With recent economic turbulence, many policy makers are talking about business incubators as a means to foster economic development and hence job creation.  In fact, President Obama has proposed $250 million in spending to create a nation network of private-public business incubators. At a local level, Mayor Michael Bloomberg has provided funding for new business incubators in New York (we are lucky to be part of one - more on that in a later post).

From our perspective, we view incubators similarly to the many angel investors and venture capitalists you’ll find on ChubbyBrain - as investors in startups.  While their investment is not typically in the form of funding, it comes in the form of in-kind services, facilities, and mentorship.

To this end, we’ve worked to recently add 300 United States incubators and their portfolio (or tenant) companies to the ChubbyBrain platform. We know that this level of information on incubators and their portfolio companies hasn’t been previously aggregated in a single place and so are looking forward to providing an analytical perspective on incubators at a national and local level going forward.

To start, we thought it would be worthwhile to look at the national incubator landscape and offer some analysis and observations on what we see as we look across the United States.

In our examination of incubators, we initially identified more than 5400 companies in incubators in the United States equating to an average of 110 per state.  The incubator supported companies are distributed across the United States according to the heat map below. (note: all data driving maps has been indexed)

As the chart shows, incubating companies are centered in California, New York, Indiana, Ohio, and Wisconsin. This makes sense given the next chart which shows the distribution of business incubators across the states where again California, New York, Ohio, Indiana, and Wisconsin are among the states with the most incubators. The average number of incubators per state was 8.3 while California had 27.

Of the 5400 companies, 2311 were determined to be scalable companies for an average of 47 per state.  It is worth noting that while we have data on more than 5400 incubator companies, not all of these incubator companies will appear in the public ChubbyBrain database because our focus is on scalable often technology-driven, but not exclusively, businesses.  As a result, many incubator companies which are in the consulting, retail or services sectors, etc are not on the platform.

These scalable incubator companies are distributed across the states as seen in the map below.

California and New York again appear at the top in the number of scalable companies.  Illinois also appears having a large number of scalable companies. The entire southeastern seaboard, from Virginia to Alabama, also made a strong showing with high numbers of scalable companies emerging out of their incubators. We also sought to understand the scalability ratio (% of companies in each incubator that are scalable).  The scalability ratio across the nation stood at 43%.  The states leading on the scalability ratio, e.g., those whose % of scalable companies relative to total companies, were New Hampshire, Arizona, Connecticut, South Carolina, and Arkansas.

We then wondered which incubators were had the highest number of scalable companies. The top ten are given in the graph below.

Amongst scalable companies, the sector breakdown is given below with healthcare being the largest segment followed by technology and internet companies.

The map below shows which sector is the largest in each state illustrates that the healthcare sector is the top sector in the largest number of states - 24.

While there is much discussion around incubation as a means to foster local economic development, added levels of analysis leveraging data that we’ve collected may yield additional interesting insights.

If you are affiliated with an incubator or have views as to what works (or doesn’t work) with reference to incubation practices, do let us know.  Or if you have impressions about what drives the disparities we see amongst states in terms of # of companies, scalability ratio, etc., we look forward to hearing from you.  If you are a public policy researcher who might be able to leverage our data for research purposes, you can also contact us.

If you’d like to contact us about any of the above, please comment below or send an email to team(at)chubbybrain.com.

We look forward to your ideas and insights.