Incubators, Accelerators And Coworking: A Q&A With Innovation Expert Carol Lauffer

Carol Lauffer has a long history of creating incubators, accelerators and innovation areas. As Principal at Business Cluster Development, Lauffer has worked on 70-plus projects to “support entrepreneurship, create new businesses, move innovative products to market, and build strong ecosystems.”

Allwork.Space spoke with Lauffer about the overlap between incubators, accelerators and coworking, the importance of having a physical space where people can connect, and how workspace operators can partner with local innovation projects. Here are the highlights of the conversation.

Allwork.Space: At Business Cluster Development, you work to create local ecosystems that attract and support entrepreneurs. What are you working on these days?

Carol Lauffer: I’m currently working with UT Health San Antonio. Two years ago I designed an accelerator and incubator to meet their needs with the Office of Technology Commercialization. They were looking for ways to help their faculty members and clinicians to commercialize technology.

I recommended that they create an accelerator that was focused on medical devices. They have a group of passionate, rather innovative clinicians who were inventing in their homes, grabbing whatever resources they could find. Imagine if you actually gave them a process by which they could learn how to do this.

I’ve been working with them on the accelerator, which is scheduled to launch the end of the first quarter. I’m helping them with various aspects to get it up and running—anything from curriculum to budget to bringing on staff people. It’s fun because it’s always varied. It’s always great to see what you’ve planned come to fruition—an actual program that’s working with inventors and innovators up and running.

Allwork.Space: You hit at the heart of coworking—that rather than working in isolation, people come into communities to accelerate and grow their ideas and businesses. What overlap do you see between incubators and coworking?

There is a fair amount of overlap. It’s not unusual for me to talk to someone who’s running an incubator—whether it’s one that’s been operating for 10 years, or just a couple years—and coworking has been adopted as an aspect of what they do. For people planning a new incubator, it’s not unusual to incorporate coworking as part of that.

There are a number of reasons for doing this. There’s just a general interest in coworking. It’s part of your vibrant downtown, it’s a place where people can come, it’s not just restricted to entrepreneurs—it’s open to freelancers and sole proprietors.

I did a project in Billings, Montana last year where they wanted to create an incubator, but there was a lot of interest in coworking. At that time, they didn’t have any coworking. We recommended that they do coworking with incubator services because they had sole proprietors, including attorneys, who were working from home and wanted to be in a space where they were around other people. They wanted to be part of a hub. Then they had people in creative industries, like web designers, and also entrepreneurs who were working in isolation.

With a coworking space with a more open layout, people can hopefully bump into each other and interact with one another. Then, for those who are entrepreneurs, they provide incubation services to help them start and develop their businesses. Combining the two is something that’s seen quite regularly now. The idea is to bring it all together and bring all these different types of people together.

Allwork.Space: For people unfamiliar with accelerators and incubators. How do you define and distinguish the two?

People do commonly get them confused. I think of it in terms of the lifecycle stage of a company. Accelerators typically work with companies that are at the proof of concept stage. For example, in the UT example, these are inventors, essentially. They have an idea for a product, they’ve been tinkering with it a bit so they may have some type of rudimentary prototype—or not. They really need a process that will educate them and help them develop the idea and business model for this idea—to help them determine whether there’s a viable market for what they’re doing.

The accelerator is a process for proof of concept, business model development and usually securing some money to get started. It’s a short process, which is one of the aspects entrepreneurs and funders like so much about it. It runs anywhere from three months to six or nine months. Of course, there are industries in which that doesn’t fit. You can build an app in three months. A medical device, maybe six months. But for anything in the life science or pharmaceutical field, no, that doesn’t fit.

Allwork.Space: Then companies are ready to go on to an incubator once they have proof of concept.

Right. Once a company completes that process, there’s still a lot more work to do with respect to their development. They have an early business model, they have a little bit of money, they may have a working prototype, but they still have a lot more work to do. For companies that have come through that process, the next stage is an incubator.

