There have been a number of evolutions in incubation activities in recent years. Changes in technologies, market demand and other factors have reshaped how startups can develop and who can succeed. Incubators develop accordingly and adjust their programmes, operations and services in response to evolving startup needs. The most important trends in incubation observed in recent decades are presented and discussed in this chapter.
Incubation in Entrepreneurial Ecosystems
Hatching Growth
Abstract
The popularity of business incubators as a tool for stimulating entrepreneurship, innovation, and economic development has risen dramatically. Estimates of the total number of incubation programmes globally range from between 4 000 to 14 000 depending on the source.1 A recent international review estimated that approximately half of the incubators active in 2020 were less than six years old (Aljalahma and Slof, 2022[1]), while the number of incubators recorded in the Crunchbase dataset quadrupled between 2008 and 2021. A range of country-level studies display a similar surge in the incubator population, as shown in Figure 4.1 (Centre for Entrepreneurs, 2022[2]; Drori and Wright, 2018[3]; Mian, 2021[4]; Hathaway, 2016[5]). For example, it has been estimated that there were approximately 12 business incubators in the United States in the early 1980s compared to 1 400 in 2020. (Davidson, 2021[6]).
The increase in the incubator population reflects a rising demand for the services provided by incubators, in line with the growth in the number of startups based on innovative technologies, products and services. As an important funder of incubators in many OECD countries, governments have also been a key driver of the spread of incubation as a tool for stimulating startup and scaleup development in recent decades.
Cumulative count of incubators in selected countries
Note: Total cumulative count of incubators, accelerators and other startup support programmes
Source: Crunchbase, data as of February 2021
As the population of incubators has grown, there has been a concurrent trend towards greater specialisation. Many incubation programmes now focus on supporting startups and scaleups in specific industries or technology areas. This sector-specialisation allows for a more tailored support offer, for example by providing access to industry-specific mentors, tools, and investment networks. Health or biotech-focused incubators might focus on providing access to specialised lab equipment that can otherwise be cost-prohibitive for individual startups, while incubators focused on artificial intelligence might offer support in accessing cutting-edge computing resources or algorithms. Specialisation not only enhances the quality of the support offered but also makes the incubator more attractive to investors, as they become hubs for innovation within a particular field.
The increased specialisation of incubation systems potentially reflects a competitive pressure for incubators to establish a niche in an increasingly crowded market. Governments are also contributing to this trend by funding sector-specialised incubation and acceleration programmes, often with the goal of fostering innovation in strategic areas deemed critical for future competitiveness. Large corporations have also established their own incubators to foster innovation within their sectors. These corporate incubation programmes – such as Google’s Launchpad and Microsoft’s ScaleUp programme – often focus on startups that align with the company’s strategic goals, enabling the integration of relevant innovations into the larger corporate structure.
Another significant trend is incubators’ growing focus on supporting the internationalisation of their clients. Today, incubators place a strong emphasis on generating “born global” companies by encouraging entrepreneurs to broaden their horizons and supporting them in serving international as well as local markets, for example by providing access to global networks, training on exporting, and information and advice on foreign markets and regulations. An important development has been the emergence of “soft-landing” programmes, where cohorts of startups are placed in an incubator or innovation hub overseas in order to help them to establish a presence in key markets.
Chapter 9 of this publication provides a further discussion on the specialisation of incubators and the implications for policy, while Chapter 6 reviews the role of incubators in stimulating the internationalisation of startups.
Delivery models for incubation have also evolved considerably with the advent of digital platforms that allow companies to access support from incubators remotely through virtual programmes. Virtual delivery models have become increasingly popular, particularly since the COVID-19 pandemic. As an illustration, nearly half (44%) of the companies supported by certified incubators in Portugal’s National Network of Incubators in 2024 participated in virtual rather than physical programmes. Virtual incubators tend to focus on delivering services like mentorship, skills training, and access to investor networks online, expanding access to incubation services to new types of startups, particularly those from emerging markets or rural areas with a limited offering of physical incubation programmes. Hybrid models combining physical office space with virtual support are also becoming more attractive to entrepreneurs who need some physical infrastructure but value the flexibility of remote services.
The advancement of digital platforms and tools has had a profound effect on how incubation programmes are run. From virtual mentorship to automated resource allocation, technology has made programmes more efficient and scalable. Tech-enabled incubation models are democratising access by reducing geographic and economic barriers, pointing to greater inclusivity and reach, albeit with potential implications for peer learning and community dynamics. Digital tools like machine learning algorithms are also being used to match startups with the right mentors, funding opportunities, and market insights. Moreover, digital tools allow for better tracking of the progress and performance of incubators’ clients, helping to improve incubation outcomes.
A parallel trend is the rise of sustainability and social impact driven incubators that specialise in stimulating new ventures that offer innovative products and services in response to environmental or social challenges. Chapter 9 of this publication provides a fuller discussion of the characteristics of social incubators and sustainability-focused incubators.
References
[1] Aljalahma, J. and J. Slof (2022), An Updated Systematic Review of Business Accelerators: Functions, Operation, and Gaps in the Existing Literature, https://doi.org/10.3390/joitmc8040214.
[2] Centre for Entrepreneurs (2022), Incubation Nation: The acceleration of UK startup support.
[6] Davidson, H. (2021), The incubator investment in network events: does the business incubator’s quality of programming and founder personality traits influence start-up performance?.
[3] Drori, I. and M. Wright (2018), “Accelerators: Characteristics, trends and the new entrepreneurial ecosystem”, in Accelerators: Successful Venture Creation and Growth, https://doi.org/10.4337/9781786434098.00005.
[5] Hathaway, I. (2016), “Accelerating growth: Startup accelerator programs in the United States”, Brookings 17 February.
[4] Mian, S. (2021), “Whither modern business incubation? Definitions, evolution, theory, and evaluation”, in Handbook of Research on Business and Technology Incubation and Acceleration, https://doi.org/10.4337/9781788974783.00008.
← 1. See, for example: F6S, Startup Blink, and Crunchbase.