a prototype, they cannot go and validate their hypotheses. Without a technical co-founder, they cannot build the prototype – at least that is the common wisdom.
  • Enter a new kind of incubator – a product incubator. They are a group of serial entrepreneurs with a mix of technical and marketing skills. They know how to bootstrap a product business and get initial customers. This is not just a tech team. It is a team that has built products before and knows how to manage a small highly capable product team.

Looks good, doesn’t it? Have you seen one like this?

7 thoughts on “A Product Incubator – Is There One Like This?

    1. That is how the thought process started. But the business model may be like an incubator/accelerator which may end up taking equity. The outsourced product development model does not get involved in other activities related to product management and marketing.

  1. That’s a bit more of a risk for the incubator as their equity is managed by someone else and they have no control on it, isn’t it? Maybe a deferred payment convertible to equity or a debenture like model where the value of work is capped at a pre-agreed rate and value based on an agreed formula and founders can pay off the work within a timeframe at a premium on value or convert to equity. The problem though will be establishing goalposts and making sure they don’t get moved.

    1. Ashwin, thatnks for the feedback.
      “Goals posts, not moved” does not sound very realistic in the case of startups. Incubators/Accelerators, just like startups they serve, are risk takers too.

      1. Dorai, I agree with you but I was highlighting the problem that arises in these types of relationships. I have executed a couple of projects in this manner, and the goalposts problem is very real and IMO the biggest challenge to be dealt with. In one case I was lucky as the equity allowed me to acquire IP that I could leverage, but in another it resulted in a major friction point as the project ended up sucking a huge amount of resources due to constant rework and tweaking and I had no say in the marketing and launch plan to force a strategy change. It was a very messy exit and resulted in my losing a lot of money out of pocket not mention time and effort involved.

        Having said that, I would consider executing these kinds of projects again, but it would have to be on a case by case basis and I would definitely require input in how the project was marketing and executed. Unless I had standing as a co-founder and a voice in the overall ops, I would not be comfortable in risking capital and manpower to a project. After all, capital is being committed just not as financial equity, but in kind so I believe the value should be commiserate with a financial injection.

  2. Trying to do similar (if not exactly the same) thing here at W2E. We are trying to build this community based incubator and people have started creating startups the same way you mentioned, i.e. they came just with ideas, (if required),got co-founders and got an operational startup. The resources, support, guidance is being provided by other members, experts, experienced people in the group. All this is being achieved through a mix of offline and online community, the portal for online is the website mentioned below in the form. And the offline community is on the meetup platform:

    Your comments, suggestions, advice are welcome 🙂

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