An incubator works with operating businesses—even if they’re early stage. They’ve done the proof of concept and now they’re trying to refine their products, line up customers, get through that next stage. Incubation is a longer process. Incubators typically work with a company anywhere from 18 months to two or three years. When you’re done, companies have employees, are generating sales, have more than one product they’re selling, they’re getting to a more mature level.

I always think of it that accelerators come first and incubators come after that, in terms of the stage of the company and what the anticipated milestones are for each company going through the process

I should also say that we’re seeing some incubators operate accelerators. They incorporate all of this together. They run an accelerator, they run an incubator, they have coworking space. They essentially become hubs for entrepreneurship in their communities where everything is blended together.

Allwork.Space: How do you see coworking working within those concepts?

I advocate that incubators work better if they have a physical space. It’s that space that creates the bumping into one other and those trusted relationships which might not happen otherwise.

When people build trusted relationships the barriers come down. That’s essentially what coworking is doing. We share the same space, we start talking to one another, there are events that are organized. Putting coworking in these spaces just multiplies that type of effect.

The clientele for coworking is a lot broader than it is for an incubator or accelerator. Coworking brings more people, including freelancers and people who run their own businesses, into the mix.

It’s different here in Silicon Valley where this stuff is everywhere. But if you think about other communities, it can be an important hub and place of activity. In Billings, we can point to it and say, “This is where a lot of entrepreneurial activity comes from. This is where creative people go.”

It also helps change mindset in the community and gets people to think more innovatively, or from an entrepreneurial mindset. People recognize that there is a place you can go, and people you can run into, and events you can attend even if you’re not a member. That’s really valuable overall, in terms of entrepreneurial activity.

Allwork.Space: Coworking is absolutely booming right now. Are you seeing the same trend with incubators and accelerators?

It seems to be growing, as well, and globally. There’s an interest and fascination with entrepreneurship in a lot of places. These are vehicles that help to promote, encourage and foster entrepreneurship. They help increase the likelihood that entrepreneurs are more successful and that they make sound decisions about a go or no go. Yes, it appears to be on a growth cycle.

Allwork.Space: What are your thoughts on the economic development aspect of these spaces working hand-in-hand?

That’s where you see communities that are taking all three of these models and trying to put them into a single space, and they want to do it downtown. They become part of a downtown revitalization because they have a lot of people in them and people have to go to lunch and they support restaurants. It’s part of creating activity within a community.

Then, beyond that, some communities focus on innovation districts. It may not be one space, but there’s coworking and an accelerator and they’re all within the district. The idea is to encourage creative people to be downtown. They have public spaces where people can hang out, and events and restaurants and concerts. They’re trying to take all these clients of coworking spaces and accelerators and incubators, and trying to encourage other tech companies to locate in that same area so it creates a whole hub of activity as part of a development.

Many communities want to support entrepreneurship because you want to grow local businesses. It makes much more sense to try to encourage the startup and growth of those companies from people who are residents in the community rather than trying to attract people from the outside. Anything you can do to help to do that is something they want to support from an economic development perspective.

Allwork.Space: Do you have any advice for workspace operators who are interested in connecting or working with local accelerators or incubators?

I always like to see more collaboration among these different organizations. There are synergies that can be created from everyone working together. Coworking may be private operators, or public, or quasi-public, and the same with incubators. Why duplicate what we have? Why not collaborate on all of that?

I would encourage operators of coworking spaces that, if there are accelerators and incubators in your community, you reach out and figure out ways to work together. You can co-host events, you can encourage members to check out the other types of models and programs that exist to support freelancers and entrepreneurs and others who are in their spaces.

I’d love to see more collaboration among these different entities. Especially from an economic development perspective, it’s just stronger. And it’s stronger for the clients, the consumers. If there are connections among the different projects, it helps them be more aware of the resources that exist and how they might get the help and assistance and advice and connections they need to be successful.