FAQ

What is a business incubator?

Business incubators are organizations that support early-stage entrepreneurs in order to increase the odds of their survival and growth. Their principal function is to centralize a wide variety of support systems for the entrepreneur. Incubators usually lease commercial space, offer flexible lease terms, access to office equipment and additional common space that often includes conference room and kitchen areas. To find out more about incubation, visit the National Business Incubator's website at: The National Business Incubation Association

Why do so many small businesses fail and how can an incubator help?

According to the SBA, 50% of small businesses fail in the first three to five years. Studies show that the top two reasons for failure are management inexperience and insufficient capital. Other reasons small businesses fail include:

• Inadequate planning

• Lack of market knowledge

• Failure to seek the advice of a professional

• Lack of financial planning and review

What specifically is venture capital?

The Venture Capital (VC) industry is a major source of funding for the entrepreneurial community. Venture capital is capital provided by outside investors for financing of new or high growth businesses. Venture capital investments generally are high risk investments but offer the potential for above average returns. In exchange for the investment, the VC firm receives an equity stake in the business.  The VC also helps the business develop its management team, and takes seats on the board of the company. They generally focus on both the business opportunity the management team that is offered.

What is an angel investor? 

An Angel investor is a person who provides financial backing to very early-stage businesses or business concepts.  Angel Investors are typically entrepreneurs or executives who have become wealthy. Often these individuals are looking for a higher rate of return than would be given by more traditional investments and will be looking to play an active role in the management of the company. Instead of investing in the stock market or mutual funds, Angels take high risk investments with new companies.

Who works for MCED?

MCED's team is comprised of experienced entrepreneurs, investors, and business development professionals, many of whom have either personally started or participated directly in starting and growing for-profit businesses. MCED’s board of directors consists of entrepreneurs, economic development professionals, and professional service providers.

Is it a government organization or a private business?

MCED is a private, not-for-profit organization. It is not a government agency.

How does MCED compare/differ from other incubators and commercial office space?

MCED has become a virtual business incubator meaning we do not have tenant clients but offer an array of business support services and development resources.

Where does MCED get its funding?

MCED receives operating support from the state, various grants and the private sector. In addition, MCED derives income from its client companies that pay a monthly fee for services provided by MCED. These revenues partially fund the operation of the incubator facility, allowing grants from the state and partner organizations to be invested in client assistance, business development and access to capital functions.

Where does MCED fit within USM?

MCED and the University of Southern Maine maintain a functional relationship, which enables the Campus Ventures program to match paid student interns with incubator clients that qualify. Though once housed on the USM campus, MCED has relocated. MCED is not an affiliate of USM.

What other organizations does MCED work with?

It's a long list! Our website lists many of the organizations we partner with to make services available to our clients. We are always adding to the pool of partners as we find additional sources of expertise. In the USM community, we work closely with ASET, School of Business, the Small Business Development Center and others as needed. In the community, we work with many non-profit small business service providers and many professional service organizations and businesses that have relevant products and services.

What are the qualifications to be an incubator client?

1. The company must exist.....we accept companies; not individuals with just ideas for a company.

2. Scalable business model involving technology based products or services with high growth potential

3. Demonstrated financial resources to sustain business operations during the start-up phase (6-12 months)

4. Capable and motivated entrepreneurial team

5. The founders of the company must be willing to fully participate in the Incubator program.

6. Ability to answer the question: “How will the MCED help you?”

In short, we are looking for quality prospects with a quantifiable probability of success.

What services does the MCED provide and how are they provided?

We provide assistance with any need our clients have but we focus heavily on the business aspects such as strategic planning, capital strategies, legal advice, financial services and advice, marketing and sales advice, human resources issues and even technology resources as needed. The assistance is provided a number of ways. The Director provides business guidance to the clients and meets with them regularly to assist with strategic issues and connect clients with resources available through the Incubator.

The Incubator works with a number of professional service providers in the community such as law firms, accounting firms, marketing and advertising firms, investment organizations, insurance companies and others that offer products and services relevant to our clients. A number of service providers come to the incubator periodically and are available to meet with clients at no cost. Others are available as needed to give some guidance and advice. Normally, the initial assistance is provided free-of-charge to the client. If more extensive services are needed, the client is responsible for forming a fee-based relationship with the service provider. Press releases are provided for clients at no cost. The Incubator also provides numerous education and networking programs. We have a frequent schedule of seminars and workshops conducted by experts on various topics. We also partner with other organizations in town to provide networking and education opportunities to our clients.

How long can a client stay in the Incubator?

MCED offers a number of programs, suited to companies at various stages in their development. As we are a virtual incubator, entrepreneurs may move between programs ast their needs change and business models transform.

What is “graduation”?

Graduation is when a client company has matured to the point that they do not need Incubator assistance regularly. Usually the company has a product in the market and has reached a level of financial stability and employee growth that enables them to be fully functional on their own. At that point, we assist with finding access to other services that may be needed as they transition.

Tell me more about your Top Gun program

Top Gun is a customized program that links the state’s most promising growth-oriented entrepreneurs with our most seasoned business professionals who will help guide them in validating their business model and perfecting their fundraising presentation. Click here to visit our Top Gun website.

What is the application process?

The process officially starts with the completion and submission of the application form which can be found on our website. If Incubator management has not already met with the company, a meeting is scheduled. During that meeting, the company is able to share more insights about the business concept and founders and to learn more about the Incubator. Click here to view our Application.

How does MCED measure its success?

We are highly accountable to our funders and clients and will report periodically on how we're doing. We measure success in several ways, including:

• The number of companies that receive business assistance via our programs, and the hours spent with those companies

• The number of companies that receive outside funding

• The development of innovative products and services that create wealth within the state

• The relationships that are fostered

• The number of jobs created

I have a promising idea for a new service business. Will MCED work with me?

MCED's focus is on growing scalable, innovation-based ventures. Though we do not work with service, wholesale, consulting, or other businesses that meet those two core criteria, we will happily refer businesses on to other programs that would be a better fit. Such traditional sources include SCORE, SBDC, and state economic development agencies such as the DECD.