We Already Know How to Do This: Stop Reinventing Startup Development Organizations

The Incubator Business Model

Jul 12, 2025

Recently, someone asked me, “How do you make a training center for entrepreneurs to be self-sustaining and not just dependent on investors?”

And I nearly threw a stapler.

Not because the question isn’t valid, because it is, but because we’ve been answering it for decades. The model exists. It’s tested. It’s been done over and over. It’s called an incubator. Not an accelerator (learn the difference), not a coworking space with startup murals and $5 coffee, but a bona fide startup incubator. And by the way, not a venture or startup studio, which I just covered here. All of these organizations were designed to be self-sustaining. And yet here we are in 2025, still asking how to build something we already know how to build –> because most people have either never seen one that works, or they’ve turned it into a parody of itself, sustained by pitch competitions and hopeful grant applications instead of actual economic purpose.

But let me give credit where it’s due. The way the question was phrased is telling: “for entrepreneurs to be self-sustaining.” I know what was meant (how can the center be self-sustaining) but let’s not ignore the Freudian slip. Because the reality is, we’ve created entire ecosystems where entrepreneurs themselves aren’t self-sustaining, and no amount of “training” is going to fix that. Why? Because you can’t train someone to become an entrepreneur. You either are or you aren’t. You can teach finance. You can teach marketing. Heck, you can teach HOW startups work; you can’t teach someone to be a capable founder. You can even teach how a cap table works. You cannot teach the mindset required to risk everything for an unproven idea.

So, let’s pretend the question was: how do we build a place that helps those who already are entrepreneurs survive, thrive, and do so without being leashed to investors? And let’s answer it the way it should be answered: by recognizing that the founders aren’t the ones who should be paying.

First, let’s kill the myth: “dependent on investors.” That’s not how incubators survive, nor should they. Investor support? Absolutely. But dependency? That’s a crutch. If the investors in your region aren’t sponsoring your incubator, stop giving them deal flow. Let them feel the consequences of freeloading off the system they claim to support.

Because here’s the thing, every rookie makes the same mistake: they try to make the incubator profitable by charging the startups. Rent, equity, program fees, like these founders aren’t already mortgaging their futures on the hope of product-market fit. Startups are broke by design. If your revenue model depends on extracting money from founders, congratulations; you’ve built a school for dropouts that can’t pay tuition and won’t graduate.

A real incubator is built like a refinery. The crude oil? Entrepreneurial ambition. The output? Investable businesses, licensable IP, validated markets, trained teams. The monetization? Upstream, from those who benefit: governments, universities, corporations, banks, foundations, economic development arms, and yes, investors. And if those people aren’t paying? They’re leeches, not partners.

Build the model the way it’s meant to be built and known to work.

The Incubator Business Model

1. Anchor with Public Benefit Capital

You want self-sustaining? You want impact? Then act like infrastructure. City and state governments will fund job creation, workforce readiness, and innovation hubs, if you prove you’re not another entrepreneurial Disneyland with a foosball table, some interns, and a mural. Offer verifiable economic value: certifications issued, teams formed, revenue generated, jobs created. Think JETI agreements ((Jobs, Energy, Technology & Innovation) with actual teeth.

2. Bundle With Real Estate (the Smart Way)

The best incubators never paid for space. Why? Because their presence adds value to the property. And in cities that “don’t get it,” property owners expect incubators to pay for space like any other tenant, missing the point entirely. You subsidize the space with the ecosystem itself. University labs, service providers, corporate teams, and conference programming all want access. You give them that, and they help pay the rent. Not the startups. Ever.

3. Develop IP and Commercialization Services

If you’re not helping founders commercialize IP, you’re not an incubator, you’re a meetup group. Real programs provide SBIR grant support, IP counsel, tech transfer navigation, and licensing frameworks. That’s what corporate sponsors should pay for: early insight and early access, not ownership. Proximity, not extraction.

4. Create a Flywheel That Pays Dividends

Not a metaphor. I mean a real financial engine. Launch a community-funded SPV. Get your law firms, angels, and philanthropic backers to fund services (like accounting, legal, GTM) and in return, you get a slice of equity in-kind. Do that across dozens of startups, and within 5–7 years, you’ve built a real portfolio. One that creates long-term sustainability, without charging founders. Curious how and why that works? Here’s how funding flywheel.

5. Understand and Expect the Right Sponsors

Stop begging for scraps. The banks, law firms, software development firms, marketing agencies, and VC firms who claim to support entrepreneurship? They owe you. Full stop. They benefit from better founders, from more startups, from talent development, and they have the capital to fund it. If they’re not sponsoring your program, they are exploiting your community. Call them out or cut them out. Either way, your program doesn’t exist to feed them free deals.

If you’re building a startup development organization and treating the founder as the customer, you’ve misunderstood who’s hungry, and you’re charging the only people in the system doing all the work. Founders have time, not money. Everyone else (governments, corporates, universities, investors) has money but no time (or know how).

So, sell them time. Sell them outcomes. Sell them access.
Access to trained talent. To validated IP. To fundable ventures.
That’s what makes your training center sustainable.

So, how do you build a training center for entrepreneurs that’s self-sustaining and not dependent on investors?
You don’t charge the entrepreneurs.
You charge everyone else for the privilege of benefiting from what those entrepreneurs become.

If you’re still asking this question, stop reinventing startup development organizations. We already know how to do this. The problem isn’t the model, it’s that too many people are still trying to profit from founders instead of backing them. Flip the entire script if you really want to make a difference.